RetireJapan

But if you are in NISA already, and have used up your 2023 allowance, then you can knock that out of the list. You can't invest it twice...

Understood.

Yes, I started a NISA 2023 last month.... and filled it up with the 120-man.

I'm planning on doing the same over the next 5 years with the new 2024 NISA.

Thanks.

Sorry one more question.

I started my Rakuten Securities account with a Tokutei Kouza.
特定口座

I am under the impression that with that account I don't need to do anything re: tax.
It's all handily handled by them.
No need to declare/submit/mess around with any kind of forms or anything else.

Am I correct? (Hope so).

Thank you.

In addition to above, I found this:

A “withholding” account is one where the brokerage not only calculates the investor’s annual taxable gains/losses, but also withholds/refunds tax every time a taxable event occurs in the account, ensuring that the investor’s annual tax liability on any profits (15.315% income tax and 5% residence tax) is always satisfied. As a result, the investor acquires the option not to declare income generated within the account on their tax return.

That 'option' thing is curious!
Why might I decide to do it if it's a hassle-y option?

Mrblobby wrote: ↑Sun Sep 03, 2023 8:30 am A “withholding” account is one where the brokerage not only calculates the investor’s annual taxable gains/losses, but also withholds/refunds tax every time a taxable event occurs in the account, ensuring that the investor’s annual tax liability on any profits (15.315% income tax and 5% residence tax) is always satisfied. As a result, the investor acquires the option not to declare income generated within the account on their tax return.

That 'option' thing is curious!
Why might I decide to do it if it's a hassle-y option?

The difference between the two types of tokutei kouza (withholding and non-withholding) also has a small section on the wiki.

The "withholding" variety is the no hassle option, as the tax is automatically calculated and paid to the tax office on your behalf. That paying-on-your-behalf factor has the benefit that it keeps any capital gains income off your yearly tax return (kakutei shinkoku, if you have to file one), which is good for self-employed people whose healthcare etc. premiums are based on the total income on the tax return. This point doesn't affect salaried people however, as their premiums are based just on their salary. It can also be good for people receiving subsidies at the prefectural / municipality level, e.g. child or disability benefits, to keep the total income appearing on their yearly tax return low.


On the flip-side, the "non-withholding" variety is the hassle-y option as the broker only calculates the tax due at the end of the year, and you have to then pay it yourself via the kakutei shinkoku. However this can be good for some salaried people, as it means you can pay the tax later than if the was broker withholding it straight away - so their is an opportunity benefit.

In your case non of this matters until you come to sell (5-10+ years down the line). You can switch between the two tokutei kouza types at any point during the year, as long as you haven't made any sales yet. Once you have made a sale, your account status at that time (withholding/non-withholding) then becomes fixed for the rest of the year. From subsequent years you can then switch (if before any sales) if you elect to.

Mrblobby wrote: ↑Sun Sep 03, 2023 8:30 am In addition to above, I found this:

A “withholding” account is one where the brokerage not only calculates the investor’s annual taxable gains/losses, but also withholds/refunds tax every time a taxable event occurs in the account, ensuring that the investor’s annual tax liability on any profits (15.315% income tax and 5% residence tax) is always satisfied. As a result, the investor acquires the option not to declare income generated within the account on their tax return.

That 'option' thing is curious!
Why might I decide to do it if it's a hassle-y option?

The Witholding Tax Rate is set at 20.315% (15.315% income tax and 5% residence tax), but if you are in a very low tax bracket, it might be beneficial to you to use Aggregate Taxation at your Marginal Tax rate, at least for the National Income Tax portion, which may be Lower than the 15.315%

Cases include, but may not be limited to (off the top of my head):

If you have Dividends on Japanese Stocks and your Total Aggregate Taxable Income is less than about Y6M, due to special Dividend Allowance, which only applies to dividends from Japanese Companies.

If you have International Dividends and your Total Aggregate Taxable Income is less than about Y3M.

You can elect to use the lower National Marginal Tax Rate, and in the case of Japanese Dividends, the special Dividend Allowance for the Aggregate National Income Tax, and keep the lower 5% rate for the Residents' Taxes.

You would have to get someone to do the actual calculations to determine which is the more beneficial; the witholding tax rate or the aggregate tax rate, and once you have made the choice in any one tax year filing, you cannot go back and change it for that tax year...

If you wanted to take advantage of the lower tax rate, you would submit a Kakutei Shinkoku with the Gensen Choushuhyo from the Broker and claim the lower tax rate and the refund...

Probably doesn't apply to you.