Tokutei koza - what if the broker screwed up?

[sutebayashi]

I have been curiously looking at my Monex account recently, to check how much profits and how much tax I will liable for. (And to figure out my furusato nozei limit for this year.)

Then I discovered that my foreign dividends stopped appearing in the calculations earlier this year.

I have lodged and enquiry with the broker to ask about it, but it also made me think - what if they were calculating tax wrong in the tokutei koza?!

Probably they would be in big trouble with the authorities, but individual tax payers might be on the hook for more taxes too.

[eyeswideshut]

I don't know the specific answer to your question but Japan has very strong consumer protections and, even if the broker disclaimed such liability in their terms of service, it is highly likely that they would end up being required to indemnify any affected investors from unpaid tax liabilities. So of the many things I lose sleep over, that would not be high on my list.

[sutebayashi]

I don't know the specific answer to your question but Japan has very strong consumer protections and, even if the broker disclaimed such liability in their terms of service, it is highly likely that they would end up being required to indemnify any affected investors from unpaid tax liabilities. So of the many things I lose sleep over, that would not be high on my list.

True and I guess the chances are higher that I am not correctly doing my kakutei shinkoku than an audited broker not correctly doing tokutei koza calculations.

I got a response from my broker too, and I will note some points for posterity:

1) in my case I switched to 源泉徴収なし type of tokutei koza from last year. It seems strange to me but they say dividends aren’t shown on the 売却損益明細 screen that I have been checking for my taxable profits. (Dividends are shown for accounts that do have the tax taken at the source)

2) they also say, irrespective of whether one is using 源泉徴収なし or あり, income tax and resident tax are already deducted before I get the dividends… (所得税、住民税が差し引かれた状態で入金が行われます。)

This second point was a surprise to me… the suggestion is that 源泉徴収なし works to avoid deduction at the source only with respect to capital gains, and not so for dividends.

Sounds like I need to go study this further as I have some incorrect understanding surrounding the dividends treatment…

[sutebayashi]

The sequel....

If any other Monex user also got this, I'd be interested to know.
(My case is probably somewhat special, in that I switched to non-tax-withholding account from 2023, and happened to receive some US ETF dividends around the end of 2022... )

Since Feb 16th, my broker is displaying an apology message to me when I login -【お詫び】特定口座 年間取引報告書の誤記に関するご連絡
E.g. it's a message about my tokutei account report for 2023 tax year.

Some things their message to me is saying....
1) お客様の口座につきましては、2022年末に発生した外国株の配当金の処理が適切に行われなかった影響...
So they seem to have done something wrong with respect to dividends I received around year end of 2022 - these dividends they refer to were showing on my 2023 reports, which is related to my original inquiry to them.

2) 提供した「特定口座年間取引報告書」を用いて確定申告を行う際は、「配当等の額及び源泉徴収税額等」の金額はすべて「0円」としてご申告ください。
... Yes, I was planning to file my tax return this year based on the 特定口座年間取引報告書 I downloaded, and indeed there are non-zero yen numbers in the 「配当等の額及び源泉徴収税額等」 section of the report.
According to this message it sounds like those numbers are wrong, and so I should ignore the report I downloaded, and submit my tax return using 0 yen numbers instead... because of this message displayed currently when I login...

Presumably I have already paid tax on these dividends back in 2022 then... Well, that's what I will presume!

I will take a screenshot of this message and save it away with my documents, just in case the tax people do ever decide to question me... I hope the tax people would have a chat with the broker about it, rather than devour my time. Also, I might go back and look at my 2022 tax return and consider what this error on the broker's part might mean for that one...

This wasn't one of the downsides I imagined for switching to a non-tax-withholding tokutei account!

[adamu]

That's pretty crazy that they screwed it up. I guess someone switching accounts at the end of the year then getting dividends before the switch applies wasn't in their test plan..

Presumably I have already paid tax on these dividends back in 2022 then... Well, that's what I will presume!

This post finally prompted me to figure out how to get this info in SBI from the UI (rather than downloading PDFs from the mailbox, which was the only way I knew previously).

In SBI at least you can look up the amount witheld from dividends and also capital gains by going to
口座管理 →取引履歴
(Note there is also 注文履歴 in the 取引 screen, that's not what you want. You want this 取引履歴 which is not in the 取引 menu but the 口座管理 one and I'm forever getting them confused).

Then clicking the 譲渡益税明細 tab and doing a search.

Maybe Monex has something similar.

[sutebayashi]

Yeah, Monex has some similar things for foreign stocks... but it seems they need to get an expert to define how their things ought to work.

They have:
- a very handy 売却損益明細 screen - but after I switched to non-tax withholding, it stopped showing foreign stock dividends (odd behavior from my perspective; whether I have tax withhold or not is a separate concern to the trade and dividend payment records)
- a 上場株式配当等の支払通知書 report, to cover the last year - this is only issued when you have a non-tax withholding account, but this report is missing those early 2023 dividends. Mistakenly those dividends are showing on my 特定口座年間取引報告書 report, but they should not be shown apparently, for non-tax-withholding accounts, I gather.
- in my US stocks account management page, a report called 外国証券に関するご案内（権利配当等）兼支払通知書 can be had. But it's weird here too because the "trade date" seems inconsistent between the search screen and the actual report. Possibly the mess stems from dividends being paid first in the US and then me actually getting the money in Japan some days later - some inconsistent handling of the dates is probably the cause of the mess, when switching from withholding to non-tax withholding. It does seem complicated...

Another thing in the apology message from Monex was, they were saying that I could not use their annual XML data, because of the aforementioned problems. That was ok with me, as I was planning to do it the old way, based off the PDF reports.

But I had some further troubles today - they had suggested I might need to report these problematic dividends myself. I tried to do so, but the NTA site is rejecting the values as invalid, and telling me to contact the payer

So, I tried to use the XML data instead, just to see what happens - and when I do that, I see an error indicating why they were telling me I couldn't use it:

ファイルの内容に誤りがあります。正しいファイルを読み込むか、証券会社等から交付されたものを読み込んでください。
証券会社等から交付された正しいファイルでこのエラーが発生する場合は、ファイルの交付元にお問い合わせください。
（TA-Ek03b05）

Hahaha! So, I guess I am not the only person in Japan having this problem. Probably someone else had already contacted Monex about it, and they must have pinpointed those customers who have been negatively impacted...

Unfortunately, I wasted my day trying to figure out what to do with this problem, but it hasn't become any clearer. As the tax on the dividends was not a big number, I am inclined to just forget about it having done some 努力義務, and probably the tax people wouldn't chase after people over small discrepancies...

At least, I might study the XML data contents and use it to try to verify what I have entered manually...

[sutebayashi]

Ugh, Monex has posted a new message and it suggests I need to amend the tax return I submitted for 2023, by the 15th. Lucky me! First time to submit a corrected tax return though, so I’ll try to enjoy the new experience…

[sutebayashi]

Oh there they go again!

Another notification from the broker today, this time they have re-issued my tokutei account report for 2023, so I have to check it to see whether I need to re-submit my tax return again (which I just did once again last night... I would have held off if I knew they would be updating me again today), plus they are also saying that they will re-issue my 2022 tokutei account report (where the mistakes began), so I might benefit from re-submitting my 2022 tax return as well - I presume through clawing back tax withheld on my US ETF dividends that should have been possible with my 2022 tax return.

It is an interesting experience - if it were me running the tax agency I would say "well that's no good but let's not inconvenience the poor tax payers who are getting the run around and their time wasted by this". But then there are cases where the tax payer has gotten a short end of a stick and they may kindly make us whole again, if we follow all the procedures to get some money back. It's tail wagging the dog stuff though.

And to think there is no capital gains tax where I come from

True and I guess the chances are higher that I am not correctly doing my kakutei shinkoku than an audited broker not correctly doing tokutei koza calculations.

How wrong I was!