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Be wary of your investments -- the TAXMAN is watching

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  • Originally posted by SantaKraut View Post
    How would the J. tax man ever find out that nanoripe has a house in a foreign country?
    How would they ever know he has tenant(s) in the house paying his mortgage?
    How would they know he has mortgage?
    If he makes less than 10,000,000 yen a year he doesn't have to declare his worldwide assets.
    Nanoripe just came to this country, he's got no assets here.
    The J. tax department knows very well that they can't get blood from a stone, if he's got nothing that they can take away from him in Japan, as in real estate, bank accounts, etc, they will do nothing.
    I suspect that the people who got audited do have (sizeable)assets in Japan, well paying jobs and perhaps savings in banks that can be seized which is why they became targets.
    Guys with lowly eikawa gigs have a lot less to worry about in my humble opinion.
    There is a formailzed agreement between Japan and a number of countries to share tax information. When we transfer money it is tracked. The very first question they asked me when they audited me was "Can you please tell us about ________?" It was an investment that they could only know about by having contacted the Canadian tax authorities. So one should not underestimate them.

    After some time, if they think there is something worth investigating, they certainly will. From what he described, he is not making any money, so tax would be minimal. Certainly in the immediate future he will be fine.

    As for the people who were audited, perhaps they HAD assets but, alas, they were forced to share them with this govt. whereupon they vanished into the ether or maybe continued to fund corrupt and/or inefficient practices.

    Comment


    • Originally posted by Super Grover View Post
      There is a formailzed agreement between Japan and a number of countries to share tax information. When we transfer money it is tracked. The very first question they asked me when they audited me was "Can you please tell us about ________?" It was an investment that they could only know about by having contacted the Canadian tax authorities. So one should not underestimate them.
      The above is absolutely correct.

      The new trend between some countries now is reciprocal tax debt collection agreements.

      Comment


      • Originally posted by Super Grover View Post
        There is a formailzed agreement between Japan and a number of countries to share tax information. When we transfer money it is tracked. The very first question they asked me when they audited me was "Can you please tell us about ________?" It was an investment that they could only know about by having contacted the Canadian tax authorities. So one should not underestimate them.

        After some time, if they think there is something worth investigating, they certainly will. From what he described, he is not making any money, so tax would be minimal. Certainly in the immediate future he will be fine.

        As for the people who were audited, perhaps they HAD assets but, alas, they were forced to share them with this govt. whereupon they vanished into the ether or maybe continued to fund corrupt and/or inefficient practices.
        Grover,

        If I were to have a rental property - i.e., an apartment in Vancouver - and to be renting it out, would I have to pay tax on any income for that here if I were in Japan for over 5 years?

        Also, if I'm a non-resident in Canada, I would no longer be considered a non-resident in Canada if I owned the rental property in Vancouver, would I? I would have to start paying taxes also in Canada.

        So essentially, one would be paying taxes here in Japan and back in Vancouver.

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        • Essentially by living in Japan you are giving the Japanese first shot on whatever taxes are due from all investments you make worldwide. And then in theory, The Cdn gov't is supposedly allowed to take whatever is left over. In theory as well, you are supposedly allowed to deduct the cost of paying Cdn taxes from your Japanese taxes. But, I don't see the Japanese gov't as being that magnaminious as they are a bunch of "let's get blood from a stone" types.

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          • Originally posted by edin日本 View Post
            Essentially by living in Japan you are giving the Japanese first shot on whatever taxes are due from all investments you make worldwide. And then in theory, The Cdn gov't is supposedly allowed to take whatever is left over. In theory as well, you are supposedly allowed to deduct the cost of paying Cdn taxes from your Japanese taxes. But, I don't see the Japanese gov't as being that magnaminious as they are a bunch of "let's get blood from a stone" types.
            Ed,

            Thanks. So the CDN Gov't. would observe / recognize the tax paid in Japan and so I wouldn't be responsible for paying twice once here and again in Canada - since I could deduct the cost of CDN taxes from what I pay here.

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            • Originally posted by mecafe1 View Post
              O'Hanlon, were you here in Japan when you sold the property 15 years ago? I am just trying to understand why something 15 years ago would matter unless you were already in Japan, still i thought the tax law extends 5 years back at most.
              I was here. It was the proceeds of the sale of my house (at a loss) and the interest it earned over the years that they back tracked. Yes they go back 5 years to an account, then they do a paper trail to see where the balance in that account came from came from. How it was generated

              "On the radar" means a remittance transfer over 1,000,000 yen or regular large transfers will trigger the NTA to look into why the money was being transferred out, or brought in. The intial form and inquiry seemed quite innocent. Why was this money transferred or imported? "No problem, I can explain."

              The intial explanation was they were just making sure, I wasn't laundering money. or a secret millionnalre hiding in Japan and not paying tax. Basically I was told as long as I could explain the reason, "I had nothing to worry about".

              Fortunately, I provided everthing they asked for over 6 months period. But, I was naive, they hammered me and informed two differnet city ward offices to collect the local tax amounts on top of their punishment fines and interest. Had I tried to cover up I have no doubt that it would have cost me more. Now I''m tagged and obediently bring the balances of all foreign accounts and pay tax.

              Comment


              • When they asked you:"Why was this money transferred or imported?" why wasn't your answer: None of your business!"?
                I don't understand why would anyone answer such a question.
                Once you pay taxes on your income what business is it of anyone what you do with your money?
                You are under no obligation to tell anyone what you do with it.
                If they are qurious/suspicious let them do their homework and try to find where the money is (provided you did the appropriate steps to shield yourself from prying eyes).
                Why be cooperative/honest/forthcoming/naive etc.?

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                • You're preaching to the choir SantaKraut.

                  When we send money we have to provide a reason, even a vague one.
                  Wouldn't be nice if the money we had after taxes was ours to use as we saw fit (within reason -- no grow op, child prostitution ring, etc.). In the real world, however, because there are crooks and because we do not stand up for what we believe in, it happens that governments insist on having another go at us. Some are more brutal than others.

                  ------------------
                  *** You are correct. You write, hypothetically, what if you are a NR of Canada. This means that CCRA has deemed you as such and you get NR-4 slips, etc. You have rental income, however, which is a tie to Canada. You probably have other ties.

                  If you earn income in Canada, of course you have to file/pay to CCRA. You may well find (I sure did) that the tax there is lower than it is here. You would be liable for additional taxation here (the difference between the two tax regimes) which is not a simple comparison and then the difference is calculated. Be careful to plan to show that the property is not generating a profit.

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                  • The purchase of a house will be the trigger for the National Tax Agency to send you a form (inquiry) asking you for information on how your purchased the house. The "inquiry" (o-tazune) carries no legal obligation for you to reply.

                    However, the sending of the inquiry is already an indication that the tax agency thinks something looks suspicious. So if you compound this by not returning the inquiry, you now look doubly suspicious, and instead of a friendly inquiry, you should now be preparing yourself for a fairly intrusive audit.

                    Comment


                    • Originally posted by SantaKraut View Post
                      ?
                      If he makes less than 10,000,000 yen a year he doesn't have to declare his worldwide assets.
                      Is this true? It would mean I unnecessarily declared and paid tax on my foreign investment account...

                      (As of this year I've figured out that I do qualify as a resident for tax purposes)

                      Comment


                      • Originally posted by Teacher101 View Post
                        Is this true? It would mean I unnecessarily declared and paid tax on my foreign investment account...

                        (As of this year I've figured out that I do qualify as a resident for tax purposes)
                        Assets and income are not the same thing. I believe the threshold is 20,000,000 income where you have to provide a detailed asset/liability report with your tax return. But whatever the threshold, you still have to declare the income from those assets...

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                        • I'd guess the majority of non-Japanese here have some sort of bank account abroad. I wonder how many of us declare all overseas accounts and pay tax on the interest earned? (Very few?)

                          If you do declare your foreign bank account and pay some tax, wouldnt that cause more problems? The J-tax folks could easily ask if youve paid enough tax, and if youve paid for all the time youve been here, and if you have any other accounts or pension funds etc.

                          It would be a real hassle if asked to prove everything about all accounts, getting papers from here and there for years back. Seems better to just keep quite about it unless you've left an electronic trail with transfers.

                          Comment


                          • Originally posted by minamon View Post
                            I'd guess the majority of non-Japanese here have some sort of bank account abroad. I wonder how many of us declare all overseas accounts and pay tax on the interest earned? (Very few?)

                            If you do declare your foreign bank account and pay some tax, wouldnt that cause more problems? The J-tax folks could easily ask if youve paid enough tax, and if youve paid for all the time youve been here, and if you have any other accounts or pension funds etc.

                            It would be a real hassle if asked to prove everything about all accounts, getting papers from here and there for years back. Seems better to just keep quite about it unless you've left an electronic trail with transfers.
                            Oh I hope everyone can be that lucky and not be found. As for the real hassle part above, yeah, it certainly was!

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                            • "Oh I hope everyone can be that lucky and not be found. As for the real hassle part above, yeah, it certainly was! "

                              It's a matter of luck (of being audited) if you have left an electronic trail.

                              If you haven't left a trail, then it's not luck. You've to decide if you want to declare everything, But I'm wondering if after declaring, instead of being thanked for it, you get more questions...

                              Comment


                              • Originally posted by SantaKraut View Post
                                When they asked you:"Why was this money transferred or imported?" why wasn't your answer: None of your business!"?
                                I don't understand why would anyone answer such a question.
                                Once you pay taxes on your income what business is it of anyone what you do with your money?
                                You are under no obligation to tell anyone what you do with it.
                                If they are qurious/suspicious let them do their homework and try to find where the money is (provided you did the appropriate steps to shield yourself from prying eyes).
                                Why be cooperative/honest/forthcoming/naive etc.?
                                Your questions reflect an attitude that would land you in deep trouble. Tax investigators give you the opporotunity to explain cash flow/income. You can adopt a ____y attitude, then you will see how much information they already have. The access to bank accounts in Japan; and the international aggreement with other tax authorities, banks to request your financial status on, the grounds that money transfer could be suspicious. Then, when they have done their homework and received all the answers you refused to answer, they finally select one of 3 categories to "punish" you. 1. Did not understand Japanese tax law. 2 . Did understand tax law and was late paying and 3. Deliberate tax avoidance and lied/refused to disclose assets/income to the investigator. Each has a different punishment scale and type 3 is serious. Tax owed over the years income that was generated, a penalty fine and then duplication of all their findings to city ward office local tax to let them take a second bite. Considering their attention to detail, I would not have liked to see the nasty side, or have them arrive at my home.
                                Last edited by O'Hanlon; 2011-05-30, 06:38 AM.

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