RetireJapan

RetireJapan wrote: ↑Fri Jul 05, 2024 4:59 am
Not at all.

You don't get to sell 'profit' or 'capital'. Your entire investment is deemed to have gone up in value, and you are taxed on the increase only.

So in your example the initial investment has gone up by 30%.

30% of the withdrawal would be the capital gain, and that would be taxed at 20.315%.

Oh, okay, that makes sense now.
There is also a percentage-increase (or decrease) value shown on the investment overview page on my broker's website. I am guessing that this is the value used to calculate how much of a withdrawal will be taxed.

Thanks for the clarification.

Sorry, just so I am clear on the capital gains taxation:

Initial Numbers
Principal investment: 1,000,000 yen
Growth: 300,000 yen
Total: 1,300,000 yen
----------

Investment has grown 30%.
I withdraw 300,000 yen.
30% of the 300,000 yen withdrawal will have cap gains tax applied (20.315%)
300,000 x 0.30 = 90,000
90,000 x 0.20315 = 18,284 (rounded-up)

Therefore, on a 300,000 yen withdrawal (using the above example), 18,284 yen will be paid in capital gains tax.

Is this correct?

Also, if the initial investment was also withdrawn in its entirety, no capital gains tax will be applied, as it is the principal?

Thanks for any clarification.

cocacola wrote: ↑Mon Jul 08, 2024 5:35 am Sorry, just so I am clear on the capital gains taxation:

Initial Numbers
Principal investment: 1,000,000 yen
Growth: 300,000 yen
Total: 1,300,000 yen
----------

Investment has grown 30%.
I withdraw 300,000 yen.
30% of the 300,000 yen withdrawal will have cap gains tax applied (20.315%)
300,000 x 0.30 = 90,000
90,000 x 0.20315 = 18,284 (rounded-up)

Therefore, on a 300,000 yen withdrawal (using the above example), 18,284 yen will be paid in capital gains tax.

Is this correct?

Also, if the initial investment was also withdrawn in its entirety, no capital gains tax will be applied, as it is the principal?

Thanks for any clarification.

I think the math here is wrong. 1,000,000 growing to 1,300,000 does not mean that 30% of what you withdraw is capital gains. It means that (300,000)/(1,300,000) = 23% of what you withdraw/sell is capital gains. Another simple way to do the math is to recognize that if you sold the entire position you have 300,000 yen in capital gains and then decide what your pro-rated capital gain is for a partial sale. Since the entire position on sale would result in (300,000) x (0.20315) = 60,945 yen in taxes a sale of 300,000 yen worth would be (300,000/1,300,000) x (60,945 yen) = 14,064 yen in taxes.

RetireJapan wrote: ↑Fri Jul 05, 2024 4:59 am Not at all.

You don't get to sell 'profit' or 'capital'. Your entire investment is deemed to have gone up in value, and you are taxed on the increase only.

So in your example the initial investment has gone up by 30%.

30% of the withdrawal would be the capital gain, and that would be taxed at 20.315%.

When an investment increases by X% the sale would not result in an X% capital gain but (X/(1 + X)) in percentage terms. For instance, 100 yen investment increases to 150 (50% increase) if you sell all 150 yen worth the gain is not 75 yen (50% of the sale) but 50 yen (33% of the sale). (This mistake is easy to make and it took me quite a while to figure out what was bothering me about it.)

TokyoWart wrote: ↑Mon Jul 08, 2024 5:57 am I think the math here is wrong. 1,000,000 growing to 1,300,000 does not mean that 30% of what you withdraw is capital gains. It means that (300,000)/(1,300,000) = 23% of what you withdraw/sell is capital gains.

Ahh, so, as Ben had said, the entire investment is considered to have increased in value, so need to figure out what percentage the withdrawal amount is of the entire, total amount. Your numbers have made it make more sense!

Just to check my math (again!):

Initial Numbers
Principal investment: 1,000,000 yen
Growth: 300,000 yen
Total: 1,300,000 yen
----------
This time, I am withdrawing 125,000 yen.

(125,000) / (1,300,000) = 9.6% of the total amount
(125,000) x (0.096) = 12,000
(12,000) x (0.20315) = 2,438

Therefore, I would be paying 2,438 yen capital gains tax on 125,000 yen worth of shares sales.

...is this correct?

Edit: so, essentially, the "Principal Investment" and "Growth" numbers are actually not needed

125,000 x (300,000/1,300,000) = 28,846 of the withdrawal is capital gains

28,846 x 0.20315 = 5,860 in taxes

which is the same as 9.615% of the 60,945 in taxes for harvesting the entire 300,000 yen gain

TokyoWart wrote: ↑Mon Jul 08, 2024 9:22 am 125,000 x (300,000/1,300,000) = 28,846 of the withdrawal is capital gains

28,846 x 0.20315 = 5,860 in taxes

which is the same as 9.615% of the 60,945 in taxes for harvesting the entire 300,000 yen gain

Ack! My math was wrong, again.

Thank-you for stepping me through it.

Confusing, isn't it?

It becomes clearer once you see it in action within your account. (Well, slightly clearer...!)

Mrblobby wrote: ↑Mon Jul 08, 2024 10:12 pm Confusing, isn't it?

It becomes clearer once you see it in action within your account. (Well, slightly clearer...!)

Not really

https://retirewiki.jp/wiki/SBI_Securiti ... fund_sales

cocacola wrote: ↑Mon Jul 08, 2024 11:04 am Ack! My math was wrong, again.
Thank-you for stepping me through it.

coca-cola, this might be of interest.

My sale completed yesterday, so all of the numbers are now in place and settled.
I've spent a fair amount of time this morning trying to understand all the numbers and adjust all my own records.
All the individual calculations do work out, but oddly fitting them all into the bigger picture, adjusting various values, has been a challenge.
I must admit, I still find it all rather confusing.

I don't think I'm stupid, but I sure feel it with these things.

Time to forget about it all now and get on with other things.

Good luck!