Cash gifts between spouses

[Tkydon]

Can anybody give a justification for gift taxes between spouses in Japan??? whilst I understand gift taxes about inheritance to children and grandchildren, we do have these in the UK. I think it is ridiculous that in the 21st century spouses in Japan cannot have a joint bank account because of gift taxes. Both my wife and I have a joint bank account in the UK and it is a far better and more honest way to run your family finances.

A Family Card on your account is fine for living expenses.

Japan does not have the concept of communal property between spouses.

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.

Anything that would be categorized as a Gift is subject to Gift Tax on the value of the gift, on the value of all gifts received in the year over the Gift Tax Allowance of Y1.1M. If gifted within 3 years before the death of the donor, it would be reassessed as Inheritance, and may be subject to additional tax under the Inheritance Tax.

There are some rules regarding valuation of certain types of gifts.

Gift Tax is levied on the Recipient, not the Donor, and gifts received in excess of Y1,100,000 Gift Allowance in any Tax Year are subject to Gift Tax, with some exceptions or additional allowances for certain types of gifts.

Any gift received within 3 years before the Donor's death, would be reassessed as part of the Donor's Estate and adjusted for Inheritance Taxes.
There is a way to defer tax on certain gifts to the death of the Donor, when the gift would be assessed for Inheritance Tax on the amount of the Gift at the time of the Gift.

There is a Special Once-In-A-Lifetime Per Spouse Allowance for a Receipt of a Gift of a Primary Residence or funds to purchase a Primary Residence received from a Spouse of more than 20 years. (A Donor can make multiple gifts to multiple spouses of more than 20 years each.)

There is a huge Spouse Allowance against Inheritance Tax which means that many spouses would not be subject to Inheritance Tax.

[captainspoke]

...
There is a Special Once-In-A-Lifetime Allowance for a Receipt of a Gift of a Primary Residence or funds to purchase a Primary Residence received from a Spouse of more than 20 years. (A Donor can make multiple gifts to multiple spouses of more than 20 years each.)
...

I wonder how often that happens?

[Tkydon]

...
There is a Special Once-In-A-Lifetime Allowance for a Receipt of a Gift of a Primary Residence or funds to purchase a Primary Residence received from a Spouse of more than 20 years. (A Donor can make multiple gifts to multiple spouses of more than 20 years each.)
...

I wonder how often that happens?

I guess absolute max would of 4 times to/from 4 different spouses, each of over 20 years ???

[Gulliver]

Transfer of money between spouses to pay living expenses would be covered under this exemption.

I wonder if the JTA lists the definitions and price limits of living expenses somewhere?

When my Tokyo trophy wife fills up the tank of our 12 cylinder Lamborghini on the way to her favorite Michelin star restaurant for sustenance, it really takes a bite out of the budget (yes, I’m using hyperbole).

[RetireJapan]

I think it is vague and fuzzy so they can interpret it however they like later

Seem to remember former PM Hatoyama getting ridiculous amounts of money from his mummy every month for living expenses...

[goodandbadjapan]

My wife has a credit card which is in her name but is a sort of subsidiary of mine (or something) which means she spends on that card and it comes out of my account along with my credit card spending. Wonder how that works. She is technically using my money to spend on herself. Is that a gift? If it's not then it is permission to spend my money which pretty much means anything goes, surely?

[Tkydon]

Exempt Gifts

Gift Tax is not levied on the following items: (Inheritance Tax Law Article 21-Paragraph 3)

(2) Gifts between persons who have a legal responsibility to support each other, for the purpose of support or livelihood.
(Gifts for purposes other than support or livelihood would be subject to Gift Tax)
抺養義務者から贈与により取得した財産で、生活費等に充てられるもの

(and other non-related items...)

Therefore, it comes down to the interpretation of 'for the purpose of support or livelihood', '生活費等に充てられるもの'

The Tax Officials might argue that designer handbags, jewelry, and other things that she might spend your money on do not qualify, and she is therefore subject to Gift Tax for amounts over Y1.1M in any Tax Year.
(but then, maybe, she'd just pay the tax with your money as well... and she'd have to pay Gift Tax on that amount too...)

[TBS]

My wife has a credit card which is in her name but is a sort of subsidiary of mine (or something) which means she spends on that card and it comes out of my account along with my credit card spending.

Yes, we also use a family credit card. The system works well for household expenses.

One Japanese couple we are close to don't even bother with a family card. The wife just keeps one of her husband's credit cards in her purse and spends away.

[Wales4rugbyWC23]

Exempt Gifts

Gift Tax is not levied on the following items: (Inheritance Tax Law Article 21-Paragraph 3)

(2) Gifts between persons who have a legal responsibility to support each other, for the purpose of support or livelihood.
(Gifts for purposes other than support or livelihood would be subject to Gift Tax)
抺養義務者から贈与により取得した財産で、生活費等に充てられるもの

(and other non-related items...)

Therefore, it comes down to the interpretation of 'for the purpose of support or livelihood', '生活費等に充てられるもの'

The Tax Officials might argue that designer handbags, jewelry, and other things that she might spend your money on do not qualify, and she is therefore subject to Gift Tax for amounts over Y1.1M in any Tax Year.
(but then, maybe, she'd just pay the tax with your money as well... and she'd have to pay Gift Tax on that amount too...)

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.

[Beaglehound]

Exempt Gifts

Gift Tax is not levied on the following items: (Inheritance Tax Law Article 21-Paragraph 3)

(2) Gifts between persons who have a legal responsibility to support each other, for the purpose of support or livelihood.
(Gifts for purposes other than support or livelihood would be subject to Gift Tax)
抺養義務者から贈与により取得した財産で、生活費等に充てられるもの

(and other non-related items...)

Therefore, it comes down to the interpretation of 'for the purpose of support or livelihood', '生活費等に充てられるもの'


The Tax Officials might argue that designer handbags, jewelry, and other things that she might spend your money on do not qualify, and she is therefore subject to Gift Tax for amounts over Y1.1M in any Tax Year.
(but then, maybe, she'd just pay the tax with your money as well... and she'd have to pay Gift Tax on that amount too...)

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?