Funeral money

[goodandbadjapan]

This is just something that popped into my head and was curious about. When somebody passes on here lots of people bring money. Does this money need to get declared at all? I assume that even if it does, the funeral costs will be set against it but if you end up getting more than you spent, what would it be assessed as? Or is it just tax free? What about wedding money?

[RetireJapan]

Good question, and I'm not sure. As it is cash, I assume the vast majority of people just put it in their pocket.

Technically I guess you would count any 'profit' as a gift towards the 1.1m a year tax free gift tax allowance...

Anyone else?

[zeroshiki]

Interesting topic.

A bit of googling (as in the first result) shows this page:
https://www.osohshiki.jp/column/article/960/

According to this, funeral gifts are not taxable 不課税 which is different from tax-free 非課税. Basically that its not an exception, but that it just isn't taxed. However, that site is quite vague about limits per person. The test they bring up is common sense 常識の範囲 which as we know is different per person but their example of beyond common sense is 1M yen (which would be taxable).

Ah, but another site gives the pertinent laws

（社交上必要と認められる香典等の非課税の取扱い）

21の3-9　個人から受ける香典、花輪代、年末年始の贈答、祝物又は見舞い等のための金品で、法律上贈与に該当するものであっても、社交上の必要によるもので贈与者と受贈者との関係等に照らして社会通念上相当と認められるものについては、贈与税を課税しないことに取り扱うものとする。（昭50直資2-257改正、平15課資2-1改正）

（葬祭料、香典等）

9－23　葬祭料、香典又は災害等の見舞金で、その金額がその受贈者の社会的地位、贈与者との関係等に照らし社会通念上相当と認められるものについては、令第30条の規定により課税しないものとする。（平元直所3－14、直法6－9、直資3－8改正）

Neither of which actually states how much is common sense except that the value is within socially accepted norms.
Google tells me that's 10k-30k per person depending on your relationship.

Pertinent here is that if the sum of the gifts exceed funeral costs (which seems unlikely) it still wouldn't count against gift tax nor income tax. Its just free money.