(sorry, couldn't resist).There will be dividend reinvestment in my TFSA from stocks purchased ages ago. i am going to hang onto those long-term, so that (and the likely existence of profits) would that make the remittance tax is inescapable no matter when i opt to do it…?TBS wrote: ↑Wed May 19, 2021 10:21 am
However, as Beaglehound says, if you make any remittance to Japan during the same calendar year as one where you make investment profits, those profits will become taxable in Japan (up to the amount you remit).
- Even as a non-permanent tax resident, capital gains will be due on any stocks purchased via your Canadian brokerages after moving to Japan, e.g. because of reinvesting dividends.
- Japan doesn't recognize the tax-free status of TFSA. Tax will be due here if the above scenarios apply.
Which brings us back to the My Number conundrum. While it makes sense to contact the JP banks to ask them if they'd allow us to remit before we have our MN issued, if we are aren't currently present there (yet), where those accounts are addressed, I'm wondering that'll create unforseen issues down the road? Better in that case to simply wait and get dinged with the tax...?Beaglehound wrote: ↑Wed May 19, 2021 8:01 am
Basically if you remit cash to Japan while a resident of Japan, then you are on the hook for any income gained overseas in that tax year. This is regardless of which account you send it from. E.g. if you realise capital gains and also send money from an unrelated Canadian savings account, the capital gain is deemed to have been remitted. So it probably makes sense to find a way to get money to Japan before you are actually resident.
You are only liable if you remit in the same year as you have income, so the way to stay exempt is to not remit. If you are holding long-term in the TFSA, i.e. longer than the 5 year period you will be a non-permanent tax resident (NPR), then the only potentially liable income here is the dividends, which will only be a small percentage of your portfolio. If you do remit while an NPR, declaring and paying the taxes on dividends via the Japanese tax return system is not so difficult. You can choose either a flat 20.315% tax rate or to have it taxed as miscellaneous income (so at your marginal Japanese income tax rate + Prefectural tax). After the 5 year period everything then becomes taxable by Japan, regardless of whether you remit or not.gulogulo wrote: ↑Wed May 19, 2021 7:58 pm There will be dividend reinvestment in my TFSA from stocks purchased ages ago. i am going to hang onto those long-term, so that (and the likely existence of profits) would that make the remittance tax is inescapable no matter when i opt to do it…?
Another question - Canadian exit tax aside, is it less of a headache if i divest myself of all short term positions before departure?
Sincerely appreciate the response.TBS wrote: ↑Sat May 22, 2021 1:45 am You are only liable if you remit in the same year as you have income, so the way to stay exempt is to not remit. If you are holding long-term in the TFSA, i.e. longer than the 5 year period you will be a non-permanent tax resident (NPR), then the only potentially liable income here is the dividends, which will only be a small percentage of your portfolio. If you do remit while an NPR, declaring and paying the taxes on dividends via the Japanese tax return system is not so difficult. You can choose either a flat 20.315% tax rate or to have it taxed as miscellaneous income (so at your marginal Japanese income tax rate + Prefectural tax). After the 5 year period everything then becomes taxable by Japan, regardless of whether you remit or not.
Some of the options you could consider are:
- Liquidating everything before coming. Nothing will be taxable by Japan this way, and you could reinvest from Japan once you arrive.
- Avoid remitting anything while an NPR, then pay the Japanese taxes on everything from year 5.
- You could liquidate everything in the final year you are an NPR, then remit in the following calendar year so as to be exempt from Japanese taxes (other than capital gains from the dividends reinvested after you arrive).
The first option is the simplest. The latter two options will require you submit Japanese tax returns. For the second option, you could sell everything then re-buy in the TFSA before departure. This will minimize the Japanese capital gains taxes eventually due. Try running the numbers for the different scenarios through a spreadsheet to understand the costs/benefits.
Sorry, I wrote that last post with TFSA in mind. For your non-registered accounts, selling would presumably incur Canadian taxes so the cost benefit calculations would be different. You should be able to keep your RRSP - there are some details on how the pay outs may eventually be taxed by Japan here.
If we were talking about the TFSA - mine containing solely canadian dividend payers, in your opinion what type of account would be the best vehicle to make those reinvestments? Am not wedded to those equities but I am to their long sustained history of increasing dividends...
In short, I haven't a suggestion for this onegulogulo wrote: ↑Sat May 22, 2021 7:44 amIf we were talking about the TFSA - mine containing solely canadian dividend payers, in your opinion what type of account would be the best vehicle to make those reinvestments? Am not wedded to those equities but I am to their long sustained history of increasing dividends...
also, back when i chose which -US- div payers, i used this awesome free resource -the Dividend Champions excel spreadsheet which is updated monthly and lists all companies that have annually increased their divvies for the past 25yrs ('Champions') / 10 years ('Contenders') / 5 years ('Challengers')
Are you aware of any such resource for Japanese stocks?
Thanks again for the feedback. Questrade are cool with keeping their accounts open to non-res folks, so i think i'll opt to leave the registered accounts be.TBS wrote: ↑Tue May 25, 2021 9:02 amIn short, I haven't a suggestion for this onegulogulo wrote: ↑Sat May 22, 2021 7:44 amIf we were talking about the TFSA - mine containing solely canadian dividend payers, in your opinion what type of account would be the best vehicle to make those reinvestments? Am not wedded to those equities but I am to their long sustained history of increasing dividends...
also, back when i chose which -US- div payers, i used this awesome free resource -the Dividend Champions excel spreadsheet which is updated monthly and lists all companies that have annually increased their divvies for the past 25yrs ('Champions') / 10 years ('Contenders') / 5 years ('Challengers')
Are you aware of any such resource for Japanese stocks?
Diversified, index investing is popular on here as it is quick and efficient. Moreover, people on here try to avoid receiving dividends if they do not need the income for their daily life expenses. Unlike TFSA, Japanese NISA-type accounts cannot grow their allowances by re-investing dividends internally. So it is better to choose mutual funds which internally reinvest dividends as they are not affected by this problem. Outside of NISA accounts, such mutual funds have a deferred taxation/compounding benefit.
Remember keeping your TFSA open is an option if your Canadian broker will deal with a Japan resident. The dividends will become taxable by Japan after year 5, or before that if you make any remittances during your NPR period.
I think the mistake you are making here is you are looking at mutual funds through a western lens.gulogulo wrote: ↑Sat May 22, 2021 7:44 am
I am loathe to use mutual funds if i can avoid it as I would prefer not to piss away my cash on managerial fees, plus i learned alot through handling my own affairs more granularly (if that's a word). Though If that's my only available choice, what terms do i look for when searching for such funds?
