RetireJapan

Looks like a few Canadians are in this thread. Who's going to start the Canada wiki page? (sorry, couldn't resist).

Some good info here that's already starting to get lost (I know nothing about Canada, just summarising):

Non-residents and registered accounts.
Specific info about Questtrade accepting non-residents.
Tax-free status of TSFA and RRSP not recognized by Japan.
Converting driving licence.
Canada-Japan tax treaty.

TBS wrote: ↑Wed May 19, 2021 10:21 am
However, as Beaglehound says, if you make any remittance to Japan during the same calendar year as one where you make investment profits, those profits will become taxable in Japan (up to the amount you remit).

- Even as a non-permanent tax resident, capital gains will be due on any stocks purchased via your Canadian brokerages after moving to Japan, e.g. because of reinvesting dividends.
- Japan doesn't recognize the tax-free status of TFSA. Tax will be due here if the above scenarios apply.

There will be dividend reinvestment in my TFSA from stocks purchased ages ago. i am going to hang onto those long-term, so that (and the likely existence of profits) would that make the remittance tax is inescapable no matter when i opt to do it…?

Another question - Canadian exit tax aside, is it less of a headache if i divest myself of all short term positions before departure?

Beaglehound wrote: ↑Wed May 19, 2021 8:01 am
Basically if you remit cash to Japan while a resident of Japan, then you are on the hook for any income gained overseas in that tax year. This is regardless of which account you send it from. E.g. if you realise capital gains and also send money from an unrelated Canadian savings account, the capital gain is deemed to have been remitted. So it probably makes sense to find a way to get money to Japan before you are actually resident.

Which brings us back to the My Number conundrum. While it makes sense to contact the JP banks to ask them if they'd allow us to remit before we have our MN issued, if we are aren't currently present there (yet), where those accounts are addressed, I'm wondering that'll create unforseen issues down the road? Better in that case to simply wait and get dinged with the tax...?

Thanks again for all the invaluable feedback. And Poseidon sends his warm regards to Jake.

gulogulo wrote: ↑Wed May 19, 2021 7:58 pm There will be dividend reinvestment in my TFSA from stocks purchased ages ago. i am going to hang onto those long-term, so that (and the likely existence of profits) would that make the remittance tax is inescapable no matter when i opt to do it…?

Another question - Canadian exit tax aside, is it less of a headache if i divest myself of all short term positions before departure?

You are only liable if you remit in the same year as you have income, so the way to stay exempt is to not remit. If you are holding long-term in the TFSA, i.e. longer than the 5 year period you will be a non-permanent tax resident (NPR), then the only potentially liable income here is the dividends, which will only be a small percentage of your portfolio. If you do remit while an NPR, declaring and paying the taxes on dividends via the Japanese tax return system is not so difficult. You can choose either a flat 20.315% tax rate or to have it taxed as miscellaneous income (so at your marginal Japanese income tax rate + Prefectural tax). After the 5 year period everything then becomes taxable by Japan, regardless of whether you remit or not.

Some of the options you could consider are:

- Liquidating everything before coming. Nothing will be taxable by Japan this way, and you could reinvest from Japan once you arrive.
- Avoid remitting anything while an NPR, then pay the Japanese taxes on everything from year 5.
- You could liquidate everything in the final year you are an NPR, then remit in the following calendar year so as to be exempt from Japanese taxes (other than capital gains from the dividends reinvested after you arrive).

The first option is the simplest. The latter two options will require you submit Japanese tax returns. For the second option, you could sell everything then re-buy in the TFSA before departure. This will minimize the Japanese capital gains taxes eventually due. Try running the numbers for the different scenarios through a spreadsheet to understand the costs/benefits.

TBS wrote: ↑Sat May 22, 2021 1:45 am You are only liable if you remit in the same year as you have income, so the way to stay exempt is to not remit. If you are holding long-term in the TFSA, i.e. longer than the 5 year period you will be a non-permanent tax resident (NPR), then the only potentially liable income here is the dividends, which will only be a small percentage of your portfolio. If you do remit while an NPR, declaring and paying the taxes on dividends via the Japanese tax return system is not so difficult. You can choose either a flat 20.315% tax rate or to have it taxed as miscellaneous income (so at your marginal Japanese income tax rate + Prefectural tax). After the 5 year period everything then becomes taxable by Japan, regardless of whether you remit or not.

Some of the options you could consider are:

- Liquidating everything before coming. Nothing will be taxable by Japan this way, and you could reinvest from Japan once you arrive.
- Avoid remitting anything while an NPR, then pay the Japanese taxes on everything from year 5.
- You could liquidate everything in the final year you are an NPR, then remit in the following calendar year so as to be exempt from Japanese taxes (other than capital gains from the dividends reinvested after you arrive).

The first option is the simplest. The latter two options will require you submit Japanese tax returns. For the second option, you could sell everything then re-buy in the TFSA before departure. This will minimize the Japanese capital gains taxes eventually due. Try running the numbers for the different scenarios through a spreadsheet to understand the costs/benefits.

Sincerely appreciate the response.

By 'everything', you mean non-registered and TFSA only - and my RRSP could remain as-is?

gulogulo wrote: ↑Sat May 22, 2021 4:19 am By 'everything', you mean non-registered and TFSA only - and my RRSP could remain as-is?

Sorry, I wrote that last post with TFSA in mind. For your non-registered accounts, selling would presumably incur Canadian taxes so the cost benefit calculations would be different. You should be able to keep your RRSP - there are some details on how the pay outs may eventually be taxed by Japan here.

TBS wrote: ↑Sat May 22, 2021 1:45 am Some of the options you could consider are:

- Liquidating everything before coming. Nothing will be taxable by Japan this way, and you could reinvest from Japan once you arrive.

If we were talking about the TFSA - mine containing solely canadian dividend payers, in your opinion what type of account would be the best vehicle to make those reinvestments? Am not wedded to those equities but I am to their long sustained history of increasing dividends...

also, back when i chose which -US- div payers, i used this awesome free resource -the Dividend Champions excel spreadsheet which is updated monthly and lists all companies that have annually increased their divvies for the past 25yrs ('Champions') / 10 years ('Contenders') / 5 years ('Challengers')

Are you aware of any such resource for Japanese stocks?

gulogulo wrote: ↑Sat May 22, 2021 7:44 am

TBS wrote: ↑Sat May 22, 2021 1:45 am Some of the options you could consider are:

- Liquidating everything before coming. Nothing will be taxable by Japan this way, and you could reinvest from Japan once you arrive.

If we were talking about the TFSA - mine containing solely canadian dividend payers, in your opinion what type of account would be the best vehicle to make those reinvestments? Am not wedded to those equities but I am to their long sustained history of increasing dividends...

also, back when i chose which -US- div payers, i used this awesome free resource -the Dividend Champions excel spreadsheet which is updated monthly and lists all companies that have annually increased their divvies for the past 25yrs ('Champions') / 10 years ('Contenders') / 5 years ('Challengers')

Are you aware of any such resource for Japanese stocks?

In short, I haven't a suggestion for this one

Diversified, index investing is popular on here as it is quick and efficient. Moreover, people on here try to avoid receiving dividends if they do not need the income for their daily life expenses. Unlike TFSA, Japanese NISA-type accounts cannot grow their allowances by re-investing dividends internally. So it is better to choose mutual funds which internally reinvest dividends as they are not affected by this problem. Outside of NISA accounts, such mutual funds have a deferred taxation/compounding benefit.

Remember keeping your TFSA open is an option if your Canadian broker will deal with a Japan resident. The dividends will become taxable by Japan after year 5, or before that if you make any remittances during your NPR period.

TBS wrote: ↑Tue May 25, 2021 9:02 am

gulogulo wrote: ↑Sat May 22, 2021 7:44 am

TBS wrote: ↑Sat May 22, 2021 1:45 am Some of the options you could consider are:

- Liquidating everything before coming. Nothing will be taxable by Japan this way, and you could reinvest from Japan once you arrive.

If we were talking about the TFSA - mine containing solely canadian dividend payers, in your opinion what type of account would be the best vehicle to make those reinvestments? Am not wedded to those equities but I am to their long sustained history of increasing dividends...

also, back when i chose which -US- div payers, i used this awesome free resource -the Dividend Champions excel spreadsheet which is updated monthly and lists all companies that have annually increased their divvies for the past 25yrs ('Champions') / 10 years ('Contenders') / 5 years ('Challengers')

Are you aware of any such resource for Japanese stocks?

In short, I haven't a suggestion for this one

Diversified, index investing is popular on here as it is quick and efficient. Moreover, people on here try to avoid receiving dividends if they do not need the income for their daily life expenses. Unlike TFSA, Japanese NISA-type accounts cannot grow their allowances by re-investing dividends internally. So it is better to choose mutual funds which internally reinvest dividends as they are not affected by this problem. Outside of NISA accounts, such mutual funds have a deferred taxation/compounding benefit.

Remember keeping your TFSA open is an option if your Canadian broker will deal with a Japan resident. The dividends will become taxable by Japan after year 5, or before that if you make any remittances during your NPR period.

Thanks again for the feedback. Questrade are cool with keeping their accounts open to non-res folks, so i think i'll opt to leave the registered accounts be.

Should i wish to generate investment income for daily expenses, what would be the best choice?

5 years is too long to wait as we’d be looking to buy a place soon, so i guess i will just bend over and accept my remittance punishment! (The Olympics won't pay for themselves after all - especially not now haha) Does the first year as an NRT allow for anything different and advantageous over the 5-year period?

Dividend reinvestment in no-fee DRIPs have been an absolute godsend for me here. I am loathe to use mutual funds if i can avoid it as I would prefer not to piss away my cash on managerial fees, plus i learned alot through handling my own affairs more granularly (if that's a word). Though If that's my only available choice, what terms do i look for when searching for such funds?

And, what type of vehicle is best suited tax-wise for:
-foreign stocks
-foreign dividend paying stocks
-Japanese stocks
-Japanese dividend paying stocks

While here in canada, and while managing my canadian accounts, i was using this to help me decide the same question: https://www.taxtips.ca/rrsp/which-inve ... ounts.htm Again, if there is, beside your voluminous knowledge, a similarly-themed japan-focused resource with an answer to this that you can point me to, i'd be very grateful.

gulogulo wrote: ↑Sat May 22, 2021 7:44 am
I am loathe to use mutual funds if i can avoid it as I would prefer not to piss away my cash on managerial fees, plus i learned alot through handling my own affairs more granularly (if that's a word). Though If that's my only available choice, what terms do i look for when searching for such funds?

I think the mistake you are making here is you are looking at mutual funds through a western lens.

Yes, in Canada and America ETFs are almost always better. This is NOT the case here in Japan.

Example S&P500 Fund - ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００)

https://www.rakuten-sec.co.jp/web/fund/ ... 90C000GKC6

Total fee: 0.0968%

That is insanely competitively priced for a fund that internally reinvests.

noted Kanto, that is minimal!

besides fund fees, what other ingrained financial notions do you suggest I should disabuse myself?

what would you say they (JP) do better / should i take advantage of once there?