Some great proposals, but how many will get through?
I was pretty excited to see this graphic on the morning news yesterday 🙂
A couple of months ago the FSA (Financial Services Agency) did a survey on what kind of improvements the general public wanted to see with NISA accounts. Based on the results of that survey, they are now considering four major changes to NISA.
Any of them would be a big improvement, but all four would revolutionise the system and make things much better for investors in Japan.
The four proposed changes are:
- Making the NISA system permanent. Under the current rules, ordinary NISA (the New NISA version) will end in 2028, and tsumitate NISA will end in 2042*
- Removing the tax-free duration limits. This is possibly the biggest change, and would bring NISA in line with the UK ISA (which it is supposedly based on)
- Increasing the annual contribution limits. This would be nice for super savers (like many RetireJapan readers), but for most people not as important as the point above
- Allowing people under 18** to use tsumitate NISA. This would effectively replace the Junior NISA, which ends at the end of next year, with tsumitate NISA, thus giving children and parents another tax-free investment option
All of these are common sense and desirable improvements to the system, and would make NISA a bit less confusing. Removing the tax-free duration limits would be huge, but I can imagine the tax agency not liking that idea much (especially considering the implications for inheritance tax).
It seems the government will consider the proposals and decide in the next year or so. Not too confident we’ll see many these of these become reality, but here’s hoping!
The new edition of the RetireJapan Guide to NISA will be published next week. Stay tuned for more info, and if you have already bought the Guide you will receive a complimentary copy of the latest edition when it comes out.
*Those years are the last year investors will be able to start a new NISA year, they do not represent the end of accounts
**Currently only people 20 and over can open NISA accounts, but from January 2023 18-year olds will be able to open Tsumitate or Regular NISA accounts.
Read about this a few days ago. I really hope the Tsumitate NISA goes through as the news said the government is still considering. Hopefully, they don’t rock the boat like raising dividends or capital gains taxes from 20 to 30 percent or do some other things to annoy investors!
“ Allowing people under 20 to use tsumitate NISA. ”
I think that should be “under 18”.
As from next year 18+ can open NISA accounts of either variety. I think..
Good catch, thanks!