NISA and gift tax

[Russ104]

We are just setting up a new NISA in my wife's name.
She does not have her own income.
She is Japanese.

Should we limit the annual amount that we put in this to the 1.1 million JPY that will be free of gift tax? or should we go for the max 3.6 million JPY if we can afford it?

[RetireJapan]

Interesting question. You'll be paying 10-15% on the amount over the 1.1m allowance, but being able to invest in NISA (assuming you are maxing out your own account too) will eventually save you 20.315% tax.

I might consider it.

Anyone else?

[Tkydon]

If you Gift a total of Y3,923,000

After the Gift Tax Exemption of Y1,100,000

The Taxable Gift Amount is Y2,823,000

The Gift Tax works out to be Y323,450 or 11.46% of the Gift Amount

This leaves Y3,599,550 for NISA

Add Y450, and

Consisting of Y1,200,000 for Tsumitate NISA Max
and Y2,400,000 for the Growth Portion of NISA Max

[Beaglehound]

Personally I wouldn't be keen at all on paying gift tax for this purpose. You, as a couple, may save on tax from gains sheltered in the NISA in the future, but what is guaranteed is a double digit hit at the outset.

[adamu]

If you Gift a total of Y3,923,000
...
The Gift Tax works out to be Y323,450
...
This leaves Y3,599,550 for NISA

I have not checked the numbers, but if correct my take is that you would be looking to make much more than this in tax savings long term (assuming the investments work out...) so it's worth doing.

This Japanese article also looks good.

Beaglehound is right though that the taxes are guaranteed, but the returns are not.

[eyeswideshut]

Off topic and unhelpful comment forthcoming but levying gift tax on transfers between spouses is insane. I would love there to be the concept of joint accounts and joint tax filings here. It just seems so anti-family in a nation where they need more families.

[RetireJapan]

Off topic and unhelpful comment forthcoming but levying gift tax on transfers between spouses is insane. I would love there to be the concept of joint accounts and joint tax filings here. It just seems so anti-family in a nation where they need more families.

It's largely to prevent inheritance tax evasion I believe. I'm guessing 90% unenforced, much like the speed limits here

[Tkydon]

Off topic and unhelpful comment forthcoming but levying gift tax on transfers between spouses is insane. I would love there to be the concept of joint accounts and joint tax filings here. It just seems so anti-family in a nation where they need more families.

Exempt Gifts: 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 - Seikatsuhi nado 生活費等に充てられるもの...

Therefore, if the person has their own money that they are spending for their own Seikatsuhi - support or livelihood, then it is legal to pay those support or livelihood expenses for them, and allow them to invest their own money, which is not a gift and already post-tax...

My calculation above assumed the recipient has no other gifts from any sources in the same tax year...
The Annual Deduction is against the sum of all gifts received in the tax year from al sources.

[Deep Blue]

Off topic and unhelpful comment forthcoming but levying gift tax on transfers between spouses is insane. I would love there to be the concept of joint accounts and joint tax filings here. It just seems so anti-family in a nation where they need more families.

This, 100%

[Deep Blue]

It's largely to prevent inheritance tax evasion I believe.

There should be no IHT between married couples either.