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Be wary of your investments -- the TAXMAN is watching

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  • #31
    Originally posted by Super Grover View Post
    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.
    I think they are watching for stock trading activity or any sort of transactions that result in funds going off shore. The trick is to get a moderate amount of funds offshore and into profitable funds, businesses or whathaveyou and keep it off their radar.

    Comment


    • #32
      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).
      I also had to fill out a form regarding my time in Japan. I think that if you have spent one day more than 5 years in the previous 10 years you are liable.


      As for money lost, I also lost money on an investment. It can only be used to offset profits of other, similar investments and only in the same year. Make a profit and they can go back 7 years (and that's financial years so at present any profit made in 2003 as the tax due was in 2004) make a loss and you can put it against investments profits only in the same year. It is really unfair.

      One other point, Japan taxes any profits made when you switch funds. In my case I didn't end an investment or repatriate the money. I switched from one fund to another due to advice from a well-known Tokyo based "financial advisor" company. Then the switched fund lost money. So in total I lost money, I lost out big time with the exchange rate and then I was taxed and fined.

      Comment


      • #33
        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.
        When the NTA first contacted me I did some research and found out I was screwed due to being ignorant about Japanese law. In a panic I asked to go and speak to the guy in charge of my case. Luckily he was busy and couldn't see me until the following week. During this time I was introduced to an accountant who told me to keep my appointment but sign/pay nothing. This accountant then dealt with everything. They when I was eventually audited the accountant successfully mitigated for me. The person who introduced us said that the accountant might be a little expensive but if he can save you some money then obviously it would be worth it.

        I really hope that you aren't going to the regional tax office by yourself.

        I can really relate to your Christmas comment as I thought I might be unable to buy Christmas presents for my kids this year

        Anyway, good luck.

        Comment


        • #34
          Originally posted by Morton View Post
          When the NTA first contacted me I did some research and found out I was screwed due to being ignorant about Japanese law. In a panic I asked to go and speak to the guy in charge of my case. Luckily he was busy and couldn't see me until the following week. During this time I was introduced to an accountant who told me to keep my appointment but sign/pay nothing. This accountant then dealt with everything. They when I was eventually audited the accountant successfully mitigated for me. The person who introduced us said that the accountant might be a little expensive but if he can save you some money then obviously it would be worth it.

          I really hope that you aren't going to the regional tax office by yourself.

          I can really relate to your Christmas comment as I thought I might be unable to buy Christmas presents for my kids this year

          Anyway, good luck.
          Thanks for your comments and feedback.

          I will go with a translator, she has handled all the demands. The tax investigator told her many times. "we don't see any problem, we just want to make sure he is not laundering money, or is a millionaire hiding in Japan." This put me into a false state of complacency. After I submitted the last bank statement, the truth came out. Salary plus overseas funds has put you in a high tax bracket. We will explain the tax laws to you. You have broken the law and will have to pay penalty fees and back tax. Fortunately I was honest, but still this whole incident makes saving for retirement a difficult task, since they will double tax you in Japan. You could say I have been given a kick up the a#s. The information at their disposal is scary.

          Comment


          • #35
            Can I clarify some things?

            1. Are overseas transfers as 'savings' (as I have been doing over the years) are affected or is it just (as was translated to me when filling in tax returns) income from stocks, bonds, and so on?

            2. Is it just the interest that is taxable? Surely not the total sum that accumulates as this has come from Japan and been taxed prior to arriving in the overseas bank. And in my case, where cash is in savings accounts where interest rates are fairly crap, is that going to be something tax office would be interested in, being relatively small?

            3. Would it be better (say if retiring in around 10 years) to send smaller transfers (around 500,000) per year, just to keep things rolling overseas, and hold the bulk here in Japan for a 'leaving day' transfer? Downside to this is I'd lose probably on exchange rates which are ace now, but might be crap in 10 years. Upside is to avoid tax office inquiries.

            4. Can you give an example of what kind of 'investment' income (i.e. interest rate on savings account) amounts would trigger tax office attention and demands for increased tax?

            Comment


            • #36
              Originally posted by edin日本 View Post
              I think they are watching for stock trading activity or any sort of transactions that result in funds going off shore. The trick is to get a moderate amount of funds offshore and into profitable funds, businesses or whathaveyou and keep it off their radar.
              When you figure out this trick, please let me know!
              They are absolutely monitoring money moving out of Japan. A friend recommended buying t/c to coincide with travel back. I may try that.

              Comment


              • #37
                Originally posted by Keeptrying View Post
                Can I clarify some things?

                1. Are overseas transfers as 'savings' (as I have been doing over the years) are affected or is it just (as was translated to me when filling in tax returns) income from stocks, bonds, and so on?

                2. Is it just the interest that is taxable? Surely not the total sum that accumulates as this has come from Japan and been taxed prior to arriving in the overseas bank. And in my case, where cash is in savings accounts where interest rates are fairly crap, is that going to be something tax office would be interested in, being relatively small?

                3. Would it be better (say if retiring in around 10 years) to send smaller transfers (around 500,000) per year, just to keep things rolling overseas, and hold the bulk here in Japan for a 'leaving day' transfer? Downside to this is I'd lose probably on exchange rates which are ace now, but might be crap in 10 years. Upside is to avoid tax office inquiries.

                4. Can you give an example of what kind of 'investment' income (i.e. interest rate on savings account) amounts would trigger tax office attention and demands for increased tax?
                1. You can name the transfer however you want, though "purchase of nuclear equpt" might not be a good idea.

                1&2 ALL interest income or other income generated from trades, sales, gifts, rental income

                3. I do not know. I think if any one of us plans to keep a large reserve here and then move it, we should go to a qualified professional well in advance first. From what I have been told recently, frequent transfers put a person on the radar. I am wondering what to do myself.
                4. See my #2.

                Comment


                • #38
                  IRS & NTA share your data

                  As an aside here - since I don't know your nationalities - but the US and Japan tax authorities are joined at the hip and share information freely. In fact, by law (US) - any bank that has a branch office in the US must report all overseas transactions (deposits, withdrawals, transfers) over US $3,000 and balances for all US citizens. So if you are paying that much in rent each month, or have a big credit card purchase, etc. - the Japanese banks report this to the IRS. In return of course, the IRS will tell the NTA anything they ask for.

                  Not knowing the tax laws - fine, just pay the penalty when audited - but I would be very careful of timing funds transfers, or disguising them in order to shirk taxes - because both sides are watching and talking. Better to pay your taxes up front.

                  Comment


                  • #39
                    Originally posted by Keeptrying View Post
                    Can I clarify some things?

                    1. Are overseas transfers as 'savings' (as I have been doing over the years) are affected or is it just (as was translated to me when filling in tax returns) income from stocks, bonds, and so on?

                    2. Is it just the interest that is taxable? Surely not the total sum that accumulates as this has come from Japan and been taxed prior to arriving in the overseas bank. And in my case, where cash is in savings accounts where interest rates are fairly crap, is that going to be something tax office would be interested in, being relatively small?

                    3. Would it be better (say if retiring in around 10 years) to send smaller transfers (around 500,000) per year, just to keep things rolling overseas, and hold the bulk here in Japan for a 'leaving day' transfer? Downside to this is I'd lose probably on exchange rates which are ace now, but might be crap in 10 years. Upside is to avoid tax office inquiries.

                    4. Can you give an example of what kind of 'investment' income (i.e. interest rate on savings account) amounts would trigger tax office attention and demands for increased tax?
                    I can't answer all your questions. I had been saving overseas and clicking the "savings option" on Citibank transfers
                    I have been doing so for almost 10 years without any inquiry from the regional tax office. I brought money in to buy an old house and also to pay for school fees. This triggered a q'aire from the tax dept, which developed into a polite but deliberate 6 months paper trail. I will find out the details tomorrow. Big single transfers seem to trigger audits. They told me to bring an incan, but maybe I should be asking a tax accountant to review and advise to reduce getting battered.

                    Comment


                    • #40
                      Originally posted by TJrandom View Post
                      As an aside here - since I don't know your nationalities - but the US and Japan tax authorities are joined at the hip and share information freely. In fact, by law (US) - any bank that has a branch office in the US must report all overseas transactions (deposits, withdrawals, transfers) over US $3,000 and balances for all US citizens. So if you are paying that much in rent each month, or have a big credit card purchase, etc. - the Japanese banks report this to the IRS. In return of course, the IRS will tell the NTA anything they ask for.

                      Not knowing the tax laws - fine, just pay the penalty when audited - but I would be very careful of timing funds transfers, or disguising them in order to shirk taxes - because both sides are watching and talking. Better to pay your taxes up front.
                      I am afraid I must disagree here, though Americans may view things differently. TJR, foreigners are getting nailed. The tax rate and penalties are obscene. Sarakin is regulated and viewed as a dirty aspect of Japan, yet the NTA is getting away with over 19% in late fees and "penalty" in addition to pushing people who most likey have no possibility of being able to continue on working for 25 years to collect retirement and social insurance payments (not easy to just get these transferred to another country) into a higher bracket with a view to taxing the sh!t out of them. The tax treaty that is meant in spirit is NOT applied very fairly here on investment income. AND, what is investment income and taxed differently here AND in other countries, is viewed as salary by Japanese if it is outside of Japan, so taxed more.

                      I say do whatever you can that won't harm you in order to avoid taxes. People work hard, why should they pay a huge percentage to a govt. which is bloated and incompetent!

                      The recent drop of 5% in the corporate tax rate is a bad joke! We are headed for serious, serious trouble and the average Japanese person has no idea of what's coming.
                      I could rant more, but I will spare everyone.

                      Comment


                      • #41
                        Originally posted by Super Grover View Post
                        ...The recent drop of 5% in the corporate tax rate is a bad joke! ....
                        International competiveness is of course important to the health of Japan’s economy – and at a 40% rate, now lowered to 35%, Japan is still high. So where else are the taxes to come from, if not from individuals.

                        Of course I agree that taxes should be fairly levied. More beneficial of course would be more efficient use of the taxes that are collected. But by all means the law needs to be followed – for you put yourself at greater risk in not doing so.

                        From Wiki………

                        • Australia: 30%, however some specialized entities are taxed at lower rates
                        • Canada: Federal 11% or 18% plus provincial 1% to 16%. Note: the rates are additive
                        • Hong Kong: 16.5%
                        • Ireland: 12.5% on trading (business) income, and 25% on nontrading income
                        • New Zealand: 30%
                        • Singapore: 17% from 2010, however a partial exemption scheme may apply to new companies.
                        • United Kingdom: 21% to 28% for 2008–2010
                        • United States: Federal 15% to 35% States: 0% to 10%, deductible in computing Federal taxable income. Some cities: up to 9%, deductible in computing Federal taxable income. The Federal Alternative Minimum Tax of 20% is imposed on regular taxable income with adjustments.

                        http://en.wikipedia.org/wiki/Corpora...rate_tax_rates

                        Comment


                        • #42
                          Originally posted by O'Hanlon View Post
                          Thanks for your comments and feedback.

                          I will go with a translator, she has handled all the demands. The tax investigator told her many times. "we don't see any problem, we just want to make sure he is not laundering money, or is a millionaire hiding in Japan." This put me into a false state of complacency. After I submitted the last bank statement, the truth came out. Salary plus overseas funds has put you in a high tax bracket. We will explain the tax laws to you. You have broken the law and will have to pay penalty fees and back tax. Fortunately I was honest, but still this whole incident makes saving for retirement a difficult task, since they will double tax you in Japan. You could say I have been given a kick up the a#s. The information at their disposal is scary.
                          When I went the first time to the NTA my new accountant hadn't officially accepted me as a client but was only advising me through a third party. I told the tax office that I had been advised by a "pro" not to sign, hanko or pay anything. The tax official then told me that the only people the tax office would deal with were me, any close relatives (providing photo ID) and a qualified accountant. Friends, translators, financial advisors etc would not be allowed.

                          Comment


                          • #43
                            Originally posted by Super Grover View Post
                            When you figure out this trick, please let me know!
                            They are absolutely monitoring money moving out of Japan. A friend recommended buying t/c to coincide with travel back. I may try that.
                            As I wrote before they knew, better than I did, how much interest I'd received. They also were aware that I hadn't bought or sold any stocks and that I didn't own any property in my home country. They told me they knew this and luckily for me I don't own any stocks or property.

                            Someone also mentioned that he uses t/c but surely when you purchase them your details are given to the bank.

                            Comment


                            • #44
                              Originally posted by TJrandom View Post
                              International competiveness is of course important to the health of Japan’s economy – and at a 40% rate, now lowered to 35%, Japan is still high. So where else are the taxes to come from, if not from individuals.

                              Of course I agree that taxes should be fairly levied. More beneficial of course would be more efficient use of the taxes that are collected. But by all means the law needs to be followed – for you put yourself at greater risk in not doing so.

                              From Wiki………

                              • Australia: 30%, however some specialized entities are taxed at lower rates
                              • Canada: Federal 11% or 18% plus provincial 1% to 16%. Note: the rates are additive
                              • Hong Kong: 16.5%
                              • Ireland: 12.5% on trading (business) income, and 25% on nontrading income
                              • New Zealand: 30%
                              • Singapore: 17% from 2010, however a partial exemption scheme may apply to new companies.
                              • United Kingdom: 21% to 28% for 2008–2010
                              • United States: Federal 15% to 35% States: 0% to 10%, deductible in computing Federal taxable income. Some cities: up to 9%, deductible in computing Federal taxable income. The Federal Alternative Minimum Tax of 20% is imposed on regular taxable income with adjustments.

                              http://en.wikipedia.org/wiki/Corpora...rate_tax_rates
                              Of course the system of taxation is complex so Wiki is just a rough sketch. Better comparisons can be found on the pages of reputable multinational tax firms (reputable means they know the laws, not necessarily pure as the driven snow).

                              Jinsei calls everyone a LIBERAL who doesn't share far right ideology, but where taxation is concerned I am not liberal or at least do not believe that current taxation here serves us well. The tax rates should be lowered across the board for everyone and the consumption tax raised to about 8%. You give people money and they will spend it, and surely they should be able to do that, as it is THEIR money. In other words, the govts. will get back enough tax revenues. When taxes are raised, people stop spending. It's fact.

                              Too many people just say, "Well where is the money going to come from? We have to tax you more. Sorry, it can't be helped." I do not buy this at all. We can do without for a while. Economize on construction, no new office furniture, reduce perks. Hang in there with some imperfections, institute a freeze on salaries, punish stuff like taxi chit b.s. severely, (3 major reasons we are where we are is due to inefficiency in govt., overstaffing and corruption). We truly should revolt because, as we all know, the above is not going to change. It hasn't in my 2 decades (+/-) here.

                              So if the J. are not going to revolt, then we others should at least fend for ourselves.

                              Comment


                              • #45
                                Originally posted by Super Grover View Post
                                I am afraid I must disagree here, though Americans may view things differently. TJR, foreigners are getting nailed. The tax rate and penalties are obscene. Sarakin is regulated and viewed as a dirty aspect of Japan, yet the NTA is getting away with over 19% in late fees and "penalty" in addition to pushing people who most likey have no possibility of being able to continue on working for 25 years to collect retirement and social insurance payments (not easy to just get these transferred to another country) into a higher bracket with a view to taxing the sh!t out of them. The tax treaty that is meant in spirit is NOT applied very fairly here on investment income. AND, what is investment income and taxed differently here AND in other countries, is viewed as salary by Japanese if it is outside of Japan, so taxed more.

                                I say do whatever you can that won't harm you in order to avoid taxes. People work hard, why should they pay a huge percentage to a govt. which is bloated and incompetent!

                                The recent drop of 5% in the corporate tax rate is a bad joke! We are headed for serious, serious trouble and the average Japanese person has no idea of what's coming.
                                I could rant more, but I will spare everyone.
                                I have the same concerns regarding retirement and the impending depression that will hit Japan as Chinese, India, Korean products start competing with Japanese goods. The immigration dept has toyed in the press with future immigration plans to increase the foreign workforce. The problem is, these new workers will be sourced from developing countries and paid low wages to make manufacturing competitive.

                                I cannot see how big corporations can survive and rural villages sustain their workforce and local taxes. There is already speculation that Chinese, Vietnamese workers are working in parts manufacturers. Very difficult for long-haul foreigners with families to plan ahead, so that they will have money to retire on.

                                Comment

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