Plagued with wealth worries?
Wealth is a worry if you don’t have any.
And it’s also a worry if you do. Reporting it in tax returns, for example. Being taxed. Or paying penalties for not reporting it in tax returns.
Here’s a summary of the changes to reporting requirements on residents of Japan that are being put in place this decade.
- Since 2014 Japan foreign residents have been obliged to report assets of more than JPY 50,000,000 held outside Japan. This is a combined total, not the minimum reportable size of any one asset. We haven’t seen the form for doing so nor been asked to declare in making our tax returns, but that’s the official requirement.
- The ‘my number’ system was instituted at the beginning of this year, 2016. Every Japan resident was sent one. Not much has happened with these my numbers yet. We’ve heard of a few people who had to quote theirs while making foreign exchange remittances. They weren’t used in tax returns this year but we understand that they will be next. My number offers a way for the authorities to track the financial affairs of any individual more closely. Whether tax offices in Japan will use my numbers systematically is a matter of case-by-case conjecture, but they can.
- The OECD Common Reporting Standard is a sign-up of 54 countries which have agreed to share financial information about their residents as of September 2017. Another 26 countries will join as of September 2018. Japan amongst them. This means assets you as a Japan resident may hold in other countries on the list will be visible to the Japanese authorities.
- An exit tax was imposed on wealthy residents of Japan as of June 30th Anyone leaving Japan for good with more than ¥100 million in financial assets will be liable for tax on those assets as if they had sold them at the point of departure—even if the assets have not been sold. A case of the authorities getting their pound of flesh even if the cash cow is not yet dead. One bright side to this new law is that foreign residents of Japan will not be liable to this provision for five years: June 30th 2020.
What to do, if you fall into the wealth is a worry category?
Investments written as life insurance provide mitigation against ongoing taxation. The issuing life insurance company owns the assets; you own a contract for the value of the assets. This is the standard structure for the UK offshore finance industry and has proved viable for 50+ years. You can declare the existence of the policy, the policy can increase in value, but there is nothing to tax. Convenient, simple, effective. Please contact us for advice on how to protect your financial assets in this way.
What to do, if you fall into the no wealth is a worry category?
Start a regular savings programme, structured as life insurance, and build up some wealth. Every little bit adds up in time, with the power of compound interest. These policies also are reportable but tax-sheltered. Please contact us for information about how to get started. We all have to start somewhere.
Email or call today 03 5724 5100
