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Be wary of your investments -- the TAXMAN is watching

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  • Supergover,

    Do you have "Non-Resident" status in Canada that would make you exempt as far as paying Canadian taxes and receiving provincial health care, etc.? (my guess is that you do have "residency" status if you have savings and investments back in Canada (primary ties).

    Also, do you and your friends have Permanent Residency in Japan? Maybe that's a factor. The Japanese government might only be looking into those who have P.R. status here.

    Anyways, I'm surprised to hear about this. It would seem to me that the Japanese government would have bigger fish to fry instead of investigating lowly college gaijin EFL teachers.
    Last edited by Shimokitazawa; 2012-09-17, 04:07 AM.

    Comment


    • Originally posted by Super Grover View Post
      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 terms of amounts being sent, I don't know if you are talking about $500, 000 - $1, 000, 000 or Yen.

      Are you saying you sent over $3 Million in savings?

      If so, I would expect that to raise flags.

      *I'm just going back now and re-reading this thread due to my own personal circumstances and need to be more aware of what I need to do. But I'm nowhere near sending home that kind of money!

      Comment


      • Originally posted by Nightwalker View Post
        If you live in Japan for less than 5 years, you are classified as a non-permanent resident. Therefore, your oversea income is safe unless you bring it into Japan.
        Okay. If this is true, then could one quit their job a the 4 1/2 year mark and then head over to live and work in Korea or China or the M.E. (I'm an TEFL teacher) and come back to Japan again in the future?

        But then how long would one have to stay out of Japan in order to avoid paying taxes on their overseas savings and investments?

        I've only read the first 5 pages of this thread and it's getting me nervous!

        By the way - the acronyms are confusing:

        NTA - ?

        T/C - ?

        O/S - ?

        Comment


        • Originally posted by Shimokitazawa View Post
          Okay. If this is true, then could one quit their job a the 4 1/2 year mark and then head over to live and work in Korea or China or the M.E. (I'm an TEFL teacher) and come back to Japan again in the future?

          But then how long would one have to stay out of Japan in order to avoid paying taxes on their overseas savings and investments?

          ...
          I believe the test is 5 years out of the most recent 10 year period - so you would need to stay away quite a while.

          Comment


          • Originally posted by TJrandom View Post
            I believe the test is 5 years out of the most recent 10 year period - so you would need to stay away quite a while.
            Right. So I'd leave after my contract finishes in 2013 and maybe head to Korea. So if anyone has any idea how long one would have to be out of Japan to turn the clock back to zero, it'd be nice to know.

            I'm only on page 7 of this whopping thread. Lots of useful, but at times conflicting and vague, information presented.

            Comment


            • Originally posted by Shimokitazawa View Post
              Right. So I'd leave after my contract finishes in 2013 and maybe head to Korea. So if anyone has any idea how long one would have to be out of Japan to turn the clock back to zero, it'd be nice to know.

              ....
              So do the math... If you have been here 4.5 years, and stay away for 5 years - then you can come back without your current stay having any effect. But if you stayed away for just 6 months - then at the end of the first year after your return, you would be affected. (4 years from your current stay, plus 1 yesr of your future stay would total to 5 years within the most recent 10.)

              Comment


              • Originally posted by Shimokitazawa View Post
                Right. So I'd leave after my contract finishes in 2013 and maybe head to Korea. So if anyone has any idea how long one would have to be out of Japan to turn the clock back to zero, it'd be nice to know.

                I'm only on page 7 of this whopping thread. Lots of useful, but at times conflicting and vague, information presented.
                If you have been here for 4 and a half years and had not lived here previously, then this means you have been here for 4 and a half years out of the last 10. If you stay away for 5 years in Korea or elsewhere then you will still have stayed in Japan for 4 and a half years in the last 10. So, basically if you stay outside of Japan for 5 years then it will reset.

                Comment


                • I have a couple of questions which I don't think have been addressed so far:

                  1. Does this tax only apply to income from savings generated in Japan or does it also apply to savings accumulated before moving here. I can see some justice in the former but none in the latter.

                  2. There was some talk of gifts and inheritances. Again, if these gifts or inheritances have no connection with Japan is the income they generate taxable?

                  Apologies if these questions have already been addressed and thanks ....

                  Comment


                  • Originally posted by shamar View Post
                    If you have been here for 4 and a half years and had not lived here previously, then this means you have been here for 4 and a half years out of the last 10. If you stay away for 5 years in Korea or elsewhere then you will still have stayed in Japan for 4 and a half years in the last 10. So, basically if you stay outside of Japan for 5 years then it will reset.
                    Yeah, I see. The "within 10 years" hadn't sunk in. So: 5 years in Japan and then 5 years spent out of Japan in order to re-set the clock back to zero.

                    Doesn't really seem practical for various reasons.

                    So the conclusion is to report all earnings then after 5 years in Japan. Or suffer the consequences if you're audited.

                    Comment


                    • Originally posted by Brown Cow View Post
                      1. Does this tax only apply to income from savings generated in Japan or does it also apply to savings accumulated before moving here. I can see some justice in the former but none in the latter.

                      2. There was some talk of gifts and inheritances. Again, if these gifts or inheritances have no connection with Japan is the income they generate taxable?
                      I believe that if you are classified as resident, then taxes are on ALL income worldwide, during the tax year concerned. The j-taxmen dont care where/when/how you earned the original funds (so taxable income would include interest on savings or gifts which have no connection with Japan :-(

                      What seems a bit mean is that the j-tax office is going after very ordinary people who naturally might have a bank account in their home countries and who are not wealthy. Also they should know that many/most non-Japanese working here will get little or no pension in japan (i.e., even if we pay into J-pension fund for 25 years, we wont be like the average Japanese salaryman who has paid for 35 years and will get a big taishokukin lump sum on retirement.) And they should know we will probably get no pension in home country either.

                      I feel I may be audited because after quitting my ordinary IT job a few years ago (around 7 million income after tax) I now sometimes earn more than double that, (due to working hard :-), NOT due to any investments, which have mostly gone south :-(. However, after reading all this tread I think my offshore stuff is safe, because I have no electronic trail in the last 3 years. And I believe the j-tax office wont go fishing to every offshore jurisdiction, without a reason.

                      I'm checking with home country tax office to see what info they have on me (since there is a small possibility the J-tax office could send them a request). However, I think my home country tax office have nothing to tell them, since non-residents there are not taxed and I havent worked their in many years.

                      (Looking at this thread, it seems unfair that guys who ACTUALLY PAID tax in their home countries (US, OZ, UK, etc) are being shook down for MORE tax by j-tax office, just because they were unlucky to have made a transfer in the last few years, and their home country tax offices provided the info on them.) It's like the j-tax office is bullying the little guys. But of course they wont touch the amakudari big fish in this country because of course that's all legal.)

                      Comment


                      • Don't fall for sneak attacks by auditors from the National Tax Agency

                        Amy Chavez actually writes something insightful & useful for the JapanTimes - recently, more so - and certainly more useful than that whiny spiteful Debit Arnoldo joker...

                        ===> http://www.japantimes.co.jp/text/fl20120915cz.html


                        JAPANTIMES: JAPAN LITE

                        Bone up on your tax audit ninjutsu to fight back

                        By AMY CHAVEZ


                        Our island of 602 people has a PA system that is used to make important public announcements. While these announcements usually concern typhoon warnings, ferry cancellations and funeral announcements, the PA system is not limited to these. Temple ceremonies are announced too, such as Buddha's birthday and the anniversary of his passing into Nirvana.

                        But last week for the first time ever, I heard a very unusual announcement.

                        "Shiraishi Island residents, may I have your attention please. Two men in suits are driving around the island in a car and knocking on doors. We consider this shady activity. Know your rights as a citizen and do not let them inside your house."

                        Indeed, a suspicious gray car had been driving around the island all day. Being that our island only has one road 6 km long, most people who do drive it do so quickly because they know exactly where they are going \ straight! But this car crept along very slowly looking like a large, elderly, gray bug.

                        By now, the entire island was in a panic. Many had already let the men in black suits inside after which the men carried away important documents. "Nothing like this has ever happened on this island before," said one of the long-time business owners on the beach.

                        Unfortunately, by the time I heard the announcement, I had let the men into my house, too. They arrived at my door and, like police officers, flipped open official-looking certificates showing that they were from the tax office. I then asked for their business cards, which they gave me. One man was from the city tax office and the other was from the prefectural tax office.

                        "We're here to do a tax audit for the years 2009 to 2011," they announced.

                        I invited them inside and they sat down on the sofa. After all, I have nothing to hide. I pay my taxes every year and abide by the tax laws. The only reason they should be here at all is to return some of the money they've grazed from my salary and used to fund dubious projects involving concrete. One thing I was sure of was that there was no way in hell I could owe any taxes.

                        "Can we take off our jackets?" they asked. I thought this was a very dumb question (do I look like their mother?), but I said yes.

                        They told me to explain my job, so I did, briefly. I also produced three files, one for each tax year in question. These files had my tax statements and supporting documentation inside.

                        They picked up one of the sheets of paper labeled "other income" that had itemized amounts I had been paid for book royalties and writing projects. May we take a copy of this receipt? They asked. "Sure, but it's already accounted for on my tax return," I said. At this point I was getting suspicious. Why were they always asking me questions? And how in the heck were they going to copy this piece of paper?

                        "I have a portable copier!" said the man and he went outside to retrieve it from the elderly gray bug. Who knows what else was inside that car. Perhaps a portable jail cell?

                        The man came back into the house, struggling with a cumbersome \ but, um, portable \ copy machine. "Can I borrow your electrical outlet?" he asked. Do you think I can write off his electricity usage on my taxes for this year?

                        A few minutes later I got a phone call from another islander. "I heard that the men are inside your house right now. Tell them to leave immediately. I'm very serious."

                        I told the men that something had suddenly come up and that I needed to go attend to it. The men said OK, finished their copying and started to leave.

                        "This is all very strange," I told them in my concluding comments. "I would think you'd make an appointment before you came." They agreed that they should make an appointment, so they did. They would come again next Thursday.

                        That night there was an emergency meeting at the local bar for all the business owners on the island.

                        Someone had acted swiftly and called in representatives from the local Small Business Association. In this informal meeting they taught us about our rights concerning the tax office. "They are not allowed inside your house. Nor can they take anything out of your house or copy any documents," they said. "Unless they get your permission, of course."

                        We all groaned as we realized that what we had mistaken for politeness was really a clever prying into our affairs. When the tax man says, "May we take off our jackets?" or "May we take a copy of this?" he is asking for permission because he must have it in order to perform that action. If you say no, he cannot legally carry out the action at that time.

                        The Small Business Association explained that this type of tax investigation is called "nin'i chosa," and while we have to cooperate with the tax men, it is to be done at our convenience, not theirs.

                        They cannot just show up at your door and expect you to drop everything to answer their questions. The reason they do this is to try to catch you off-guard. They will try to deceive you, or coerce you into saying something you shouldn't. They will try to surprise you with questions and demand point-blank answers. But you have the right to take time to think about the answers or consult someone if necessary.

                        And starting in 2013, new laws will come into effect so that the tax men will have to present a paper in advance informing you of why you are being audited and what will be covered in it along with the date of the audit.

                        The men from the Small Business Association then passed out booklets that explained exactly what the tax men can and cannot do. It lists all your legal rights (with drawings!), everything from your right to privacy to your right to refuse people entry into your home.

                        Until then, they said, every time the tax man asks for permission to do something, ask them why they need to do it. If you feel they are violating your rights, you may tell them to stop the audit at that moment and reschedule to finish it at a later date. You have the right to stop the audit process if you feel overwhelmed or if you don't know the proper answers.

                        They recommend having someone else in the room with you during the audit (for blue form tax filers). They encourage people to demand to know reasons for absolutely everything and to never use your inkan stamp unless you know exactly what you're signing for.

                        The tax men may be intimidating but you can be, too. Stand up for your rights. Know your tax audit ninjutsu and use it to fight back.

                        Follow Amy Chavez on Twitter @JapanLite

                        Comment


                        • Originally posted by caramellocap View Post
                          Yep, Super Grover's done a great job reminding gaijin of what our responsibilities are unfair tho they can be.

                          My position always has been re Japan - in my home country a 'permanent resident' is legally and technically that. Somebody who Oz has awarded a certain legal status and so they have all the benefits of permanent residency as well as the responsibilities. Japan is completely a hatfull of arzeholes when it comes to asserting that gaijin are 'permanent resident'.

                          In first world countries, permanent residency is a legal status and gives rights. In Japan it means any poor bas-tard who is living for five years or more in Japan, renewing permission to stay that has nothing to do with real permanent residency. Japan is just doing that to bestow minimal status on the gaijin yet reap all the benefits of subjecting the faux permanent resident gaijin to permanent resident taxes.

                          It surprises me that many here and elsewhere have never picked up on that immense hypocrisy. Yeah and this hypocrisy institutionalised means in theory you do have to declare everything that is earning income and interest-bearing. Whether in your home country or Japan. My first time in Japan was over 5 years and when I prepared before for their tax grab. I have a good accountant/biz lawyer in Oz.
                          .
                          These lamenting comments are not helpful. First of all, the subject of this thread has nothing to do with your residential status, or the rights you have or don't have in Japan as a resident or permanent resident tax payer. In fact, not many countries have such a generous 5-year grace period exempting overseas income from local taxation as Japan. In other countries any resident is taxed from the first day he is a taxpayer on his entire income worldwide.

                          The point here is to understand tax obligations under Japanese laws and how they are enforced. Discussing actual or alleged "unfairness" of the tax system or the resident system isn't helpful. If you stay here, you have to pay taxes in line with the law of the land. The system isn't unfair, because double taxation does not take place. If income is taxed in your home country, you get a corresponding credit here. Sure, taxes in Japan are high, and in some cases higher than in some other countries. We can complain about this, everybody hates to pay taxes, no matter how much, and everybody is free to look for loopholes and ways to reduce his burden. But it seems what certain posters here have in mind or looking for is advice about tax evasion. They get shocked when they hear that the Japanese taxman is not less diligently going after the tax dodger than in Australia, UK, US or France.

                          For those of you who have bank accounts/investments that you have left no paper trail for re sending money to them from Japan or vice versa - I'd say you're still safe keeping them incognito if they're abroad. You already pay tax wherever they are located. The Japan position is hypocritical. But yes, for everything that there is a link to and for which you have been doing things openly, you need to declare it
                          I think this is misleading in both points. First of all, I do know for sure (form my Japanese tax consultant) that the Australian tax authorities do report income in Australia to the NTA. I don't know the threshold, I don't how frequent, or whether it's done regularly, but it takes place at least occasionally. When I turned in the documents for my 2011 tax declaration, my consultant told me that just one of their Australian clients got audited because, the Australian tax authority had reported income to the NTA, which did not turn up in the Japanese tax declaration. I think your second point is also wrong. If you have paid already taxes in your home country (keep in mind though, in some countries there is no tax at all on non-resident tax payers), you get a corresponding tax credit here in Japan. Normally 100% of the tax you have already paid is recognized here. If interest, dividends, or rental income was already taxed in Australia, you get a 100% tax credit for it here in Japan. There ins't anything "immensely hypercritical" about this. Such wording is obfuscating the issue.
                          Last edited by chainbolt; 2012-09-17, 05:03 PM.

                          Comment


                          • I am super busy for the next 24 hours or so but will reply Shimikitazawa, when I can. Briefly, though, I was and still am a NR of Canada but I still did have to pay taxes at that time. I was issued NR-4 slips too.

                            The figures were in millions of yen.

                            For me, the point of this thread is to make people aware of what seems to be a calculated plan to assess maximum penalties in a less than above board way.
                            Last edited by Super Grover; 2012-09-17, 04:36 PM.

                            Comment


                            • Originally posted by Super Grover View Post
                              For me, the point of this thread is to make people aware of what seems to be a calculated plan to assess maximum penalties in a less than above board way.
                              No tax evasion, no penalties.

                              And by the way, lets not forget:
                              • Penalties for tax evasion in Japan are (still) more lenient than in most developed countries. I know a few countries, where they go back 10 years (in Japan only 5 years) and where interest + penalties reduce the evaded amount to zero after 5 years (not on in Japan).
                              • In Japan currently the threshold for a case to become a criminal case transferred to the prosecutor seems to be somewhere between 20 MJPY and 30 MJPY evaded taxes. I my home country I commit a crime when evading only 10% of this amount.
                              • The way to come clean in Japan is very easy and far less costly than in other countries.
                              Last edited by chainbolt; 2012-09-17, 05:18 PM.

                              Comment


                              • Originally posted by Sterling View Post
                                Amy Chavez actually writes something insightful & useful for the JapanTimes - recently, more so - and certainly more useful than that whiny spiteful Debit Arnoldo joker...

                                ===> http://www.japantimes.co.jp/text/fl20120915cz.html


                                JAPANTIMES: JAPAN LITE

                                Bone up on your tax audit ninjutsu to fight back

                                By AMY CHAVEZ


                                Our island of 602 people ........

                                And starting in 2013, new laws will come into effect so that the tax men will have to present a paper in advance informing you of why you are being audited and what will be covered in it along with the date of the audit.

                                ....
                                Interesting article - thanks for the link. The part regarding the new law in 2013 is good to know.

                                Comment

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