Gift tax question

[captainspoke]

I see this kind of thing for the US:

The person who makes the gift is the one who is responsible for paying any gift tax that may be due and reporting the gift to the IRS on a gift tax return...
For the person who receives the gift, there won't be any immediate tax consequences ...

Is this the way it works in Japan? I've read that ¥1.1M is the tax free gift limit.

So for example, if I receive up to ¥1.1M each from two distinct sources (a total of ¥2.2M), neither I nor they will have to pay any gift taxes. Is that correct?

But if I receive over that amount from separate sources, say, ¥2M from two different sources (total ¥4M), it is the Donors that are gifting the money that will be liable for taxes on the gift (the amount over the limit, ¥900k each in this case), and not me?

**

I am aware that you can pay someone's living expenses, which will not count towards the tax-free gift limit, and that there are other exceptions--for education, helping children buy a house, and so on. That's not my question. Just outright gifting, pure and simple.

[RetireJapan]

Seems the recipient pays the tax, unless they fail to, in which case the donor does???

http://123s.zei.ac/zouyo/zouyozeikakaru.html

[captainspoke]

I guess an instance of this question might be when grown kids give money to a parent(s)--beyond basic support or monthly expenses.

Maybe give them a credit card to use?

Maybe the kids could claim that they'd (always) promised to pay their parents back for sending them to college?

[eyeswideshut]

The only 2 exceptions that I am aware of are (a) children's education and (b) assisting children in buying a house.

[kizuki]

The only 2 exceptions that I am aware of are (a) children's education and (b) assisting children in buying a house.

Can you share more details about (b), possibly a relevant link? I have been trying to find information about this but not able to find the limit for this exception. Some links mentioned that it is 25 million yen but not sure of this. The time limit of receiving the gift and buying a residential place in same or next year is clear from those sites but not sure of any other requirements.

[RetireJapan]

The only 2 exceptions that I am aware of are (a) children's education and (b) assisting children in buying a house.

Can you share more details about (b), possibly a relevant link? I have been trying to find information about this but not able to find the limit for this exception. Some links mentioned that it is 25 million yen but not sure of this. The time limit of receiving the gift and buying a residential place in same or next year is clear from those sites but not sure of any other requirements.

I think it might be different according to the local area. If you have any contact with a housebuilder or estate agent I'm sure they'll be able to walk you through the details.

[eyeswideshut]

The only 2 exceptions that I am aware of are (a) children's education and (b) assisting children in buying a house.

Can you share more details about (b), possibly a relevant link? I have been trying to find information about this but not able to find the limit for this exception. Some links mentioned that it is 25 million yen but not sure of this. The time limit of receiving the gift and buying a residential place in same or next year is clear from those sites but not sure of any other requirements.

Check out: https://www.nta.go.jp/publication/pamph ... l/05_3.htm (Japanese only).

[kizuki]

Thanks, I will check it out. Quick glance tells me that it might be around 20 million yen.

[captainspoke]

I found this on the PWC site:

Gift tax is a national tax levied on the recipients of a gift. The scope of gift tax is similar to inheritance tax, i.e. a taxpayer’s visa type and the time they have resided inside and outside of Japan affects which gifts may be subject to gift tax. However, the gift tax regime is not unified with inheritance tax, with the exception of a gift that is made within three years from date of death of the donor.

The annual gift exemption per recipient is JPY 1.1 million. Any amount of gift(s) received above the exemption will potentially trigger Japan gift tax.

Additionally, there is a special system where the taxpayer can make an irrevocable election to integrate inheritance and gift tax when certain conditions are met.

Under the special system, referred to as 'settlement of taxes at the time of inheritance':

Qualified transfers are those from lineal ascendants who are aged 60 years and older made to their lineal descendants who are aged 20 years or older.

Gifts of up to a total of JPY 25 million will be exempt from gift tax. Several gifts can be made tax-free as long as the total gifts do not exceed the JPY 25 million threshold.

Gifts are taxed at a rate of 20% on the amount exceeding the accumulated threshold of JPY 25 million. The amount of gift tax, if any, will be treated as a prepayment of tax against a future inheritance tax liability.

Valuation of the gifted assets will freeze at the time of the gift for the inheritance tax calculation.

Those who made this election will automatically be subject to the inheritance tax filing regardless of the situation at the time of inheritance.

Recently, special exemptions for gifts made for designated funds have been introduced. These programs are to promote the transfer of wealth from older generations to the younger generation and allow a certain amount of gifts that are free from tax. The exemption is applicable only if the funds are used for qualified expenses. A special account based on the custody agreement must be set up to take the tax benefit. This account is usually maintained by a financial institution that has custody of the funds. Any amounts not used for qualified purposes will be subject to gift tax. Currently, JPY 15 million of educational expenses, as well as JPY 10 million of expenses for marriage and childcare, are qualified for tax-exempt gifting per recipient (due to expire on 31 March 2019).

Below this there's a chart with the tax rates depending on certain factors, and the formatting will not copy/paste in here, so if you're interested look at: (very near the bottom)

http://taxsummaries.pwc.com/ID/Japan-In ... ther-taxes