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Be wary of your investments -- the TAXMAN is watching

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  • Originally posted by TJrandom View Post
    Just a few commentscc..

    Originally posted by SantaKraut View Post
    c If you have to have a property in Japan register it under your wife's (provided you trust her enough) or (children's) name. But they would have needed to have sufficient income to purchase that property – and if they didnft, then they are at risk of audit and penalty for not paying taxes on their presumed income. Alternatively, you are guilty of trying to hide assets.
    But they would have needed to have sufficient income to purchase that property – and if they didnft, then they are at risk of audit and penalty for not paying taxes on their presumed income. Alternatively, you are guilty of trying to hide assets.
    Not necessarily.
    You are allowed to buy property for anyone you want, and register that person as the owner, aren't you?
    The purpose would be not to have anything on your name that can be seized in case there is a problem.
    If they can't take your property away from you, you have a much better chance to fight back.
    Your children would also avoid paying inheritance taxes.
    You could also buy the property and gift it to your children however you would have to check the tax ramifications.
    In any case local tax laws should be studied to find out what's the best way to divest oneself from one's assets, in a benefical way of course.
    Originally posted by SantaKraut View Post
    Open a bank account with a bank that has branches both in Japan and in your home country. That way both tax authorities will obtain the full picture – as the banks will report to both authorities. Personally, I would look for banks that do not have branches or any other business in the other country.
    Originally posted by TJrandom View Post
    That way both tax authorities will obtain the full picture – as the banks will report to both authorities. Personally, I would look for banks that do not have branches or any other business in the other country..
    Well, this would be done in order that money transferred out of the country doesn't actually show up as it has been taken out. Since there is no overseas transfer order given to any bank it doesn't look like the money left the country. And if both the deposits and the withdrawals are sensible amounts none is the wiser since all the transactions are taking place within one account.
    Originally posted by SantaKraut View Post
    Change banks every couple of years emptying and closing your old account. Presumably, these will be rather large withdrawals and redepositfs and will most definitely be reported. I would find one I like and stick with it, or simply open an additional account in another bank.
    Originally posted by TJrandom View Post
    Presumably, these will be rather large withdrawals and redepositfs and will most definitely be reported. I would find one I like and stick with it, or simply open an additional account in another bank.
    They shouldn't be large withdrawals because keeping money in a Japanese bank is a seriously flawed financial strategy. It earns no interest but it is in danger of being confiscated by the NTA should one not comply with whatever demand they make.
    As might as well keep the money at home. Japan is very safe, home invasions / break-ins are very rare. Get a fire retardant safe, bolt it down, cement it into an inconspicuous place, have an alarm system installed and you are good to go.
    Originally posted by TJrandom View Post
    I would be looking for ways to not leave a paper trail, but if one is to be left – I wouldnft want it left across multiple countries.
    Then there is only one solution that I can think of, please feel free to offer more, is taking cash out whenever you travel overseas.

    Just guessing but perhaps this provision of the Japan-Canada tax treaty caused some of the grief SG is having now:
    Article 10[4]
    1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.

    2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that Contracting State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

    a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which owns at least 25 per cent of the voting shares of the company paying the dividends throughout the period of six months immediately before the end of the accounting period for which the distribution of profits takes place;

    b) 15 per cent of the gross amount of the dividends in all other cases.

    And this:

    Article 11[5]
    1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
    2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that Contracting State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

    Basically interest earned in one country is double taxed in the other.
    One solution could be to reinvest the interest without claiming it as income and keep it locked in (compounding interest if you will) until the day the person moves back home at which point it could be taken out and taxed (but only one tax paid).

    As to stocks and bonds, how about trading in countries that do not have the best of relationships with Japan and wouldn't be so keen to disclose personal information, China, perhaps Russia?

    Comment


    • Originally posted by SantaKraut View Post
      ...You are allowed to buy property for anyone you want, and register that person as the owner, aren't you?
      No.

      Your children would also avoid paying inheritance taxes.
      That is your intent - but, there is a reason for that inheritance law - and your solution contravenes it.

      You could also buy the property and gift it to your children however you would have to check the tax ramifications.
      Yes, but there is a yearly limit to how much can be given without them paying income (gift) tax on it. Any property would exceed that limit.

      Of course some of what you suggest is based upon an assumption that a person here now, will not be here later - while I usually work from an assumption that if here now, will be here forever - but that is just me.

      Comment


      • gifting property

        Originally posted by SantaKraut View Post
        You are allowed to buy property for anyone you want, and register that person as the owner, aren't you?
        The purpose would be not to have anything on your name that can be seized in case there is a problem.
        If they can't take your property away from you, you have a much better chance to fight back.
        Your children would also avoid paying inheritance taxes.
        You could also buy the property and gift it to your children however you would have to check the tax ramifications.
        In any case local tax laws should be studied to find out what's the best way to divest oneself from one's assets, in a benefical way of course.
        Just for the record, buying a house in your wife's name is tricky. Unless she can prove she bought it with her own money, and the loan is in her name (unlikely, since you are presumably the one with the salary that qualifies for a loan), the tax office will say it is a gift from you to her and tax you appropriately, 20% I think. And the tax office looks at big purchases, especially put in wive's names.

        You can only give your wife or other dependent 1,100,000 yen a year without paying tax on it. (It better to give 1,101,000 yen or so and pay the minimal ax so the gift is registered with the NTA.) If you'd like to give her or your children some of your assets now to avoid the inheritance taxes later, such as part ownership in your house, here is how to do it.

        Let's say you have two kids. You can give the kids and her 1,100,000 each yearly, or 3,300,000 total. For cash, just put it in their accounts. For property, do it by rewriting the deed (which costs 35-70,000 yen). The cheapest way is to do rewrite it every two years. If you pay someone to do this rewrite it in January, you can shift 1,100,000 yen per recipient for both the preceding and following year in one rewrite, so in this case, you can shift 6,600,000 yen worth of the house over.

        Comment


        • Originally posted by ctskelly View Post
          Just for the record, buying a house in your wife's name is tricky. Unless she can prove she bought it with her own money, and the loan is in her name (unlikely, since you are presumably the one with the salary that qualifies for a loan), the tax office will say it is a gift from you to her and tax you appropriately, 20% I think. And the tax office looks at big purchases, especially put in wive's names.

          You can only give your wife or other dependent 1,100,000 yen a year without paying tax on it. (It better to give 1,101,000 yen or so and pay the minimal ax so the gift is registered with the NTA.) If you'd like to give her or your children some of your assets now to avoid the inheritance taxes later, such as part ownership in your house, here is how to do it.

          Let's say you have two kids. You can give the kids and her 1,100,000 each yearly, or 3,300,000 total. For cash, just put it in their accounts. For property, do it by rewriting the deed (which costs 35-70,000 yen). The cheapest way is to do rewrite it every two years. If you pay someone to do this rewrite it in January, you can shift 1,100,000 yen per recipient for both the preceding and following year in one rewrite, so in this case, you can shift 6,600,000 yen worth of the house over.

          Does that 1.1m yen dependents allowance still work if I send overseas to family member? And what would be the definition of dependent? Could I, for example, suddenly decide to class a sister as a dependent and send 1m to her overseas account over the space of a year?

          If that money then gets rerouted over time (e.g. within the same year) to my account, is that not money laundering or is it closer to just being a bit iffy (i.e. the former a criminal offence, the latter just stretching the rules/law)?

          Comment


          • The after shocks continue

            I paid the 1,000,000 sum plus late payment fine, now the interest on unpaid funds are arriving Jan 135,000 and now Feb 100,000.
            When they have you on the radar, they will track you, and you will pay for your indescretion.
            Can't wait until the brown envelopes end, so that I can get back to normality.

            Comment


            • Gift tax and the bastards at NTA

              In the course my audit last year, of course they examined every single somewhat sizeable transfer abroad. They also enquired after one transfer from my wife's account to mine. Combined with other funds, we bought land. In the beginning they claimed that it could be a gift and were intending to apply tax! Outrageous! We had some "discussion," I produced a title, and ultimately it was dropped since they seemed to be satisfied that it was not a gift. I think that "gift" is pretty tricky between husband and wife and they would be hard-pressed to prove their case. Through the course of our "discussion," they stated that in Japan when a couple buys a home, the percentage of ownership is declared. That was the first time i had heard that.

              We have a property somewhere else that they were able to find out about (I cooperated) by following the paper trail. They asked who the owner is. I said "jointly owned, 50% each," which is the case. They wanted to see the title to confirm, but I refused since I felt they were just phishing in order to nail down what every one of my assets is and where. Since they would not be able to read the title even if they were able to request it, they gave up.

              I bring this up to reinforce how ruthless these guys are.

              Comment


              • Originally posted by Super Grover View Post
                Gift tax and the bastards at NTA

                In the course my audit last year, of course they examined every single somewhat sizeable transfer abroad. They also enquired after one transfer from my wife's account to mine. Combined with other funds, we bought land. In the beginning they claimed that it could be a gift and were intending to apply tax! Outrageous! We had some "discussion," I produced a title, and ultimately it was dropped since they seemed to be satisfied that it was not a gift. I think that "gift" is pretty tricky between husband and wife and they would be hard-pressed to prove their case. Through the course of our "discussion," they stated that in Japan when a couple buys a home, the percentage of ownership is declared. That was the first time i had heard that.

                We have a property somewhere else that they were able to find out about (I cooperated) by following the paper trail. They asked who the owner is. I said "jointly owned, 50% each," which is the case. They wanted to see the title to confirm, but I refused since I felt they were just phishing in order to nail down what every one of my assets is and where. Since they would not be able to read the title even if they were able to request it, they gave up.

                I bring this up to reinforce how ruthless these guys are.

                Grover, I have to register that I disagree. I don't see them as ruthless or bastards at all. They are just doing their jobs, and more or less fairly, when you think about how many of us don't pay.

                Whenever you buy land or a house here, you have to make the Touki document that says what percent of the land belongs to whom. They need to know because that is a sly way of gifting. The reason they crack down on gifting is because of the social reforms following WWII. Until then, the rich stayed rich and the poor stayed poor. By heavily taxing inheritances, of which gifts are a part too, they found equitable ways to redistribute wealth.

                Cheating the NTA is rampant. You see it on the news everyday. How can we blame them for trying to put a stop to it?

                Comment


                • Originally posted by Keeptrying View Post
                  Does that 1.1m yen dependents allowance still work if I send overseas to family member? And what would be the definition of dependent? Could I, for example, suddenly decide to class a sister as a dependent and send 1m to her overseas account over the space of a year?

                  If that money then gets rerouted over time (e.g. within the same year) to my account, is that not money laundering or is it closer to just being a bit iffy (i.e. the former a criminal offence, the latter just stretching the rules/law)?
                  Yes, that works. But you'd better have the money transfer docs to prove it. A million yen a year would probably do it to get dependency, and of course, there is no limit how much you can give her, since Japan is not taxing her. But her country might.

                  Comment


                  • Originally posted by ctskelly View Post
                    Grover, I have to register that I disagree. I don't see them as ruthless or bastards at all. They are just doing their jobs, and more or less fairly, when you think about how many of us don't pay.

                    Whenever you buy land or a house here, you have to make the Touki document that says what percent of the land belongs to whom. They need to know because that is a sly way of gifting. The reason they crack down on gifting is because of the social reforms following WWII. Until then, the rich stayed rich and the poor stayed poor. By heavily taxing inheritances, of which gifts are a part too, they found equitable ways to redistribute wealth.

                    Cheating the NTA is rampant. You see it on the news everyday. How can we blame them for trying to put a stop to it?
                    I, too, disagree with your disagreement, but this is not mean-spirited disagreement. I base this on my firsthand experiences with them. They were polite, but not nice. So maybe "bastards" was a bit strong, but "ruthless" was on the money, pardon the play on words. They did not merely limit themselves to the specifics of the audit. They tried to phish. I seriously doubt that my case was unique. They are definitely out to collect as much as they can, which is their job, but I have enough from my situation to know that they are ruthless -- those 3 anyway. What's more, I object to certain aspects of their job parameters.


                    IGNORE if you want!
                    As for redistributing the wealth, I strongly disagree with that principle of redistributing thewealth if the society allows people to go out and do well. Japan more or less does. You have people who work hard and make money honestly. That money is THEIRS, and NOT the country's. Of course we are all obliged to pay tax in order to ensure that the society functions smoothly for all. My family pays a lot, but we feel that that is not terrible since we were born with intelligence into good families who were able to provide us with advantages. To those whom much is given, much is expected. So we contribute a lot more than the guy who was born with less. It is fair. Once we have done that, however, what's left over is OURS. The guy who puts his remainder into a post office account and earns nothing is free to do so. It earns nothing so he isn't taxed. Another guy uses his initiative, takes risk, thinks and in other words tries to improve his lot. He does well. Why is the government entitled to any of that? Hasn't he already paid his taxes to ensure that the society functions smoothly for all? Then at his death the government says, "We want another cut." What if he chooses to live abroad and has the misfortune to pass away within 5 years? Should the NTA have the legal right to make a claim on his estate? All of this is wrong. IF the government were to take these taxes but provide a superb environment in return, then perhaps it might being doing so with some justification. But initially the government says, "You pay these basic taxes and society will be run well." That is a kind of contract, so when one party breaks the contract, there have to be consequences. I think people may be right to "cheat" on a case by case basis.

                    People "cheat" because fairness is fleeting here. People have mostly paid their taxes, but the government is failing them (me). The recent sovereign credit reduction was actually far too modest. Anyway, it is right that people should be upset and not want to pay.

                    Kanemaru Shin paid a mere 200,000 yen fine for his massive fraud -- tens of millions of dollars. Ozawa is likely going to get away with his indiscretions. Tanaka Kakuei was never punished prior to his death and 10 years after the initial trial. During the Recruit Scandal, ultimately, they were given tiny fines and released even though Take____a was a crook of epic proportions. The Mizuta family owns a private university in Chiba and Saitama (and more). How did the father who was born poor manage to end up with one of the finest ukiyo-e collections in Japan and be able to buy land and build universities? As the Minister of Finance, he had a defined income. The family even lives in Mizuta-cho in Tokyo! How did a simple man get all of this money?! Btw, many private universities are nothing more than money laundering! There are so many more cases -- I could go on and on as could any Japanese with half a brain. When the people see that the leaders are crooks and get away with it, they get fed up. I had to pay vastly more than Kanemaru Shin and had no idea I was doing anything "illegal." Cynically, I believe that the NTA waits in order to amass income from penalties and fines which are at the same level as the "sarakin" rates.
                    Last edited by Super Grover; 2011-02-12, 12:08 PM.

                    Comment


                    • I didn't want to come back to this thread by I have to vent. Today, yes Saturday, I got a visit from 2 city officials giving me a bill (a shockingly large one) for additional city tax. I will also get a Kenko Hoken bill but it has still to be calculated. I already pay about 700,000 a year for kenko hoken.

                      Maybe it was my fault but I was simply trying to save and have to pay tax etc on money I never received ( the investment eventually lost money). This really has soured Japan for me. Every other investment I have I will wait until I am retired to cash in I will then make sure I am outwith the jurisdiction of Japan and cash them in.

                      I really hope I don't post here again.

                      Comment


                      • Originally posted by Super Grover View Post
                        I base this on my firsthand experiences with them. They were polite, but not nice.
                        I will second this, also from first-hand experience.

                        Saying please and thank you and bowing deeply might make grandma think you are really "nice" but they were out for blood (and got a few pints) and certainly not nice.
                        Smiling courteously and saying "pardon me" as you stick the knife in does not make you nice.

                        Comment


                        • This tread brings some pretty scary news. Would I be correct in assessing that those who have been asked to explain their overseas income are in the higher tax brackets in Japan, say over 9million yen/year?

                          Comment


                          • Originally posted by skimpy View Post
                            This tread brings some pretty scary news. Would I be correct in assessing that those who have been asked to explain their overseas income are in the higher tax brackets in Japan, say over 9million yen/year?
                            No one has said and it is not a question for polite company, is it? The point is that they seem to be hunting. Second, -- and this is purely a hunch as I haven't enough evidence in terms of actual numbers -- they seem to be waiting to do a five-year audit versus an immediate audit so as to assess the maximum amount of fines/penalties.

                            Fwiw, from here, I have yet to find a way (still looking) to trade individual stocks on the TSE (Toronto) for a reasonable price. Still recovering from the body blows, but eventually will find out if or how money can be sheltered in order to try to recover from the year's losses.

                            It is biting irony that if we could have keep our money we'd ("we" means many of us) need no government assistance ever. Yet when it's taken, we could be forced to be at the trough. Ah well. Far better than being in Libya or Tunisia or Christchurch. We must enjoy the moment.

                            Comment


                            • Originally posted by Super Grover View Post
                              Fwiw, from here, I have yet to find a way (still looking) to trade individual stocks on the TSE (Toronto) for a reasonable price.
                              Sorry but I can't answer your question directly, except to say I would imagine there are numerous online brokers in Canada. New Zealand is a bit of a backwater, but it still has about 3 banks that offer direct online share trading (although one of them buys the shares into a trust that the bank controls, rather then you owning the shares personally - or through a Trust), and there are a couple of brokers where you can also trade online directly through them.

                              Link to one of the NZ banks that has a demo etc: https://www.asbsecurities.co.nz/

                              We can also use the Aussie brokers as well. They're in a bit of a price war at the moment - so very cheap. Saw one about a month ago offering A$10.00 trades.

                              However, I would think with all the anti-money laundering laws in force everywhere, you will probably have to be in Canada to personally open an account.

                              Comment


                              • As far as I am aware -- and not aware enough yet -- stocks traded from outside are subject to the world income rule and therefore attract extra tax (been there!!), whereas stocks traded here are treated more favorably by the NTA. As I have written, I am still recovering so haven't been able to get on this properly. Sometimes these posts are sort of my idle thoughts. Sorry.

                                Comment

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