Accumulating ETFs

[TokyoWart]

That is very interesting. I wonder how funds like eMaxis Slim all-country (which don't pay out dividends at all, regardless of whether you choose reinvesting or distribution when you buy them) are treated?

That's why I find this confusing. Several years ago I had to help someone with a Nikkei index mutual fund they had contributed to over about a decade and no dividends had ever been paid out so it was internally accumulating but there also did not seem to be any report in the interim that indicated taxes paid or due.

[fools_gold]

That's why I find this confusing. Several years ago I had to help someone with a Nikkei index mutual fund they had contributed to over about a decade and no dividends had ever been paid out so it was internally accumulating but there also did not seem to be any report in the interim that indicated taxes paid or due.

This article explains it.

As far as I know, for funds like emaxis slim dividend distributions are accumulated within the fund untaxed. Taxes on distributions are effectively deferred as capital gains tax to be paid when you sell the fund.

[rasselbiluga]

This is so confusing. I've asked the tax accountant who is currently preparing my tax return whether one would have to include in their tax return dividends from accumulating ETFs and her answer is yes... Although I am not sure she understands what a accumulating ETF is. I tried to describe as best as I could that dividends are never paid into my brokerage account - she said that it does not matter. But again, her English is very limited and my Japanese is even more so...

I just don't know what weight to give to the advice... This is very annoying.

Besides NISA, I am also investing in Ireland-domiciled accumulating ETFs via IKBR, for the reasons nicely summarised by TBS in this thread:

- If you are not planning on staying in Japan long-term, you will be able to keep your ETF units when you leave if e.g. Interactive Brokers let you transfer your account to your new country. This avoids having to sell on exit and pay Japanese capital gains taxes.
- The Japanese tax treatment with respect to dividends looks broadly identical to Japanese mutual funds: they can re-invest internally only having to pay foreign withholding taxes. [Edit Apr 30, 2021: I am no longer sure about this, check it out if you are thinking of investing this way.]
- The fund costs are low.
- You can do everything in English, from researching to trading, which many will appreciate.

The question whether we need to pay capital gain taxes on dividends, even though these are accumulating ETFs, is obviously very important. Fraussie, did you end up including the accumulating ETFs in your tax return? I did some search for 再投資型etf, but could not come up with any useful info concerning their taxation.

[Fraussie]

Sorry haven't logged into my account for a while - better late than never!

I am not yet taxble on my worldwide income so I did not include dividends in my tax return. I queried the whole thing with the accountant who prepares my tax return and could not get a straight answer...

[ayetobee]

Please excuse my newbie question, how do you find out if the fund is an accumulating or distributing ETF?
I assume if it lists its distributions, that would tell or is it stated somewhere specifically?