Death & Taxes

[wagyl]

To the Daily Fail reader (and Prince Philip) you already have slitty eyes.

Although I understand the concept of making the decision whether to leave this country to avoid a tax burden not imposed in another country, I never cease to be amazed that people who have made the decision to stay will deny themselves, say, 75% of a gift just because a government will help itself to the remaining 25%.

[legion]

Gifts and inheritance are taxed differently, the tax on gifts is higher. You can spread gifts out into yearly payments of less than 1 million yen and avoid tax. There is also provision for a gift to help buy property, and gifts for education for grandchildren.

The problem is inheritance of property, if you inherit a place in the UK you are going to have to find a large amount of cash to pay the tax man in Japan, or try and sell the property within 10 months of the date of death, get paid on time and bring the money to Japan.

I think this is an unreasonable position to put people in. Given the situation I think they could have added provision to give people time to tidy up affairs, deal with things like furniture, ornaments, heirlooms, before they sell the house. Trying to do that from Japan and keep work commitments is adding strain to an already difficult time. It really paints Japan in a poor light.

[wagyl]

Your anger is blinding your eyes to what I am saying, but that is not an uncommon phenomenon when the topic is tax.

As to the light this paint Japan in, you do realise that the concerns of we gaijin are not even a gobbet of snot under the fingernail, soon to be flicked away... As your Daily Fail readers say, "if you don't like it, go back to where you came from."


Not that I was talking about a gift as in a gift inter vivos, but more generally, I think the current annual tax free limit is two million yen. https://www.nta.go.jp/taxanswer/zoyo/4408.htm

[chibaka]

The problem is inheritance of property, if you inherit a place in the UK you are going to have to find a large amount of cash to pay the tax man in Japan, or try and sell the property within 10 months of the date of death, get paid on time and bring the money to Japan.

10 months? What genius came up with that idea?

So let me get this right, don't sell the house you get taxed, sell up and bring the cash here, no tax... ??

So who reports the property inheritance to Taro?

[Wage Slave]

The problem is inheritance of property, if you inherit a place in the UK you are going to have to find a large amount of cash to pay the tax man in Japan, or try and sell the property within 10 months of the date of death, get paid on time and bring the money to Japan.

10 months? What genius came up with that idea?

So let me get this right, don't sell the house you get taxed, sell up and bring the cash here, no tax... ??

So who reports the property inheritance to Taro?

Apparently, you have to settle your tax bill within 10 months - that doesn't seem too bad to me. A bit tight but not outrageous. If you are in the UK and you don't sell the property within 2 years you will be liable for capital gains tax on top of inheritance tax so there is no reason for delay. Usually the siblings want it all settled and the money in their account ASAP anyway.

No. That's not it. You pay the tax whether you decide to sell up or not.

You are required to report the inheritance if it exceeds the tax free allowance. If it doesn't you don't have to.

[CastleTintagel]

what people aren't seeing is the new dynamic in taxation. the sad thing is that _everyone_ , even the high mucky muckys won't like where this is going, although they will still have beter options for avoiding. the combinations of unprecedented technology and complicated taxation and the desire of the government for control is leading us to permanent state of oversight in which every action is under the eyes of the state. Orwell never dreamed of what the next dictators will be able to do.

[matsuki]

Or the rest of the world could follow Japan into the future with one-coin lunches and cash only?

[Wage Slave]

Yeah, well at the moment all that is happening is that the NTA will be able to quickly and cheaply check the information people declare on their tax return. That's not tyranny, that's just being able to catch people telling fibs in order to evade paying tax.

Legion, I do understand how you feel - In respect of inheritance Japan is making a claim on money that never had any connection with Japan. I agree that that feels completely wrong. And I agree it doesn't cast Japan in a very good light.

However, that's where we are and Wagyl is right - If we don't like it, we can always leave. I think your first move is to collect all the information together and calculate what your liability is actually likely to be. It may be that (annual) lifetime gifts to you and your brother will be enough to reduce that liability to an acceptable level. And don't forget that UK inheritance tax is a flat rate of 40% on estate value over 650k - gifting will also potentially help to avoid that. Cameron has promised to increase that to 1 million but it will be a while and the details are not yet known.

Once you have all the information collated and if you have a large liability then I would take some legal advice. Give all the information to a lawyer and let him make some inquiries/check the rules/check your calculations. Then you can have a chat about how best to manage the thing. You could include the idea of your parents drawing up a will to give your brother more than yourself - Personally I definitely wouldn't do that having seen how much people change once large sums of money come into play. Anyway, at least you should check it will definitely work and work out how and when you are going to get the money and where you are going to keep it and what gift tax you are going to pay on transfer.

[wagyl]

Of course going back to the UK with your family is not always an option. But your MP will look after your interests, I am sure....

[chibaka]

You are required to report the inheritance if it exceeds the tax free allowance. If it doesn't you don't have to.

So what if the inheritance is within the tax free allowance, you don't report it, then make the cash transfer to Japan?
Will Taro shit the bed and send round Abe's storm troopers?

[wagyl]

Is this just a hypothetical question or do you think you have a mention in somebody's will?

[Wage Slave]

You are required to report the inheritance if it exceeds the tax free allowance. If it doesn't you don't have to.

So what if the inheritance is within the tax free allowance, you don't report it, then make the cash transfer to Japan?
Will Taro shit the bed and send round Abe's storm troopers?

No, I wouldn't have thought so. Transfers inward are entirely routine and entirely welcome. They would no doubt like to see the income from that newly acquired wealth declared in tax returns but the fact it suddenly appeared wouldn't automatically trigger an audit. And a quick query would resolve the matter if it did.

In my view, and I stress it is just my judgement, we are not particularly targeted as a group and in my case at least I certainly don't have enough to be of any particular interest. Still it's important to play the game and declare the modest, especially in the current climate, income the money earns so that a quick look at my account shows it's in order. I also reckon it's very dangerous to be perceived as taking the piss with tax authorities - they don't like it one little bit. I have a policy of not messing around with them either in the UK or here or anywhere I've lived.

And I am not against paying tax. As Warren Buffet says, "I buy civilisation with that money". Whenever I hear someone complaining about how much tax they have to pay, I reflect that it is a direct consequence of them having a high income. Well done, or possibly lucky, them. If someone is really worked up about inheritance tax, then it means they have a really serious chunk of money headed their way. Lucky them. Most of us would gladly have that kind of worry.

[chibaka]

Is this just a hypothetical question or do you think you have a mention in somebody's will?

Both really, for information. Anything I possibly expect to be a beneficiary of in the future is of relatively low value, and would be shared so it's not a concern.
Tax wise that is.....
As it stands, inheritance is not taxable if it's within the allowance limit, then Taro's evil twin decides to tax money brought into Japan..... who knows

If I was expecting a share in a Mayfair property... I wouldn't be sitting in Japan typing this

[legion]

Your anger is blinding your eyes to what I am saying, but that is not an uncommon phenomenon when the topic is tax.

You didn't say grasshopper

You are overlooking the reason people get angry, they have already paid tax, income tax & property tax, as well as the commercial tax called interest on a mortgage. If jiji baba have some spare money to pass on it is money they had left after they paid tax & paid bills, but the tax man takes another cut. So they are taxed twice on that sum of money. I guess you will excuse this by saying they would have paid sales tax if they had spent it instead.

[legion]

Yeah, well at the moment all that is happening is that the NTA will be able to quickly and cheaply check the information people declare on their tax return. That's not tyranny, that's just being able to catch people telling fibs in order to evade paying tax.

Legion, I do understand how you feel - In respect of inheritance Japan is making a claim on money that never had any connection with Japan. I agree that that feels completely wrong. And I agree it doesn't cast Japan in a very good light.

However, that's where we are and Wagyl is right - If we don't like it, we can always leave. I think your first move is to collect all the information together and calculate what your liability is actually likely to be. It may be that (annual) lifetime gifts to you and your brother will be enough to reduce that liability to an acceptable level. And don't forget that UK inheritance tax is a flat rate of 40% on estate value over 650k - gifting will also potentially help to avoid that. Cameron has promised to increase that to 1 million but it will be a while and the details are not yet known.

Once you have all the information collated and if you have a large liability then I would take some legal advice. Give all the information to a lawyer and let him make some inquiries/check the rules/check your calculations. Then you can have a chat about how best to manage the thing. You could include the idea of your parents drawing up a will to give your brother more than yourself - Personally I definitely wouldn't do that having seen how much people change once large sums of money come into play. Anyway, at least you should check it will definitely work and work out how and when you are going to get the money and where you are going to keep it and what gift tax you are going to pay on transfer.

You do know that if you have PR or a spouse visa and you leave Japan they charge you an exit tax on your assets.

I'm not going anywhere, I have a mortgage to pay and kids in school. I expect my mother to live to be 104 and my father assures me he intends to spend all the money then sell the houses and spend that too, so I think I will be safely under the radar for some time yet.

And yes, it does feel wrong because the basic justification for tax is the state provides the environment where you prosper enough to gain assets of value. Japan cannot say it provided support to my parents while they scrimped and saved to buy a house.

[Wage Slave]

You do know that if you have PR or a spouse visa and you leave Japan they charge you an exit tax on your assets.

No, I'm sorry I don't. Can you supply any details?

Edit to add - It's brand new and is a capital gains tax on financial assets especially shares and derivatives on those leaving for good. It will also apply to the market value of inherited property.

It:

1. Was passed this year, will go into operation in 2020 and 2025 for foreigners.
2. Is a capital gains tax so only applies to the increase in market value of assets held while living in Japan.
3. Only applies to people with over 100 million Yen's worth of eligible assets.

It won't apply to me.

https://www.pwc.com/jp/en/taxnews-international-assignment/assets/ias-news-may-2015.pdf

[wagyl]

I guess you will excuse this by saying they would have paid sales tax if they had spent it instead.

No I will say that tax is a cynical exercise in creaming just enough off that the populace does not get too restless. It has always been so and will always be so. Looking for rationalisations, or pointing out that a different event or a different authority also creamed off already has absolutely no bearing on the matter. What that means is that unless you can get the people that matter feeling restless enough about this that the government starts to shake in its boots, there is frankly nothing you can do about it. Obviously 8% to 10% consumption tax has the politicians worried about their future. The lowering of tax free limits for inheritance tax evidently did not.

But I will restate what I said above. Many people get so angry about a tax impost that they throw the baby out with the bathwater. For example, imagine you have a mention in a will. You stand to collect a tidy sum. But because a tax authority somewhere is going to take a quarter of that, you decide that 100% of zero is better than 75% of a million. You are not alone in that kneejerk reaction. However, I know which I choose.

You do know that if you have PR or a spouse visa and you leave Japan they charge you an exit tax on your assets.

Seriously, cite, please. You have been asked before.

Japan cannot say it provided support to my parents while they scrimped and saved to buy a house.

And what did you do to earn that house? You just happened to be born to those parents, it is a freebie to you too, and you have no guarantee that you will get it until they are in the casket and they haven't decided in the meantime to leave it to the Cat's Home.

[Yokohammer]

I found this:

http://beaconreports.net/japans-new-exit-tax/

[wagyl]

Found it. A tax on those leaving who have over 100 million yen value of stocks, shares and derivatives. Phew, I just scrape underneath the limit LOL
Applies to just the usual 5 years in the last 10 tax-residency. That time is calculated from July 2015 so we have 5 years anyway. Work visas are expressly excluded.
Tax rate is 15.315% which is a weirdly exact figure.
https://www.kpmg.com/jp/en/knowledge/ar ... 150420.pdf

[Wage Slave]

This is what happens when you edit a post rather than post anew. Anyway yes, I will just scrape under the wire in 2025 no doubt.

[Wage Slave]

as well as the commercial tax called interest on a mortgage.

Wow, you are angry. First time I have heard interest described as a tax. For starters, taxes are only imposed by government - they are very clear they have a monopoly on that.

Secondly, the nature of interest is more like rent. If you have the benefit of someone else's asset then, the way capitalism is organised, you pay them a rent in exchange. You could call it ursury, and Islam does. But they don't let you have the benefit of someone else's money for free. You have to share the benefit that their money, that you are using, generates.

You a commie?

[wagyl]

You a commie?

He may be a faithful Christian.
The Jews have a more limited definition of who the People of God are. The banking Christians are just unfaithful.

[Samurai_Jerk]

And yes, it does feel wrong because the basic justification for tax is the state provides the environment where you prosper enough to gain assets of value. Japan cannot say it provided support to my parents while they scrimped and saved to buy a house.

And Japan wouldn't tax your parents or their estate so your argument is pretty much nonsensical. As a matter of fact it would be your parents' home country that would be taxing them twice. If I have a father in the Cayman Islands where there is no estate or inheritance tax who leaves me $50 million cash, you think I should be able to get all of that tax free as a resident of Japan while my neighbor Suzuki should have to pay taxes on the 100 million yen property he inherits just because his father happens to live in Japan. How is that right? And how is an estate tax righter than inheritance tax? Using the US as an example a single person can inherit a $5-million-dollar estate tax free whereas a $20-million-dollar estate left to 50 people would be taxed before being divided among them. If anything, an inheritance tax is fairer.

That's not to say that I agree with all the details of the implementation of this new inheritance tax scheme. I don't. However, in principle I don't have a problem with inheritance tax being applied to overseas inheritance and in principle I think estate taxes are unfair.

[chibaka]

Found it. A tax on those leaving who have over 100 million yen value of stocks, shares and derivatives. Phew, I just scrape underneath the limit LOL

えええ！ You don't have 100 million yenz? Peasant! Even obaa chan will hand over 10 million with just a couple of random phone calls

I must say this inheritance tax must be difficult to implement. 1) FG needs to fess up or 2) Authorities in the home country need to grass on FG.
If neither happens then it's meaningless. Or are there more plans additional to banks passing on info to Taro with the CRS thingie.

Only time in my life I'm happy that my family is piss poor, the horrors of worrying over too much money...

[Wage Slave]

I must say this inheritance tax must be difficult to implement. 1) FG needs to fess up or 2) Authorities in the home country need to grass on FG.
If neither happens then it's meaningless. Or are there more plans additional to banks passing on info to Taro with the CRS thingie.

If you inherit a good chunk of money then where are you going to put it? If it lands in a bank account or shares or a range of other things then it's existence will presumably be automatically reported to the NTA and they might want to ask a few questions - especially, "Where did this money come from?" We all know it doesn't grow on trees.

Only time in my life I'm happy that my family is piss poor, the horrors of worrying over too much money...

Exactly. Won't someone think of the multinational employed, incredibly well paid expats from well off families who are now well on the way to being very wealthy in their own right ..... poor, poor things having to fret over paying tax on their capital gains.

[chibaka]

I wonder if the aforementioned obaa chan is questioned by the old bill about the origins of the 10 million yen she handed over to a complete stranger...
Food for thought, or redirect to the "respect for the aged" or lack of, thread...

[legion]

as well as the commercial tax called interest on a mortgage.

Wow, you are angry. First time I have heard interest described as a tax. For starters, taxes are only imposed by government - they are very clear they have a monopoly on that.

Secondly, the nature of interest is more like rent. If you have the benefit of someone else's asset then, the way capitalism is organised, you pay them a rent in exchange. You could call it ursury, and Islam does. But they don't let you have the benefit of someone else's money for free. You have to share the benefit that their money, that you are using, generates.

You a commie?

You seem to think it is wrong to be angry.

Individuals in Japan pay tax on assets abroad, companies like Amazon do business in the UK but evade tax, the people working in their warehouses are paid so little they are dependent on benefits to make ends meet, so Amazon is both avoiding tax, and their profits are being bankrolled by the tax payer. Does this not make you angry, or do you find another excuse?

This will be interesting to watch.
http://www.independent.co.uk/news/uk/crickhowell-welsh-town-moves-offshore-to-avoid-tax-on-local-business-a6728971.html

[Wage Slave]

She will likely say it's savings and that's perfectly plausible. As is the likelihood she didn't have it in a bank account because she wants to keep it off the record so she can evade tax if she decides to gift it. No-one can prove that though and she will just say she doesn't trust banks.

If she did have it in a bank account then again no issue because there will likely be a historical record. It didn't suddenly appear in her account one day.

The problem with inheritances over (say 38 million Yen for the allowance with one sibling) is near enough to £200,000 suddenly appearing in your bank account. That makes an impact and is a bit difficult to explain away as savings you have been keeping under your bed until now.

Of course they don't have to check everyone. Just make it clear that there are significant penalties and make sure you catch a few as an example to the others.

[Wage Slave]

Individuals in Japan pay tax on assets abroad, companies like Amazon do business in the UK but evade tax, the people working in their warehouses are paid so little they are dependent on benefits to make ends meet, so Amazon is both avoiding tax, and their profits are being bankrolled by the tax payer. Does this not make you angry, or do you find another excuse?

It does make me angry, but it is an entirely different matter to describing mortgage interest as a tax. Which is what you did. And what I commented on.

[legion]

And yes, it does feel wrong because the basic justification for tax is the state provides the environment where you prosper enough to gain assets of value. Japan cannot say it provided support to my parents while they scrimped and saved to buy a house.

And Japan wouldn't tax your parents or their estate so your argument is pretty much nonsensical. As a matter of fact it would be your parents' home country that would be taxing them twice. If I have a father in the Cayman Islands where there is no estate or inheritance tax who leaves me $50 million cash, you think I should be able to get all of that tax free as a resident of Japan while my neighbor Suzuki should have to pay taxes on the 100 million yen property he inherits just because his father happens to live in Japan. How is that right? And how is an estate tax righter than inheritance tax? Using the US as an example a single person can inherit a $5-million-dollar estate tax free whereas a $20-million-dollar estate left to 50 people would be taxed before being divided among them. If anything, an inheritance tax is fairer.

That's not to say that I agree with all the details of the implementation of this new inheritance tax scheme. I don't. However, in principle I don't have a problem with inheritance tax being applied to overseas inheritance and in principle I think estate taxes are unfair.

You seem to be deliberately missing the point in your eagerness to hand over the fruits of your parents' labour to the taxman. By your argument they are now taxed three times, twice by the UK, once by Japan. I already pay tax in Japan, income tax, city tax, property tax etc, and my kids will pay tax on what I have left when I die.

Interesting you raise the Cayman Islands, a British protectorate, ie, defended by the British navy, and an infamous tax haven. One of Thatcher's first acts was to change the law to allow Dennis to park their money abroad, safely away from the taxman, and the liability of being in an onshore bank, ie, subject to the risk of the bank going under due to unwise investments. Gee, I wonder where the origins of the financial crisis lie?

But if I understand your argument you are now saying because the tax havens exist Japan is justified in taxing everything they can, just to make it "fair". By fair you mean wealthy people can afford dedicated accountants to help them evade tax, little people have to pay up and not complain.

Who was it that called me house nigger a while back? Tax is about control, and it is certainly working on you. You should move to Hokkaido with all the other sheep.

And remember, the nominal value of a house is not what most people paid for it, with interest we pay far more than the given price of the house. So while you are taxed on the supposed "value" of the house, the cost of the house was far greater.