Tokutei account vs General account?

[RMA]

I want to know in what scenerios one should opt general account over tokutei account? If you are expecting dividends or capital gains of less than JPY 200,000 in an year then would it make more sense to opt general account over tokutei account or it won't make any difference?

[TokyoWart]

My experience has been that even in the general (一般) account the dividend tax is taken out before the dividends arrive in my account so I don't see any advantage to using it over the tokutei account.

[RMA]

My experience has been that even in the general (一般) account the dividend tax is taken out before the dividends arrive in my account so I don't see any advantage to using it over the tokutei account.

If that's not the case then in what circumstances one should go for general account instead of tokutei account? May I know why you chose general (一般) account for purchasing dividend paying stocks?

[TokyoWart]

If that's not the case then in what circumstances one should go for general account instead of tokutei account? May I know why you chose general (一般) account for purchasing dividend paying stocks?

My account history goes back to when they changed the law and tax system for dividends but the main reason I still have an ippan account is that part of my compensation is in company stock and that can only be received as a general security and originally could only be received in an ippan account. The rule has changed since then in that such stock can also be received in a tokutei account but it still must be received as an ippan security. If I had any choice everything would be tokutei.

[RMA]

If that's not the case then in what circumstances one should go for general account instead of tokutei account? May I know why you chose general (一般) account for purchasing dividend paying stocks?

My account history goes back to when they changed the law and tax system for dividends but the main reason I still have an ippan account is that part of my compensation is in company stock and that can only be received as a general security and originally could only be received in an ippan account. The rule has changed since then in that such stock can also be received in a tokutei account but it still must be received as an ippan security. If I had any choice everything would be tokutei.

That makes sense, thanks for clearing.

[TBS]

My experience has been that even in the general (一般) account the dividend tax is taken out before the dividends arrive in my account so I don't see any advantage to using it over the tokutei account.

Can you please confirm if this was Japanese dividend tax that was withheld in the general (一般) account?

I thought that the general accounts and the no tax withholding versions of the tokutei kouza (源泉徴収なし) do not withhold any Japanese taxes. The answer to RMA's question could then be yes, it may make sense to buy via these accounts provided the following are true:

- RMA is an employee with a salary of less than ¥20 million;
- Their employer files an end of year tax adjustment on their behalf;
- Their total income from all other sources (dividends, capital gains and so on) is less than ¥200,000;
- They have no other reason that would require them to file a final income tax return.

Note this would save on the income tax portion, but it might still be necessary to file a residents tax return separately.

[TokyoWart]

Can you please confirm if this was Japanese dividend tax that was withheld in the general (一般) account?

Yes. That has been true for me for ippan (一般) accounts at both Nomura and Nikko-SMBC. I am not sure if this is because my dividend income is relatively high but it was true even from the very beginning for those accounts when the total dividends were lower. (In addition I have tokutei accounts and those of course withheld the Japanese dividend tax).

[TBS]

Can you please confirm if this was Japanese dividend tax that was withheld in the general (一般) account?

Yes. That has been true for me for ippan (一般) accounts at both Nomura and Nikko-SMBC. I am not sure if this is because my dividend income is relatively high but it was true even from the very beginning for those accounts when the total dividends were lower. (In addition I have tokutei accounts and those of course withheld the Japanese dividend tax).

Thanks! That tallies up looking closer at these links. They say that dividend taxes are withheld in all accounts, but capital gains taxes are not in 一般 and 源泉徴収なし tokutei accounts. Capital gains taxes then have to be paid via the final tax return at the end of the tax year.

[RMA]

Can you please confirm if this was Japanese dividend tax that was withheld in the general (一般) account?

Yes. That has been true for me for ippan (一般) accounts at both Nomura and Nikko-SMBC. I am not sure if this is because my dividend income is relatively high but it was true even from the very beginning for those accounts when the total dividends were lower. (In addition I have tokutei accounts and those of course withheld the Japanese dividend tax).

Thanks! That tallies up looking closer at these links. They say that dividend taxes are withheld in all accounts, but capital gains taxes are not in 一般 and 源泉徴収なし tokutei accounts. Capital gains taxes then have to be paid via the final tax return at the end of the tax year.

Thank you for clarification. I understand on dividends part. As for capital gains if the same are not expected to be more than JPY 200,000 a year then can one avoid paying taxes on them by using ippan (一般) accounts?

[TBS]

Thank you for clarification. I understand on dividends part. As for capital gains if the same are not expected to be more than JPY 200,000 a year then can one avoid paying taxes on them by using ippan (一般) accounts?

Yes, provided you meet all the conditions of my earlier post, you should not need to pay the national capital gains tax (15.315%). However you will likely have to file a residents tax return instead for the municipal capital gains tax (5%).

If you do decide to explore this, consider using a 特定口座（源泉徴収なし）rather than an 一般 account. Capital gains are much less predictable than dividends, so if you end up with profits over ¥200,000 (or a loss you want to carry over), the tax documents that come with the 特定口座 will make filing the 確定申告 easier.