New NISA Rule

It’s a good one, for a change 🙂

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This year NISA accounts saw a fairly significant change, one that I completely missed. Ooops.

​Fortunately our forum members are more competent than I am, so someone brought it up this week.

It’s actually a great little change, in that it fixes something that was wrong with NISA. There’s still a long way to go before the Japanese version comes even close to how good the British ISA is, but any improvement is a positive in my book.

​The way NISA accounts worked until this year is that when the tax-free period was up (after five years for the regular NISA and twenty for the tsumitate), you could choose to ‘roll-over’ the investments into a new NISA year, but only up to the NISA limit.

For example, if you had 1.2m yen’s worth of shares in the account and their value had gone up to 1.5m yen, you would only have been able to roll over 1.2m yen’s worth. The remaining 300,000 yen’s worth of shares would either have to be sold or moved into a taxable account.

From this year, however, you can roll over the full amount, regardless of how much it is worth. This is a pretty significant change, as it allows your NISA holdings to get bigger over time.

You can read about the changes in Japanese here.

Of course, the main issue is that regular NISA accounts are only due to exist until 2023. I am still hoping the government will extend their validity or replace them with something comparable or better.

If that happens, rest assured. You will read about it here (eventually).

19 Responses

  1. Thanks for the update. It’s a great change for the better.
    Appreciate the link in Japanese too-saves me having to explain it to my wife.

  2. Am I understanding this right?
    If, for example, the NISA scheme gets extended indefinitely, this means that, that if I invest an initial 1.2. million in a given year, I can keep it in the account and let it grow tax free indefinitely?

    1. It’s a big if, but yes, I believe so. Of course this is how these accounts normally work: both the UK ISA and the Roth IRA allow you to invest tax-free for decades. Japan’s NISA is severely limited in comparison (but hopefully will improve).
      My personal wish list:
      1. unlimited duration (tax-free until withdrawal)
      2. ability to rebalance within the account
      3. increased contribution limits
      4. no expiry on the NISA system
      We can dream, eh?

    2. And of course you would only have the first five years as seed money if you chose to roll over every account…

      1. Right, but assuming the money keeps growing, it would be better keeping that first five years money in the NISA, rather than starting over with a “fresh” 1.2 million right?

      2. All things being equal, if the initial investment were worth more than 1.2 million, it would be better to roll it over than to cash out and invest a new 1.2 million in the same investment.

  3. Tangentially, is it possible for a UK citizen to start a British ISA from Japan? Or do you have to be resident in the UK?

  5. I have an off-topic NISA question.
    Most Japanese stocks can only be bought in lots of 100. I have enough cash in my account to buy 100 shares of a company I want, but not enough remaining in my NISA allotment for the year. Can I split the purchase and have 50 shares go to NISA and 50 go to my non-NISA general account? (I use SBI Shoken.)

    1. I have never tried that, but I assume it would not be allowed (as the minimum order size is 100, and each order has to be assigned to either NISA or taxable). Might be worth asking SBI 😉

    2. I tend to use mutual funds to ‘use up’ the last bits of NISA allocation, as they don’t have minimum purchase amounts…

  6. Looking at this again, I realised I didn’t understand: how can I ‘roll over’ into a new NISA year if the 5 years (or 20) are up? I’m out of NISA by then aren’t I?

    1. The thing to keep in mind is that each NISA year is treated separately. So you don’t have a five-year NISA account, you have a five-year 2014 account, a five-year 2015 account, etc.
      So when my 2014 year expires next year, I will have the option of using my 2019 allocation to roll it over 🙂

  7. Thank you! So each NISA year has a kind of 5-year tax exemption ‘tail’ on it. A bit embarrassed I didn’t know that but very glad I do now. Much obliged 🙂

    1. Ha, ha, it’s not particularly intuitive, is it? A *lot* of people miss that.

  8. Thanks for interesting and useful posts!
    I have a small comment regarding:
    “regular NISA accounts are only due to exist until 2023”
    NISA account will cease to exist in 2027, As I understood 2023 is the last year you can open new account or roll-over.

  9. Is my understanding correct that the end-of-2018 rollover is only needed for securities purchased in 2014? If I opened my NISA account in 2018, I should be fine until the end of 2022, right?