Hi,
Have been sending money for several years to Canada to fund the purchase of a home there, but priced out of the market sadly and want to bring money back to Japan, approximately CAD250K, to put towards Japanese mortgage.
Have found some information regarding large sums being transferred into Japan on previous threads and posts, though not read anything specific to bringing savings that originated in Japan back from Canada.
Am I correct in understanding that these kind of personal savings transferred from and then back to Japan are not subject to Japan tax? If this is the case, are there any limitations on how much can be brought back annually? At one time?
Appreciate any advice should you be able to help and many thanks in advance.
JPN to Canada back to JPN
-
captainspoke
- Sensei
- Posts: 1574
- Joined: Tue Aug 15, 2017 9:44 am
Re: JPN to Canada back to JPN
I think there are a couple aspects to consider. First, over the years that you have kept the money in Canada, have there been any investment returns on it (from basic interest in a bank acct, to some kind of brokerage account)? And if you are a tax resident of Japan, have you been declaring that (gains, distributions, interest) on your tax return here? If so, then I think the situation would be that you are effectively cashing out of those foreign investments (and repatriating the funds in yen). If there is any final profit from doing that, in yen terms, then about a year from now when doing your taxes for 2022, you'll probably owe some tax on it. In the meantime, before next tax season, there should not be any taxes on it--no tax specifically on money that's repatriated. Taxes on it would be as normal--e.g., XYZ fund, bought on certain dates (with the f/x rates for those dates), then sold now (at present f/x rates), and any changes in yen value due to the changes in exchange rates figured in accordingly.
If the money has not been invested, perhaps kind of just sitting in a bank account (minimal interest on it), you may only have to declare that interest on it--in which case, there would be only minor taxes. OTOH, in addition to that, technically, this could be looked at as an investment in foreign currency. That is, you were buying CAD over a period of time, and are now cashing that in back to yen. In this case, you'd need a listing of the dates you exchanged into CAD, and rates for those dates, and then line all that up with the present exchange rate, when you convert back into yen. Again, this would be a 2022 event, so it would be reported on your tax return a year from now.
For the transfer of the money itself, I would do it in one go--all at once, and a bank to bank wire transfer. This would be the most cost effective. Set up a CAD sub account at a bank that allows that here (shinsei, sony, and maybe some others), and have your canadian bank wire the money--in canadian dollars--to that account here, reason being that you'll likely get better exchange rates on your own.
In some places you might read about Wise (formerly Transferwise), but their limit is a million yen, which would mean you would need to do a (long) series of transactions. Also, from what I've read, while their f/x rates are okay for smaller amounts, for 250k you would be better off not using them.
This wiki does a good job on transfers: https://www.reddit.com/r/JapanFinance/wiki/index Scroll down to Handling Money, and then Transfers. That's on sending money out, but sending it in/back is pretty much the same thing.
Your bank here--any bank here--will call you when the funds arrive, probably asking about the origin of the money. Also, they will report this to the relevant tax office, which may also contact you. Don't be frightened by this, it's normal. The bank wants to make sure they are not aiding money laundering, and the tax office wants to be assured of the above--that you have been and/or will be declaring any gains, dividends, interest, and so on. (and that it's not a gift) If the bank asks for a reason for the transfer, or for the origin of the funds, state firmly that it is a transfer from your own account--from your own account there in canada to your own account here.
Good luck!
If the money has not been invested, perhaps kind of just sitting in a bank account (minimal interest on it), you may only have to declare that interest on it--in which case, there would be only minor taxes. OTOH, in addition to that, technically, this could be looked at as an investment in foreign currency. That is, you were buying CAD over a period of time, and are now cashing that in back to yen. In this case, you'd need a listing of the dates you exchanged into CAD, and rates for those dates, and then line all that up with the present exchange rate, when you convert back into yen. Again, this would be a 2022 event, so it would be reported on your tax return a year from now.
For the transfer of the money itself, I would do it in one go--all at once, and a bank to bank wire transfer. This would be the most cost effective. Set up a CAD sub account at a bank that allows that here (shinsei, sony, and maybe some others), and have your canadian bank wire the money--in canadian dollars--to that account here, reason being that you'll likely get better exchange rates on your own.
In some places you might read about Wise (formerly Transferwise), but their limit is a million yen, which would mean you would need to do a (long) series of transactions. Also, from what I've read, while their f/x rates are okay for smaller amounts, for 250k you would be better off not using them.
This wiki does a good job on transfers: https://www.reddit.com/r/JapanFinance/wiki/index Scroll down to Handling Money, and then Transfers. That's on sending money out, but sending it in/back is pretty much the same thing.
Your bank here--any bank here--will call you when the funds arrive, probably asking about the origin of the money. Also, they will report this to the relevant tax office, which may also contact you. Don't be frightened by this, it's normal. The bank wants to make sure they are not aiding money laundering, and the tax office wants to be assured of the above--that you have been and/or will be declaring any gains, dividends, interest, and so on. (and that it's not a gift) If the bank asks for a reason for the transfer, or for the origin of the funds, state firmly that it is a transfer from your own account--from your own account there in canada to your own account here.
Good luck!
Re: JPN to Canada back to JPN
Thank you very much.
Great advice and information for me to better understand the nuances of my situation. I'll look into CAD sub accounts as an option for transferring a larger lump sum.
Also appreciate the heads up on contact from bank and that it is nothing to be anxious about.
Appreciate your help.
Great advice and information for me to better understand the nuances of my situation. I'll look into CAD sub accounts as an option for transferring a larger lump sum.
Also appreciate the heads up on contact from bank and that it is nothing to be anxious about.
Appreciate your help.