RetireJapan

Hi everyone
I know about the gift tax that applies for sum over 1.1m yen, but what if the amount received is to be divided with other family members?
To be more specific, my family in Europe sends to my Wise account more than 1.1m yen, but one third of it is actually for my kids, some for my wife and some for me.
Would I still need to pay taxes because it's everything under my name? Is there a way to get around it?

I hope I made myself clear enough

I think it depends on the 'true' use of the money--i.e., it can all come to you, and then you pass it on to the others. Obviously, make sure you can point at the electronic trail (subsequent transfers to bank accounts for those others) in case the tax office calls with any questions.

Not sure about Wise, but regular banks here do report inbound transfers over the $10k/¥1.1m level to the tax office (it's probably automated). Also, some of those actual banks can sometimes call themselves to ask about the source/purpose of the funds.

Yeah it happened twice with my previous bank, but after switching to Sony Bank no problem at all.
When I receive the money I send them straight away to their junior Nisa account, hopefully that will be enough as proof

This might get interesting in future.

There is a term - 名義預金, for accounts in someone else’s name, but that another person effectively has control over. This comes up in the context of inheritance and gift taxes.

Apparently, the tax people when doing audits upon some trigger may come asking questions to the person the name of the account is in, and if that person doesn’t know anything about it, or doesn’t have the ability to access it, the tax people would regard that as a meigi yokin, belonging to the person who controls the money.

I am also loading up Junior NISAs, with my intent to invest cash now to pay for the kids education or whatever in future, but with the NISA changes next year, we’ll be able to get the cash right on out should we (errr, the kid, I mean) choose, with no restriction on the child’s age any longer.

Since it’s tax free investment I imagine “my kid” will keep the money invested until they want to have a tonne of money for something useful.

To me, these legacy Junior NISA are therefore nothing but 名義預金 from 2024 onwards. The withdrawal age restriction that will be abolished next year gave it a good semblance of being the kids money. But from 2024, should the kid “choose” to gift 1.1 million a year to me or spouse, that seems possible.

How the tax auditors will be thinking about this, I’m not sure, so I will stick to my plan of investing as per the original intent of the Junior NISA. (In the long run Junior NISA still seems a good way to avoid potential inheritance tax liability for the kids, although options are open…)

(I am also suggesting to my parents that they gift my grand kids 1 million yen equivalent a year, because if they “max out” their annual tax free gift allowance each year, that’s a good amount of money that is potentially out of scope for my inheritance tax bill when that time comes, hopefully as far away as possible - for multiple reasons. I was thinking I could have them each receive the money directly, but receiving once and splitting seems rational, but retain some kind of evidence to corroborate the facts I guess)

sutebayashi wrote: ↑Sat Jan 14, 2023 4:48 am I am also suggesting to my parents that they gift my grand kids 1 million yen equivalent a year, because if they “max out” their annual tax free gift allowance each year, that’s a good amount of money that is potentially out of scope for my inheritance tax bill when that time comes, hopefully as far away as possible - for multiple reasons. I was thinking I could have them each receive the money directly, but receiving once and splitting seems rational, but retain some kind of evidence to corroborate the facts I guess)

We have been maxing out the grandkids' Jr NISA accounts for a while now, and plan to continue putting money into their junior taxable accounts (assuming they get to keep using those from 2024).

I'd rather give family money when they are younger, as it will be more useful to them and I will be able to enjoy giving it to them.

RetireJapan wrote: ↑Sat Jan 14, 2023 5:38 am I'd rather give family money when they are younger, as it will be more useful to them and I will be able to enjoy giving it to them.

Forum is family, right?

CAM recently wrote up an interesting section on the wiki about upcoming changes to inheritance tax, especially involving giving gifts while alive:

https://retirewiki.jp/wiki/Inheritance_ ... d_tax_code

adamu wrote: ↑Sat Jan 14, 2023 6:46 am

RetireJapan wrote: ↑Sat Jan 14, 2023 5:38 am I'd rather give family money when they are younger, as it will be more useful to them and I will be able to enjoy giving it to them.

Forum is family, right? ...

Yep, anyone who joined before September 2017 is family!

adamu wrote: ↑Sat Jan 14, 2023 6:46 am CAM recently wrote up an interesting section on the wiki about upcoming changes to inheritance tax, especially involving giving gifts while alive:

https://retirewiki.jp/wiki/Inheritance_ ... d_tax_code

Not planning to die in the next seven years, but you never know I guess

sutebayashi wrote: ↑Sat Jan 14, 2023 4:48 am But from 2024, should the kid “choose” to gift 1.1 million a year to me or spouse, that seems possible.

Remember, the Gift Limit is on the Recipient; If the sum of All Gifts received in any one year by the Recipient exceeds Y1.1M, then the excess will be taxed according to the Gift Tax rules.

sutebayashi wrote: ↑Sat Jan 14, 2023 4:48 am How the tax auditors will be thinking about this, I’m not sure, so I will stick to my plan of investing as per the original intent of the Junior NISA. (In the long run Junior NISA still seems a good way to avoid potential inheritance tax liability for the kids, although options are open…)

(I am also suggesting to my parents that they gift my grand kids 1 million yen equivalent a year, because if they “max out” their annual tax free gift allowance each year, that’s a good amount of money that is potentially out of scope for my inheritance tax bill when that time comes, hopefully as far away as possible - for multiple reasons. I was thinking I could have them each receive the money directly, but receiving once and splitting seems rational, but retain some kind of evidence to corroborate the facts I guess)

Again, the Gift Tax Allowance applies to the sum of all gifts received by the recipient in the tax year, so if you are paying their J-NISA, etc., to the limit of Y1.1M and the Grandparents gift Y1.1M, then that is a total of Y2.2M and Y1.1M would be taxable.

Right now, any amount of gifts, even if invested in a NISA, over the last 3 years before the passing of the Donor will be added back into the Estate for Inheritance Tax, and a credit applied for any Gift Tax paid.
However, this period will be extended to seven years, so there may be an additional inheritance tax liability on the value at the time of the gift.

Tkydon wrote: ↑Sat Jan 14, 2023 2:40 pm Again, the Gift Tax Allowance applies to the sum of all gifts received by the recipient in the tax year, so if you are paying their J-NISA to the limit of Y1.1M and the Grandparents gift Y1.1M, then that is a total of Y2.2M and Y1.1M would be taxable.

Yes, but there is no J-NISA (800,000 per year) from next year anyway, so rather than parents gift kids money, having their grandparents gift them instead seems a better use of the tax free gift allowance. Parents should start gifting after the grandparents have passed (or have no more to gift), I think.

Right now, any amount of gifts, even if invested in a NISA, over the last 3 years before the passing of the Donor will be added back into the Estate for Inheritance Tax, and a credit applied for any Gift Tax paid.

That would be the case for gifts made to a statutory heir, say if my parent passes and has given me gifts. Then I inherit. Yes the money would be considered.

But this does not apply to gifts given to others, which would include grandchildren (so long as I don’t die first, making the grandkids statutory heirs). Those gifts given to the grandkids should not be included in the inheritance tax I believe - although the tax people might want to make an argument that they are “meigi yokin” of the parent, perhaps. The parent had better not touch the money, I suppose.