RetireJapan

Hi,
Does anyone know if there is a way to reduce income tax on my main job, which is a full time uni job, by creating a company that runs at a loss and then using the income from the main job to subsidise the losses? Is anything like that in Japan possible?

Only business losses from certain categories can be used to offset salary income. Rental income is the main one with people using depreciation of the properties as a loss harvester (no longer available for overseas properties). Losses from other businesses cannot be used against salary income (only against the income of the business) so unless you can convince your uni to pay your company, setting up a loss making side business is not helpful.

Thanks for the info, in what scenario could I create a company and get the Uni to pay my salary there instead? or is it impossible?

jonnyd wrote: ↑Sat Apr 02, 2022 9:02 am Thanks for the info, in what scenario could I create a company and get the Uni to pay my salary there instead? or is it impossible?

I guess you could be hired as an independent contractor or business under an outsourcing contract (業務委託契約) but I am not familiar with how the tax office would treat such a relationship nor whether any university would agree to do so for what would otherwise constitute an employee role. Why not ask the HR of the uni and see what they say?

Assuming that switching from employee to contractor would be acceptable to the school, I think that would require resignation as a part of the switch.

Which would mean you'd lose seishain protections (tenure, if you have it), and eventual taishokukin. You'd also be on your own for nenkin (and would lose shigakukyosai for this and health cover) and also back to NHI. Perhaps less important, but no need for them to give you research money, commuting allowance, maybe not even an office.

In many ways, like quitting full time to become a part-timer with a full teaching schedule. Once they understand the contractor model, maybe you'd get replaced with a westgater.

I don't think you can do this.

To reduce income tax, make sure you are making use of the standard deductions.
iDeCo is an obvious one to maximize if you aren't doing so already.
Then any money you have spent on health above 100,000yen. My better half tells me this includes over the counter medicines such as Bufferin or cold medicine, allergy pills, and of course it includes most dental treatment as well.
Then furusato nozei to get free stuff for pre-paying local taxes.
That is about all I can think of that is legit.

Contributions into iDECO are with Pre-Tax Income, so not taxed on the way in. The distributions will be taxed on the way out.

Contributions into NISA are from Post-Tax Income, so the income is already taxed on the way in. The distributions will not taxed on the way out.

So you should do both.

Tkydon wrote: ↑Mon Apr 04, 2022 10:50 am Contributions into iDECO are with Pre-Tax Income, so not taxed on the way in. The distributions will be taxed on the way out.

Contributions into NISA are from Post-Tax Income, so the income is already taxed on the way in. The distributions will not taxed on the way out.

So you should do both.

Since you are from the UK. Americans joining either comes with a big *.