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Be wary of your investments -- the TAXMAN is watching

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  • #16
    Originally posted by Morton View Post
    Well, I just got audited and luckily I decided to hire a new and very good accountant and he saved me a fortune.

    One of the taxmen who came was an international tax specialist and he came loaded with information about me. He knew about my bank accounts and the amount of interest I had been paid in the last 5 years. I have been warned not to lie and luckily I didn't. I think if I had been caught lying they would have been much tougher with me.

    My tax problem started less than a month ago and at that time I posted asking whether or not the NTA would contact my bank. Well they did and my my bank told them and this all happened in a very short space of time.

    Make no mistake about it they are coming for us and they can and will easily get information about us. I was more ignorant than deceptive but I will never mess with the NTA again.

    How?
    The rules are rules. They pretty much know what they are going to get from you or they wouldn't bother with the audit.

    Comment


    • #17
      Originally posted by Super Grover View Post
      How?
      The rules are rules. They pretty much know what they are going to get from you or they wouldn't bother with the audit.
      I'm not sure of your question but I was audited (and only over the last 3 years income) because I'm self-employed. The business aspect of the audit I past with flying colors, there was no amendments there. It was my overseas accounts that caused me a ____load of trouble. I don't want to go into too many specifics but my accountant argued about dates, exchange rates, interest rates (in my home country), my ignorance, fairness and other technical stuff I didn't understand. Where there was no concrete figures/rates/details my accountant argued for and I got most of the benefit of the doubt. One example is the exchange rate used. As some dates couldn't be verified the exchange rate they agreed as oppossed to the worst scenario exchanged rate saved me a substantial amount. I was still fined and charged around 15% interest. My resident tax, kenko hoken and various other things will also be retrospectively amended and increased. If the NTA had wanted to be evil/unfair they could have. They had all the power here.

      Basically I felt the NTA were very fair and they gave me/my accountant the benefit of any doubt but they let it be known, politely but clearly, not to let it happen again and it won't.
      Last edited by Morton; 2010-12-14, 04:36 AM.

      Comment


      • #18
        Originally posted by NorthByNorthwest View Post
        Without divulging any unnecessary personal details, do you mind telling us what triggered it? For example, were you also in some decidedly high tax bracket as well or were you making sizable deductions on your tax returns?

        Nervous guys like me want to know ...
        What triggered it for me was I actually made a loss on an investment and repatriated the money to Japan. Despite making a loss the NTA wanted to know where the original money came from. Although it was from legitimate savings they wanted to see the paper trail which led to an account in my native country. This led to other accounts which led to a month of stress and weight-loss.

        The NTA came with a record of every remittance that I'd sent from Japan to my home country over the last so many years. As I wrote before one of the guys who came was an International Tax specialist from a relatively newly formed section of the NTA. My accountant hadn't even heard about this section until the audit. I live in a rural prefecture and the International Tax guy came from its biggest city. Even so, such a small, rural prefecture having such a guy is quite sobering. Basically he said that they know that foreigners (and many Japanese) do have overseas accounts (as well as stocks, rental property etc) and tax should be paid on this and the remitt of this new section is to ensure tax is paid. Even without sending money back to Japan they would have eventually audited me as I've been here over 5 years. They're basically going through a list of permanent residents slowly but surely.

        As for my income it's not super high and my deductions are sadly pretty low it was basically just my time. Luckily for me I am self-employed so I file a tax return every year. This limited them to 3 years with me. If you are a regualr company employee they will go back 5 years. My tax returns are also done professionally every year and this also seemed to help with the audit.

        My advice would be to be safe rather than sorry and slowly but surely start to be more honest with your disclosures.

        Comment


        • #19
          Originally posted by Super Grover View Post
          Somewhat large amounts sent will trigger a report to the agency. Frequent transfers will also trigger a report.


          What is large, and what is frequent?

          Comment


          • #20
            Originally posted by Morton View Post
            I'm not sure of your question but I was audited (and only over the last 3 years income) because I'm self-employed. The business aspect of the audit I past with flying colors, there was no amendments there. It was my overseas accounts that caused me a ____load of trouble. I don't want to go into too many specifics but my accountant argued about dates, exchange rates, interest rates (in my home country), my ignorance, fairness and other technical stuff I didn't understand. Where there was no concrete figures/rates/details my accountant argued for and I got most of the benefit of the doubt. One example is the exchange rate used. As some dates couldn't be verified the exchange rate they agreed as oppossed to the worst scenario exchanged rate saved me a substantial amount. I was still fined and charged around 15% interest. My resident tax, kenko hoken and various other things will also be retrospectively amended and increased. If the NTA had wanted to be evil/unfair they could have. They had all the power here.

            Basically I felt the NTA were very fair and they gave me/my accountant the benefit of any doubt but they let it be known, politely but clearly, not to let it happen again and it won't.
            I see. When calculating the exchange rate, they use a monthly average, so your accountant argued for lower rates.
            In my friend's case, they were not particularly polite. He was basically advised to return. They informed him that they would audit him next year.
            From the various stories coming in, it seems that foreigners are being targeted. Definitely there must an initiative to go out there and collect every yen. I think they will drive people out.
            With taxes set to go up on certain investments here, with the combined taxes getting close to 50% of total income, I think people who can will be thinking about leaving. We will be gone pretty much the day after my wife can retire.

            Comment


            • #21
              What about funds being sent offshore to places like the Channel Islands, the Cayman's or other places where the banks aren't so cooperative?

              Comment


              • #22
                Originally posted by Keeptrying View Post
                What is large, and what is frequent?
                In my friend's case 4-5 transfers per year. 500K to 1000K over 5 years. Added: So 4000K, more or less per year.

                We were asked about 2 transfers in the past 2 yrs. They were over 3000K. In one case we had to provide a letter and proof of what the transfer was for. We satisfied that request as no further requests came from the NTA ----- until last week. They want to revisit this. There is nothing for us to hide as what we said it was for (land) has not changed. But what we get from this is they just get to come back and say, "Hey, how's that land? Built anything on it? Renting it for vegetable farming? Meth op?"

                Different people seem to have a different story about this. I will do my best to find out. I think things have changed.
                Last edited by Super Grover; 2010-12-14, 11:21 AM.

                Comment


                • #23
                  Originally posted by edin日本 View Post
                  What about funds being sent offshore to places like the Channel Islands, the Cayman's or other places where the banks aren't so cooperative?
                  RIGHT NOW, the NTA is in the process of making a new deal with the Caymans so that they can track funds there.
                  Guernsey/Jersey -- how will you get any significant amount of money there without leaving a trail?

                  What I want to know is how/whether I can trade iShares and otc Canadian shares (others, too) here cheaply.
                  Last edited by Super Grover; 2010-12-14, 11:22 AM. Reason: clarify

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                  • #24
                    If you send money home, say it is for paying tax on income earned in Japan.... bwahahaha....

                    Comment


                    • #25
                      The stress of the last few weeks was really bad. I just wanted it finished and if I'd dealt with the NTA myself I would have signed anything just to get it overwith. My adivce to anyone in this situation is to shell out for professional help. I think there is a mutual respect between the NTA and accountants and that will be helpful for you.

                      I've also heard that in cases of simple ignorance the NTA are willing to bend if you are straight with them. It seems that for the sake of a speedy resolution the NTA will go someway to meet you in the middle with a compromise. Again though the way to reach a compromise in Japan is probably best left to the Japanese themselves. Really get a competent Japanese accountant.

                      I feel clean now almost as if I've just been to confession and I pity anyone who has to undergo this process in the future.

                      Comment


                      • #26
                        Tax dept investigations of foreigners

                        The above comments on tax dept investigation are acurate You can add me to the list of victims. I sent money overseas as a retirement fund/education savings fund. Since I was taxed on my income and taxed by the Australian goverment, I thought I was OK. Surely Japan wouldn't tax my interest on my taxed income. Wrong... they would.

                        The tax dept demanded all transactions and income statements from my employer for the past 6 years and invoices of share portfolios as far back as 2003. I thought honesty was the best policy and provided all the necessary information from overseas banks , investment companies, employer, etc. I have been requested attend the regional tax office on Friday and will be asked to pay 1,000,000 yen. Yes that's right one million.

                        So I tried to save for my retirement and kids education and will be taxed twice. Not the news I need before Christmas.

                        Be careful, the more information you volunteer the harder they will hit you. Gaijin seem to be the new target to increase taxation. The tax dept has access to outgoing and incoming funds. You have been warned.

                        Comment


                        • #27
                          The lesson here is to get out of Japan in 3 years.

                          If you want to stay in Japan for longer, you need to chill in your country for 12 months and then come back. There is point to stay here longer and have to go through such bs.

                          Comment


                          • #28
                            So, when am I considered a resident so they can tax my foreign income? And when I pass that threshold, do they then backtax me for the entire time? I lived here previously for 3 years and moved back to the States for 3 years. Now I've been back again for just over 2 years this time.

                            Like I said, I haven't sold any investments in these past 2 years except for a couple of loser stocks, so what should I be reporting to be honest with the NTA?

                            I haven't transferred any money into any investment accounts. However, I sent one big transfer of 1,000,000yen to a US bank account to pay off an emergency medical bill that happened during a trip to the States. The paper trail on that should be pretty self-explanatory (in fact I'm planning on claiming medical expenses on the next tax return).

                            Comment


                            • #29
                              Originally posted by O'Hanlon View Post
                              The above comments on tax dept investigation are acurate You can add me to the list of victims. I sent money overseas as a retirement fund/education savings fund. Since I was taxed on my income and taxed by the Australian goverment, I thought I was OK. Surely Japan wouldn't tax my interest on my taxed income. Wrong... they would.

                              The tax dept demanded all transactions and income statements from my employer for the past 6 years and invoices of share portfolios as far back as 2003. I thought honesty was the best policy and provided all the necessary information from overseas banks , investment companies, employer, etc. I have been requested attend the regional tax office on Friday and will be asked to pay 1,000,000 yen. Yes that's right one million.

                              So I tried to save for my retirement and kids education and will be taxed twice. Not the news I need before Christmas.

                              Be careful, the more information you volunteer the harder they will hit you. Gaijin seem to be the new target to increase taxation. The tax dept has access to outgoing and incoming funds. You have been warned.

                              In the case I referred to above it is well above 1,000,000. Wouldn't it be nice if one just could not "volunteer" information. One is compelled to supply them wiht what they ask for or risk serious penalties.

                              Nightwalker is right.

                              Morton, you feel clean?! I would feel raped. I suppose it is just a matter of time until it is my turn. I think it would be worth it to physically go to a bank and withdraw and move the money and then redeposit elsewhere. When one goes across borders in Europe, is there a passport stamp for each time in and out?

                              Comment


                              • #30
                                Originally posted by Teacher101 View Post
                                So, when am I considered a resident so they can tax my foreign income? And when I pass that threshold, do they then backtax me for the entire time? I lived here previously for 3 years and moved back to the States for 3 years. Now I've been back again for just over 2 years this time.

                                Like I said, I haven't sold any investments in these past 2 years except for a couple of loser stocks, so what should I be reporting to be honest with the NTA?

                                I haven't transferred any money into any investment accounts. However, I sent one big transfer of 1,000,000yen to a US bank account to pay off an emergency medical bill that happened during a trip to the States. The paper trail on that should be pretty self-explanatory (in fact I'm planning on claiming medical expenses on the next tax return).
                                then no worries. but if you were to have adequate (to them) income-earning activities and you passed the threshold, then, yes, you'd be taxed for monies "owing."

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