Calculating foreign tax credit

[unborderedlife]

Thanks for the detailed response but I'm just getting more confused

My situation isn't too complicated; I just can't see where to enter the foreign dividends since the section in 収入金額 seems to only refer to securities on the Japanese stock market. All my Japanese securities are either in NISA or 特定口座 so I don't believe I need to fill this part in at all.

There does seem to be a proper section (国外で支払われる預金等の利子など国内で源泉徴収されないもの等に関する事項（総合課税の対象) to enter foreign interest though, so that's fine.

I tried just entering the foreign dividends in the 外国税額控除 section along with the interest, and it calculated my foreign tax credit as 3,700 yen, which is far lower than what I got when doing the calculation in Excel.

I think I might need to pay a visit to the tax office and see if they can walk me through it too. Did you have to make an appointment?

[TokyoWart]

I think I might need to pay a visit to the tax office and see if they can walk me through it too. Did you have to make an appointment?

I think that's a good idea (I can see how this is confusing). I didn't need to make an appointment at my tax office but I made a point of going early at the beginning of the tax preparation season when it wasn't too crowded.

[mule96]

I cant take sreen shots and post them here, but on the first site (収入金額・所得金額の入力)
if you click on either 配当所得 on the Top, or 株式等の譲渡所得等 or 上場株式等に係る配当所得等 in the bottom box, a menu appears with the following points:

１　配当所得の課税方法の選択
総合課税　ー　申告分離課税　ー　配当等がない
(selection of tax for dividend income
Comprehensive taxation　ー　separate taxation　ー　no dividends)

The middle is the one you usuall want.

２　株式等の売却・配当・利子等の入力
Here are various and somehow confusing point for entering stock selling, dividends and interest.

The First Green button is for information through a 特定口座 account, that is when you have the year end summary (「特定口座年間取引報告書」の内容を入力する).


For the second green box you have the following options (株式等の「取引明細」などの内容を入力する方
一般株式等の売却がある。
 →　一般株式等とは
Selling of non public traded stocks

特定口座（源泉徴収あり・源泉徴収なし）以外で上場株式等の売却がある。
 →　上場株式等とは
Selling of publicly traded stocks that are not in 特定口座 account. For example SBI/Rakuten 一般traded or trades from foreign brokers go in here.

特定管理株式等が価値を失った場合の特例の適用がある。
 →　特定管理株式等が価値を失った場合の特例とは
特定投資株式の取得に要した金額の控除の特例の適用がある。
 →　特定投資株式の取得に要した金額の控除の特例とは
Those two are something with losses or so.


The third green box 配当等の支払通知書」などの内容を入力する方 lets you enter dividends outside 特定口座 your dividens from foreign brokers go here. If you click here
１ 上場株式等の配当等に関する事項
Dividends from publicly traded stocks

２ 非上場株式等（「上場株式等」以外のもの）の配当等に関する事項
Dividends from not publicly traded stocks.

Area 1 is your choice where you have two options:
個別に配当等を入力（訂正等）する。 入力する
Enter by Hand　→ That is what I do

配当集計フォームに入力したデータを読み込む。 読み込む
Or read in an excel you can download. I never used this so.

Then you have the following form:

(１) 種目
There you can enter something like 株式の配当

(２) 銘柄等
Here you can enter the ticker or the name of the company

(３) 支払の取扱者の名称等
Here you canter the name of your broker

(４) 収入金額
Here is the total dividend income (in JPY)

(５) 源泉徴収税額
If there was already taxation at source (in Japan), this goes in here. This wil not be the case for foreign brokers.

(６) 配当割額控除額(住民税)
The same for source taxation on the local level.

(７) 通知外国税相当額
(８) 通知所得税相当額
Those two are new this year. But according to this
https://www.keisan.nta.go.jp/r2/tebiki/ ... toku08.pdf
This is not 外国税額控除 so it can be probably ignored.

(９) 負債の利子
Interest on debt - not sure about this


A little bit confusing but maybe this helps.

[unborderedlife]

Thanks mule96, I did go through that screen repeatedly but your explanation helps.

Is there a reason by I should select 申告分離課税 as opposed to 総合課税?

So say I select 申告分離課税 and manually enter my Australian dividend income (converted to yen) under １ 上場株式等の配当等に関する事項. (I don't have a Japanese 配当等の支払通知書 as it is a foreign broker).

Later on, I enter the dividend (and bank interest) income again in the 外国税額控除 section under
１　本年中に納付する外国所得税額 (breakdown of taxes paid overseas) and the total adjusted foreign income in ２ 調整国外所得の計算. (Please see attachment for how the e-tax form looks).

The form calculates my foreign tax credit to around 3,800 yen. I paid the equivalent of around 12,000 yen in taxes to Australia on those two income sources. So I will essentially pay over 8,000 yen in double tax...what gives?

[mule96]

Is there a reason by I should select 申告分離課税 as opposed to 総合課税?

総合課税 Taxation as at income tax
申告分離課税 Taxation is at the 20.315% tax rate.

So if you are currently in Tax level that is more than 20.315%, 申告分離課税 is better, if you are lower 総合課税 is better.

So say I select 申告分離課税 and manually enter my Australian dividend income (converted to yen) under １ 上場株式等の配当等に関する事項. (I don't have a Japanese 配当等の支払通知書 as it is a foreign broker).

That is correct. It says 「配当等の支払通知書」など meaning etc. You need to attach documentation from your broker of course and the base for your exchange rate, but that should be ok.

Later on, I enter the dividend (and bank interest) income again in the 外国税額控除 section under
１　本年中に納付する外国所得税額 (breakdown of taxes paid overseas) and the total adjusted foreign income in ２ 調整国外所得の計算. (Please see attachment for how the e-tax form looks).

That is how I do it.

The form calculates my foreign tax credit to around 3,800 yen. I paid the equivalent of around 12,000 yen in taxes to Australia on those two income sources. So I will essentially pay over 8,000 yen in double tax...what gives?

I do this with the attitude, that the government doesnt deserve any single Yen for free

[unborderedlife]

Is there a reason by I should select 申告分離課税 as opposed to 総合課税?

総合課税 Taxation as at income tax
申告分離課税 Taxation is at the 20.315% tax rate.

So if you are currently in Tax level that is more than 20.315%, 申告分離課税 is better, if you are lower 総合課税 is better.

Got it, that makes sense.

That is correct. It says 「配当等の支払通知書」など meaning etc. You need to attach documentation from your broker of course and the base for your exchange rate, but that should be ok.

The complicated thing is that Australia's financial year goes from July to June, so I can't just attach the EOFY statement from the broker. I probably will have to attach each individual dividend payment statement from each investment fund.

What documentation do you attach for the exchange rate? NTA says "In principle, the TTS, TTB or TTM rate that was published by the taxpayer's main financial institution is used, but other reasonable market rate may also be used if it is applied continuously"
so did you just attach a chart from your bank?
Ref: https://www.nta.go.jp/english/taxes/ind ... /12017.htm

The form calculates my foreign tax credit to around 3,800 yen. I paid the equivalent of around 12,000 yen in taxes to Australia on those two income sources. So I will essentially pay over 8,000 yen in double tax...what gives?

I do this with the attitude, that the government doesnt deserve any single Yen for free

Lol, what do you mean? Didn't they just get 8,000 yen for free?

[mule96]

What documentation do you attach for the exchange rate? NTA says "In principle, the TTS, TTB or TTM rate that was published by the taxpayer's main financial institution is used, but other reasonable market rate may also be used if it is applied continuously"
so did you just attach a chart from your bank?
Ref: https://www.nta.go.jp/english/taxes/ind ... /12017.htm

I use http://www.murc-kawasesouba.jp
and write something like 為替レート (TTM) 参照 and put in the link.

Lol, what do you mean? Didn't they just get 8,000 yen for free?

They would get even more if you don't do it!

[kanpanela]

I tried just entering the foreign dividends in the 外国税額控除 section along with the interest, and it calculated my foreign tax credit as 3,700 yen, which is far lower than what I got when doing the calculation in Excel.

unborderedlife,

Does the treaty to avoid double taxation between Japan and Australia says that you will not be double taxed?
The 8k out of 12k tax, seems close to double taxation. Perhaps there is some wrong input in that e-tax form?
If not, can you claim for your 8k back by referencing the treaty?

What happens if you remove the fact that you already paid that tax, does the amount they credit you go down to 0? Just making sure, we're getting
the correct form fields.

When you find out the reason for the discrepancy, can you please let us know the reason?

[Tkydon]

In order to avoid Double Taxation, you need to invoke the Japan Australia Tax Treaty.

https://www.mof.go.jp/tax_policy/summar ... 00131b.pdf

Article 10, Paragraph 2 (b) refers
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State for the purposes of its tax, being dividends beneficially owned by a resident of the other Contracting State, may be taxed in that other Contracting State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident for the purposes of its tax and according to the law of that Contracting State, but the tax so charged shall not exceed:
a) 5 per cent of the gross amount of the dividends if the beneficial owner of the dividends is a company which owns directly shares representing at least 10 per cent of the voting power of the company paying the dividends;
b) 10 per cent of the gross amount of the dividends in all other cases.

You will need to file a form with your Australian Broker claiming this level of Withholding in Australia

The Broker will then withhold Aus Tax due at 10%

In Japan, you need to file a Kakutei Shinkoku by Mar 15, and you need to select the Separate Self-Assessment Taxation method (Form B - Pages 1&2 And Page 3).
Under the Separate Self-Assessment Taxation method, you will be liable to 20.315% Dividend Tax (15% National, 0.315% Reconstruction, and 5% Residential Taxes).

You should receive a Statement of Aus Taxes Withheld from your broker. I don't know if that will be before or after Mar 15.

You can then revisit and amend your Kakutei Shinkoku and claim the Foreign Tax Credit for the 10% Tax paid in Aus - Form B Page 1 - Item 46.
So then your taxes become 10% Aus Withholding, 5% National, 0.315% Reconstruction, and 5% Residential Taxes.

[unborderedlife]

Hi, sorry I just saw this as I am once again doing my taxes and confronted with the same issue.

Are you saying that Japan will only provide a Foreign Tax Credit for tax paid in Australia to a maximum of 10%, regardless of how much tax I actually paid?

Assuming that is so, the Foreign Tax Credit calculated by e-Tax is still far lower than 10% of the my foreign Aus income. For example, this year I earned the equivalent of around 100,000 yen in dividend+interest income, and paid around 30,000 yen in tax to the ATO. (I am currently taxed by Australia at 30% for dividend income, and 10% for interest income. Which is the standard rate for non-residents after filing an annual tax return with Australia.)

Even if the NTA only returns 10% as foreign tax credit, I should get around 10,000 yen back. But after entering the values, it only calculates around 6,000 yen, which is like 5%. Can you think of any reason why?

BTW, even if I submit a form with my broker to have tax withheld on dividends, am I even able to qualify for 10% withholding tax if I am not a resident for tax purposes in Australia?