RetireJapan

Hi there. Sorry for another basic question on the total limit of old vs. new NISA.
I'm reading conflicting info on this. This website claims that the

"Total Tax Exemption for both is still the same as before – JPY 18M."

https://argentumwealth.com/unlocking-ni ... -in-japan/

My understanding was that the new NISA total exemption is JPY 18M while the old is much lower, either 6M or 8M JPY.

Thank you.

Darren in Japan wrote: ↑Fri Mar 08, 2024 7:50 am Hi there. Sorry for another basic question on the total limit of old vs. new NISA.
I'm reading conflicting info on this. This website claims that the

"Total Tax Exemption for both is still the same as before – JPY 18M."

https://argentumwealth.com/unlocking-ni ... -in-japan/

My understanding was that the new NISA total exemption is JPY 18M while the old is much lower, either 6M or 8M JPY.

Thank you.

It is not comparing Apples to Apples.

There is no Tax Exemption for NISA on the contributions. You contribute Post-Tax Funds.

Under the Old NISA, you could only choose the Regular (Growth) NISA, and the funds for any one year could only stay invested for 5 Years, or the Tsumitate NISA, and the funds for any one year could stay invested for 20 years. But in either case the total amount you could get into the system was limited by the number of years the system was running.

Under the New NISA, you can now invest in both the Regular (Growth) NISA and the Tsumitate NISA, and the funds can stay invested forever...
There is a Maximum to the total amount of funds you can invest into the system of Lifetime Limit Y18M, and max annual contributions of Y2.4M and Y1.2M respectively.
When you take funds out, the gain is Tax Free and you get credited back the allowance equal to the purchase price of what you sold to the Outstanding Lifetime Limit...

This does in no way equate to a total NISA Tax exemption of JPY 18M.

The Tax Exemption is whatever amount is 20% of the Gains you make over the amount invested over the years when you withdraw the funds. The amount invested is limited to the Lifetime Limit of 18M at any one time...

If I invest 3.6M This year and each year for 5 years, I exhaust my Lifetime Limit, so cannot put in any more funds until I sell something...

If each of those 3.6M grows at 20% per year, Then in the 6th year it is worth a total of 32M, and I can cash out take the 18M + the 14M Gain Tax Free, and that frees up the 18M Lifetime Allowance so I can put in another 3.6M per year over the next 5 years...
If this was a Regular Account, I would have to pay 20% Capital Gains Tax on that 14M or 2.8M, so I save tax of 2.8M
But that may not be so tax efficient...
or
I can just let the 18M ride; after 21 years @ 20% per year it'd be worth 495M, for a gain of 478M tax free... for a tax saving of.... Drum Roll Please...

95.6M

Of course, those returns are highly unlikely, but...

https://www.propublica.org/article/lord ... piggy-bank

Even at 10% per year over 21 years, it'd be worth 101M for a gain of 83M tax free... for a tax saving of 16.6M

10% per year over 31 years, it'd be worth 261M for a gain of 243M tax free... for a tax saving of 48.6M

Old Ippan NISA: ¥6M allowance.
Old Tsumitate NISA: Was planned to be an ¥8M allowance but was cancelled at ¥2.4M.
New NISA: ¥18M

Covered on the wiki:

https://retirewiki.jp/wiki/NISA
https://retirewiki.jp/wiki/Old_NISA
https://retirewiki.jp/wiki/Tsumitate_NISA

thank you for your quick responses. Sorry I should have phrased the question as:

The old NISA you can only invest a max of 6 or 8 million JPY?
And so the new NISA increases the max by 10-12 million JPY?
And thus the mentioned website isn't accurate?
As it says "no change in total exemption max of 18 million" so that seems to imply that you can do all three of the previous NISAs together?

Darren in Japan wrote: ↑Fri Mar 08, 2024 2:39 pm thank you for your quick responses. Sorry I should have phrased the question as:

The old NISA you can only invest a max of 6 or 8 million JPY?
And so the new NISA increases the max by 10-12 million JPY?
And thus the mentioned website isn't accurate?
As it says "no change in total exemption max of 18 million" so that seems to imply that you can do all three of the previous NISAs together?

Refer to adamu's answer.
Yes, that website is wrong. You cannot invest any more in 'old' NISA so I can't see why it matters, to be honest.
Total of 18M yen investable in new NISA is the key number.

The old NISA doesn't affect the allowance of the new NISA.

The sentence you quoted is not talking about the old NISA, but about the two components of the lifetime limit in the New NISA.

Here's a direct link and a quote from the section on the wiki that explains the same thing:

https://retirewiki.jp/wiki/NISA#Tsumitate_and_Growth_portions wrote:Of the ¥18 million lifetime limit, a maximum of ¥12 million can be from Growth investments. It is possible for the whole ¥18M to be from Tsumitate investments (e.g. ¥1.2M × 15 years).

It's complicated, but basically if you stick to funds, you'll be able to use the full ¥18M limit.

thanks Adamu.

So that website is correct actually?

And the below statement is correct?
"Total Tax Exemption for both is still the same as before – JPY 18M."

Since 18M was achievable with the old NISA if you had invested 15 years x 1.2M per year with Tsumitate NISA, right?

The reason I ask is that some friends have quoted that website and are confused on the changes (including me!).

Darren in Japan wrote: ↑Sun Mar 10, 2024 8:30 am thanks Adamu.

So that website is correct actually?

And the below statement is correct?
"Total Tax Exemption for both is still the same as before – JPY 18M."

Since 18M was achievable with the old NISA if you had invested 15 years x 1.2M per year with Tsumitate NISA, right?

The reason I ask is that some friends have quoted that website and are confused on the changes (including me!).

Incorrect.
Old tsumitate limit was 400,000 yen per year. It was planned to be available for 20 years = total investable sum was 8M.
Old 'regular' NISA was 1.2M per year x 5 years, so total of 6M yen.

This is covered correctly in that article.
This line is wrong:
Total Tax Exemption for both is still the same as before – JPY 18M