Submitting a tax adjustment

[Chris D]

I'm looking to submit a tax adjustment at the tax office this year. Previously I've been able to have it done by my employer but my foreign income for 2018 is borderline on the 200,000 yen mark and I turned over my portfolio so I have a ton of capital gains to report. Also, I opened an iDeco last year so I have that form to submit plus I think our health expenses are going to be over 100,000.

Are there any good online guides to get started on what I need to prepare? I have a spreadsheet of dates and amounts for all my income and capital gains. When I convert to yen (from AUD) do I just convert the resulting income/capital gain from AUD to yen or do I have to also take into account the exchange rate on the day of purchase? Also, what kind of actual supporting documentation do I need? I have nothing physical. I can print out various records from my broker and registry websites but I'm not sure if that is acceptable or necessary. Also, as I was going over my history, I realised I've had a few special shareholder allotments that just show up as an increase in my balance but I have little idea of how much I paid at the time. I can check the share price at the time but the allotment price was likely discounted from that.

Thanks!

[RetireJapan]

If you take all your paperwork to the tax office they will help you. Go as early as possible in order to miss the crowds. I wrote about my experience here: https://www.retirejapan.com/blog/filing ... -in-japan/

I believe you will need the exchange rate on that day for each foreign transaction.

[Chris D]

Thanks, I did read through that post. So I'll need the exchange rate for both the day of purchase and the day of sale? Is there an official source of exchange rates that can be used for this purpose? Also, I broke my sale up into two lots, that which is covered by capital gains and that which is not. But it seems like I'll need to break down the sale by every single purchase to take into account differing exchange rates. Also, I was previously enrolled in a number of dividend reinvestment plans and getting the information as to the price those shares were allocated at seems near impossible. The best I think I can do is use the closing share price on the day the share went ex dividend but I'm not sure of the accuracy of that and what "documentation" I can provide regarding it. Did you run into any of these kind of issues?

[RetireJapan]

Thanks, I did read through that post. So I'll need the exchange rate for both the day of purchase and the day of sale? Is there an official source of exchange rates that can be used for this purpose? Also, I broke my sale up into two lots, that which is covered by capital gains and that which is not. But it seems like I'll need to break down the sale by every single purchase to take into account differing exchange rates. Also, I was previously enrolled in a number of dividend reinvestment plans and getting the information as to the price those shares were allocated at seems near impossible. The best I think I can do is use the closing share price on the day the share went ex dividend but I'm not sure of the accuracy of that and what "documentation" I can provide regarding it. Did you run into any of these kind of issues?

Oooof. No, I don't sell anything abroad and all my funds are accumulation rather than distribution (because I didn't want to deal with tax stuff)

I am not sure how much detail the tax office will want. In the comments on that post someone mentioned using a bank rate (as that tends be be better for the person declaring) which you can find on their websites and printing it out as proof. I would get the basic info then go and talk to the tax office. They are usually pretty helpful, especially if you go in out of season when they aren't busy.

[TokyoWart]

I have had the same trouble with reporting capital gains and losses during dividend reinvestment of overseas shares. My experience working both with the local tax office and my zeirishi (税理士) was as follows:

1. They definitely expect a calculation of purchase price and sales price in yen using the applicable rates on each date (not just the simpler conversion of capital gain into yen). Note that this gives a completely different result than just converting the capital gain/loss into yen and I most recently had cases where a capital loss under US reporting rules became a capital gain under Japan's rules because of these exchange rate effects.

2. You can use almost any objective online resource that gives the historical rate. I used Oanda.

3. In cases of long series of dividend reinvestments you will likely find your broker gives you a summary up to a certain date (e.g. basis of X dollars as of January 1, 2017) and then each quarterly figure after that. In these cases my zeirishi used the rate on (for instance) January 1, 2017 for that basis figure and then converted each figure afterwards based on the rate on the date of dividend re-investment. The tax office seemed fine with this probably because they had no alternative.

4. For dividend reinvestments you mentioned using the date the stock went ex-dividend. In my case I had to use the trade date of reinvestment (which was later than the ex-dividend date) when calculating the basis for new shares.

5. In contrast, when reporting the total foreign dividends I received in a given year the tax office has been fine with using some form of average exchange rate for the year. I use the official average rate published by the US Treasury department each year for my US dollar-yen conversion.

[TokyoWart]

Depends on your residency status but most foreigners will not be taxed on foreign investment income during their first 5 years in Japan and that income is not reported. My understanding of reporting overseas assets is more complicated. If your income is over ¥20,000,000 you need to submit a statement of all assets including foreign assets regardless of how long you’ve been in Japan. There’s also an Overseas Asset Report requirement which is triggered by the total amount of your assets in Japan (over ¥300,000,000) or overseas assets above a certain amount and that’s required when you are a tax resident (usually after 5 years) regardless of your income. Both requirements can be fulfilled with the same submission but they are technically different.

[adamu]

You can fill it in online. If you have a My Number Card (photo version), you can even submit it online. I didn't have one, so I filled it in online, then took it to the tax office. The online process guides you through all the questions, so it'll probably tell you what to put there.

https://www.keisan.nta.go.jp/kyoutu/ky/sm/top

Note: I did this last year, this year I managed to get away with just a year-end adjustment at my employer.

[Chris D]

Oooof. No, I don't sell anything abroad and all my funds are accumulation rather than distribution (because I didn't want to deal with tax stuff)

I am not sure how much detail the tax office will want. In the comments on that post someone mentioned using a bank rate (as that tends be be better for the person declaring) which you can find on their websites and printing it out as proof. I would get the basic info then go and talk to the tax office. They are usually pretty helpful, especially if you go in out of season when they aren't busy.

2. You can use almost any objective online resource that gives the historical rate. I used Oanda.

3. In cases of long series of dividend reinvestments you will likely find your broker gives you a summary up to a certain date (e.g. basis of X dollars as of January 1, 2017) and then each quarterly figure after that. In these cases my zeirishi used the rate on (for instance) January 1, 2017 for that basis figure and then converted each figure afterwards based on the rate on the date of dividend re-investment. The tax office seemed fine with this probably because they had no alternative.

4. For dividend reinvestments you mentioned using the date the stock went ex-dividend. In my case I had to use the trade date of reinvestment (which was later than the ex-dividend date) when calculating the basis for new shares.

Thanks a lot for everyone's replies. Unfortunately a 12 year (underperforming) dormant portfolio, mostly left to dividend reinvest has left me with a bit of a clean up this year. Pretty typical investing style among my peers at the time but last year, after reading this site and others, I realised I needed to get things sorted out.

Regarding 2, I've created a spreadsheet with exchange rates for all relevant dates. As for 3, I can get that information so that's good. 4, I need to redo some of the figures I've already done to use the trade date. In terms of the share price, I've been using GOOGLEFINANCE to drive that, but is that something I'll need to document for the tax office?

[TokyoWart]

Regarding 2, I've created a spreadsheet with exchange rates for all relevant dates. As for 3, I can get that information so that's good. 4, I need to redo some of the figures I've already done to use the trade date. In terms of the share price, I've been using GOOGLEFINANCE to drive that, but is that something I'll need to document for the tax office?

When I have submitted something that was based on historical exchange rates or prices, I have brought a hard copy printout of my source when I went to the tax office (and in my case these have always unfortunately been face-to-face meetings). They don't always even keep that paper evidence when it was very long but they have accepted the submissions.

[Chris D]

I want to thank everyone for their advice. I followed it all, created spreadsheets to smooth things out, printed all my sources, even was able to explain about the tax I had already paid on my bank interest and get the appropriate deduction. I went to the tax office on Tuesday, had to wait 3 hours but then had an hour consultation with an extremely helpful member of staff. They did all the data entry for me, consulted elsewhere when they needed to and overcome some hiccups on the website along the way. A pretty good experience compared to in Australia.
Thanks again.