New Tsumitate NISA

[Moneymatters]

Edit: I am not sure about the automatic conversion. That was an assumption. Please correct me if you know otherwise.

You mostly got it. No details have been confirmed yet, so we're all just guessing.

I would clarify that existing investments up to this year would not be "converted" to the new rules, but it's likely people with existing accounts will be able to invest under the new rules from next year without applying for a new account (but again, it's just a guess).

Rakuten is saying existing NISA account holders will not need to apply for access to a new nisa account..

すでにNISA口座（一般NISA・つみたてNISA）を開設済みのお客様におかれましては、新NISAの口座開設手続は不要です。
https://www.rakuten-sec.co.jp/web/info/ ... 16-01.html

[ToushiTime]

Rakuten is saying existing NISA account holders will not need to apply for access to a new nisa account.

すでにNISA口座（一般NISA・つみたてNISA）を開設済みのお客様におかれましては、新NISAの口座開設手続は不要です。
https://www.rakuten-sec.co.jp/web/info/ ... 16-01.html

Great, that's good to know. Thanks.

I also noticed that the table on the Rakuten page you linked to says you cannot rollover Tsumitate NISA holdings.
Presumably that means the maximum lifetime investment amounts will not include investments made under the old system?

[ToushiTime]

You don't need to sell anything.

In the case of the existing system, if I don't sell before the tax free period expires, what happens when I eventually sell and receive the value of my accumulated investments until then, including capital gains?

Aren't the capital gains taxed in that case?
Isn't it better to sell before the end of the tax free period i.e. before the end of 2040 etc in my case?

Existing investments up to this year will become taxable as their tax free period expires, according to the original rules. For investments made this year in Tsumitate NISA, that's 20 years from now until the end of 2042.

Is this a rolling tax free period, i.e. if I started my Tsumitate NISA investing in 2021, that year's investments become taxable from the end of 2040, and the following year's investments become taxable from 2041?

[zeroshiki]

You don't need to sell anything.

In the case of the existing system, if I don't sell before the tax free period expires, what happens when I eventually sell and receive the value of my accumulated investments until then, including capital gains?

Aren't the capital gains taxed in that case?
Isn't it better to sell before the end of the tax free period i.e. before the end of 2040 etc in my case?

When your securities exit the NISA account and enters a tokutei or ippan account after the tax-free period expires, its acquisition cost is the price of the security on the day of this transfer. So you are only assessed capital gains tax if your security gains value beyond this price.

Existing investments up to this year will become taxable as their tax free period expires, according to the original rules. For investments made this year in Tsumitate NISA, that's 20 years from now until the end of 2042.

Is this a rolling tax free period, i.e. if I started my Tsumitate NISA investing in 2021, that year's investments become taxable from the end of 2040, and the following year's investments become taxable from 2041?

Yes, NISA accounts exist per year. A 2020 T-NISA account expires in 2040, a 2021 account in 2041, etc.

[ToushiTime]

When your securities exit the NISA account and enters a tokutei or ippan account after the tax-free period expires, its acquisition cost is the price of the security on the day of this transfer. So you are only assessed capital gains tax if your security gains value beyond this price.

So, something I buy for 100 yen now rises in value to 130 yen by the end of the tax free period, and then subsequently rises to 140 yen.
I have to pay 20% capital gains tax on the 10 yen difference?

Yes, NISA accounts exist per year. A 2020 T-NISA account expires in 2040, a 2021 account in 2041, etc.

Just to clarify, do you mean A) or B)?

A) If someone started a Tsumitate NISA in 2021, then the investments made in 2021 are taxable from Jan 2041, the investments made in 2022 are taxable from Jan 2042, and the investments made in 2023 are taxable from Jan 2043?

Or

B) If someone started a Tsumitate NISA in 2021, then all investments made in 2021, 2022 and 2023 will all become taxable from Jan 2041?
and if someone started a Tsumitate NISA in 2022, then all investments made in 2022, and 2023 will all become taxable from Jan 2042?

[zeroshiki]

When your securities exit the NISA account and enters a tokutei or ippan account after the tax-free period expires, its acquisition cost is the price of the security on the day of this transfer. So you are only assessed capital gains tax if your security gains value beyond this price.

So, something I buy for 100 yen now rises in value to 130 yen by the end of the tax free period, and then subsequently rises to 140 yen.
I have to pay 20% capital gains tax on the 10 yen difference?

Yes, only on the 10 yen. Your account will show an acquisition cost of 130 for those securities even though you bought them at 100 yen 20 years ago.

Just to clarify, do you mean A) or B)?

A) If someone started a Tsumitate NISA in 2021, then the investments made in 2021 are taxable from Jan 2041, the investments made in 2022 are taxable from Jan 2042, and the investments made in 2023 are taxable from Jan 2043?

Or

B) If someone started a Tsumitate NISA in 2021, then all investments made in 2021, 2022 and 2023 will become taxable from Jan 2041?
and if someone started a Tsumitate NISA in 2022, then all investments made in 2022, and 2023 would become taxable from Jan 2042?

A. Its per year.

[ToushiTime]

A. Its per year.

Thanks.

What happens when I buy the said item for ¥100 yen but then replace it with something else?

How do they differentiate between my 2021 investments and 2022 investments if I have replaced most of my original mutual funds for other ones by the time the tax free period expires?

I don't understand how they can work out which portion of my portfolio is attributed to my 2021 investments and which is attributed to 2022 investments by the time 2041 rolls around.

[zeroshiki]

A. Its per year.

Thanks.

What happens when I buy the said item for ¥100 yen but then replace it with something else?

How do they differentiate between my 2021 investments and 2022 investments if I have replaced most of my original mutual funds for other ones by the time the tax free period expires?

I don't understand how they can work out which portion of my portfolio is attributed to my 2021 investments and which is attributed to 2022 investments by the time 2041 rolls around.

You can't replace anything in a NISA. The TNISA has a 400k limit per year and that means anything you buy in the TNISA account that year counts. If you sell it, tough luck that allocation is gone forever.

Example: you buy 100k of mutual fund A in 2021 under a TNISA account, you decide you don't like it and want to buy mutual fund B. So you sell mutual fund A. The allowance never comes back and you can only buy 300k of mutual fund B in 2021 because you already used 100k on A. If for example, this realization you don't like mutual fund A happens in 2022, no matter what you do to the 2021 account doesn't affect 2022. Making purchases in 2022 only affects the 2022 limit.

[adamu]

Selling an asset in a NISA does not return the annual allowance.

• Thus the allowance is an allowance on total purchases for a year.
• Once a purchase has been made, that amount of the NISA allowance is irreversibly consumed.

[ToushiTime]

Thanks for the explanation and info.