Cash gifts between spouses

[Tkydon]

My suspicion is that unless you are whacking large amounts into your spouse’s bank account, or investing large amounts in their name, it would be fiendishly difficult for the tax folk to find out what’s going on with family finances. What would trigger them to do so? I also doubt they are motivated to investigate these things. Does anyone have any stories to the contrary?

I just don't see the point of a gift tax between spouses. What business is it of the Japanese government on what we spend as a family. I would like to actually know how much money this brings into the Japanese government. I have the same set up with a credit card with my wife that others have mentioned, but I really would prefer a joint bank account.

Yes, I agree with you both, but I am just quoting the law as written. Enforcement may be an issue.

As I said before, Japan does not have the concept of Community Property between spouses.

https://www.ata-tax.jp/service/index02_en.html

3. Married couple
Property ownership and taxation on married couple generally treats each spouse as a separate individual with separate legal and property rights, similar to US common law property system as opposed to US community property system. Joint bank account is not available in Japan. Inheritance of foreign joint account originated from the spouse income would be regarded as taxable event by Japan tax authority.

https://japanpropertycentral.com/real-e ... -in-japan/

I was recently requested by Prestia to provide a list of family members' accounts at the bank. I am guessing this would enable tracking of living expenses / gifts between family members, and may possibly be used to facilitate taxation in the future...

[RetireJapan]

Have never met anyone who has run into gift tax between spouses. I guess it's one of those things like driving the speed limit where they can bust you any time they want to, but mostly don't bother

[TJKansai]

I was recently requested by Prestia to provide a list of family members' accounts at the bank. I am guessing this would enable tracking of living expenses / gifts between family members, and may possibly be used to facilitate taxation in the future...

My wife has a Prestia account, but no such inquires yet. Actually, she is the only one with an account with them. Since she gets free transfers I park a fair bit of cash there, and then we use it pay off household and schooling expenses. We all have a ridiculous number of accounts due to various schools having restrictions on which banks they use.

As a data point, I've deposited up to 3 million in the past and no questions were asked.

On the other hand, incoming/outgoing amounts over ¥1 million (from overseas) usually have had a bank inquiry as to source and purpose.

We had to jump through a lot of Prestia hoops to send tuition money to a government school in Canada, and then even more hoops to cash the CAD refund check the school sent us when the program was shut down due to Covid.

[Tkydon]

I was recently requested by Prestia to provide a list of family members' accounts at the bank. I am guessing this would enable tracking of living expenses / gifts between family members, and may possibly be used to facilitate taxation in the future...

My wife has a Prestia account, but no such inquires yet. Actually, she is the only one with an account with them. Since she gets free transfers I park a fair bit of cash there, and then we use it pay off household and schooling expenses. We all have a ridiculous number of accounts due to various schools having restrictions on which banks they use.

As a data point, I've deposited up to 3 million in the past and no questions were asked.

On the other hand, incoming/outgoing amounts over ¥1 million (from overseas) usually have had a bank inquiry as to source and purpose.

We had to jump through a lot of Prestia hoops to send tuition money to a government school in Canada, and then even more hoops to cash the CAD refund check the school sent us when the program was shut down due to Covid.

Yeah, just a couple of years ago, I was able to register an Overseas Payee on Prestia on the spot. Recently, I had to do one and it took about a week for the registration to go through before I could make the first transfer. I guess it is all due to the Anti-Terrorist / Anti Money Laundering measures.

[bbkennyd]

Fascinating topic. I'm new to the site. Made an initial and lengthy reply post in the dummies section. This "gift" area is a topic that I am very curious about.

I wonder how far back the "gift" might be traced. We currently live in California. I'm a US citizen and my wife is a US PR/JPN citizen. We have joint accounts in the USA and California is a Community Property state. In the US as soon as cash is deposited into any of these accounts they are owned 50/50. My understanding is that the US looks at deposits into joint accounts as gifts - but I am kosher because the total of my "gifts" fall way under her annual $159k limit and my wife is kosher because I get the Unlimited Marital Deduction.

Now, the fun part - what if we move to Japan and become tax residents. If I continue to deposit my pension into our joint accounts in the US will this be a taxable "gift" event in Japan? For example, if I am depositing 100K USD into the account over the course of a year, I am technically gifting my wife 50K USD. In the US, I am under the impression that the 159K USD limit still applies so long as I remain a US citizen. And, once the money is in the account my wife owns half of it. Therefore, when the funds are remitted to Japan half of the cash would already be hers. Would Japan expect my pension deposits into the US accounts to be reported as gifts? If so, I guess I need to devise a better strategy!

[Bubblegun]

Have never met anyone who has run into gift tax between spouses. I guess it's one of those things like driving the speed limit where they can bust you any time they want to, but mostly don't bother

Unless the GITS have an end of month quota then, quietly.......they'll sit, at a very very very tiny junction, eyes peeled, heart racing, waiting, hiding, prowling, for the moment you go just a tipsy over the limit or didn't quite stop at the line. Anyway, at least my kid got to sit on the police motor bike and get a photo taken. Cost me 6,000 yen for that photo.LOL worth it!

I'm now bringing some money over from the UK, so I suppose it would be ok to gift a million yen to the wife, and kids?

But I wonder.....isn't there a time limit, or proof that it was a gift?

[Beaglehound]

Fascinating topic. I'm new to the site. Made an initial and lengthy reply post in the dummies section. This "gift" area is a topic that I am very curious about.

I wonder how far back the "gift" might be traced. We currently live in California. I'm a US citizen and my wife is a US PR/JPN citizen. We have joint accounts in the USA and California is a Community Property state. In the US as soon as cash is deposited into any of these accounts they are owned 50/50. My understanding is that the US looks at deposits into joint accounts as gifts - but I am kosher because the total of my "gifts" fall way under her annual $159k limit and my wife is kosher because I get the Unlimited Marital Deduction.

Now, the fun part - what if we move to Japan and become tax residents. If I continue to deposit my pension into our joint accounts in the US will this be a taxable "gift" event in Japan? For example, if I am depositing 100K USD into the account over the course of a year, I am technically gifting my wife 50K USD. In the US, I am under the impression that the 159K USD limit still applies so long as I remain a US citizen. And, once the money is in the account my wife owns half of it. Therefore, when the funds are remitted to Japan half of the cash would already be hers. Would Japan expect my pension deposits into the US accounts to be reported as gifts? If so, I guess I need to devise a better strategy!

Might be best in that scenario to use a US account in your own name for such deposits, then remit to your account here. Once it’s here, no problem for your wife to access it for living expenses.

[bbkennyd]

Might be best in that scenario to use a US account in your own name for such deposits, then remit to your account here. Once it’s here, no problem for your wife to access it for living expenses.

Fantastic! What are the odds that the rest of this process will be this easy?

[Gulliver]

…
However, there are a set of Exempt Gifts, including: (Inheritance Tax Law, Article 21 Paragraph 3)

2. Gifts between persons who have a legal responsibility to support each other, unless the gift is made for a purpose other than support or livelihood.

Transfer of money between spouses to pay living expenses would be covered under this exemption.
Transfer of Residential Property would not.

Support for dependents (living expenses, education expenses, etc.) is not considered to be a gift, but anything not directly considered to be direct living expense support to dependents would be considered a gift.

“Transfer of money between spouses to pay living expenses”

Would bank transfers between spouses for the purposes of paying monthly rent qualify as “living expenses” under this exemption?

[captainspoke]

...
Would bank transfers between spouses for the purposes of paying monthly rent qualify as “living expenses” under this exemption?

Of course.

For all the handwringing over the gift tax with regard to spouses/kids, would anyone know of an actual instance where someone was 'caught' for this? Even if you only heard of it third hand thru the rumor mill? (I haven't.)