Declaring Capital Gains

[goodandbadjapan]

This is a bit of a long shot, but here goes. About 10 years ago I signed up for one of those off-shore plan things. Last month I was able to make a partial surrender of it without penalty and so received a fairly large lump sum to my bank. Now, the way this plan worked was I sent 100,000 yen a month and it went towards various funds etc. as allocated by my adviser. In other words, I didn't really know what I was buying. Anyway, the partial surrender was made and I have certainly got out more than I paid in so some capital gains will have been made, but I have no idea how to figure out what they are. I have received a statement of what I sold and how much I got for them, but not how much I originally paid for the sold units, meaning knowing the gain / loss for each sale is not possible. As the sold units have been bought in monthly instalments for some ten years, how on earth do I find out what the 'original' purchase price was of those that have been sold? And as not all units have been sold, how do I decide which ones have been sold? The ones I bought earliest or the ones I bought latest etc (as over ten years purchase prices will have varied significantly)I have asked the offshore company to send me a simplified statement as in 'You paid this for this and sold same for this' but not sure if they can supply that or not. Has anyone else had to do this?

Sorry if this makes little sense. I'm doing my best to understand it all and failing!

[RetireJapan]

I take it the people that sold it to you are not providing tax planning as part of their service?

And I guess you're not going to go with option number 1, which is to pretend you didn't get any money?

I'd be inclined to ask the provider to send you the necessary paperwork. Maybe go and ask the tax office what they would need. My experience (with small amounts of money) is that they are really helpful and generally try to save you money.

Sounds like a great guest post, by the way

[N00bster]

So you paid JPY100.000 for X months, and I suppose that the sum you have surrendered (let's call it S) is in JPY too. In that case, wouldn't the capital gain simply be S - (X * 100000) ?

[goodandbadjapan]

Yes, but it was only a partial surrender. In other words. I paid 100,000 yen a month which bought various assets in various funds. So I might have bought 1,000 units in Fund A and 1,000 in Fund B, 500 in Fund C etc over the years, all at whatever price those units happened to be for that particular month. Then I asked for a partial surrender of say ¥10,000,000 and got that last month. This was done by assets in various funds being sold off, but not all the assets (I still have the off-shore vehicle, just with less in it). I know how many units were sold and what I got for them, but not what I paid for them because I don't know which month or even year the sold units were originally purchased.That's the info I am trying to get!

So far, they have told me 'you held this many units and we sold this many for this price' but unless I know what was paid for them, how can I assess the gain or loss? Each month that 100,000 yen was divided into various assets so it's not quite as simple as it might seem. Or not to me, it isn't!

And to complicate matters further - the payout was in sterling, not yen!

@RetireJapan I am still talking to the fund folk, but once it is all sorted I might be able to write something up!

[Cheeseman]

Sorry to dig up an old post but I find myself in a very similar position and would love to hear how this ended.

[goodandbadjapan]

I ended up just calculating the total gain to date, and apportioning it according to the percentage of the portfolio I was selling. Gave my figures and calculations to my accountant and let them got on with it. It worked out fine in the end. Later I sold the rest of the portfolio anyway and calculated whatever gain there was on that percentage.

[robster]

Not to suggest that you would do anything other than the most honest thing ... but how would the Japanese tax authorities know about this income if you did not report it to them?

[captainspoke]

I ended up just calculating the total gain to date, and apportioning it according to the percentage of the portfolio I was selling. Gave my figures and calculations to my accountant and let them got on with it. It worked out fine in the end. Later I sold the rest of the portfolio anyway and calculated whatever gain there was on that percentage.

You truly had no records of funds you'd sent being used to buy x-number of shares in A, B, and C? Never any (e.g.) quarterly statements? Nor what had been sold for the redemption?

[goodandbadjapan]

I ended up just calculating the total gain to date, and apportioning it according to the percentage of the portfolio I was selling. Gave my figures and calculations to my accountant and let them got on with it. It worked out fine in the end. Later I sold the rest of the portfolio anyway and calculated whatever gain there was on that percentage.

You truly had no records of funds you'd sent being used to buy x-number of shares in A, B, and C? Never any (e.g.) quarterly statements? Nor what had been sold for the redemption?

No, I didn't say that. I had bought various funds regularly over years and then partially sold the funds. A partial redemption, which was the key issue. As the price of the units varied over the years, I didn't know how to calculate the gain as I didn't know which units I was selling - the ones I bought in, say 2011, or those bought in say 2015, at a considerably different price. Say i bought 100 units in a fund for $100 in year one and then added 100 units in year 2 at a cost of $150 and then bought, say, 50 units in year 3 at $200 because the price has risen, then in year 4 I sell 70 units. To know the gain, I needed to know if they were all units bought at the year 1 price or at the year 2 price or maybe year 3 with some of year 2 etc. The gain would differ and that is what I didn't now how to do and was trying to get the info for. I knew how many units I had sold and what i got for them, of course, but the gain would differ depending on when I had bought those sold units. Had they sold the units bought in year 1, or year 2 or a combination? And that's what nobody could tell me - which precise units I had sold.

[captainspoke]

"No, I didn't say that." Not to be too contrary, but in your OP: "Now, the way this plan worked ... I didn't really know what I was buying."

But anyway, what follows is good to hear. And I guess your accountant did it, so it's done, (it sounds like it would take a lot of calculation)

"I had bought various funds regularly over years and then partially sold the funds. A partial redemption, which was the key issue. As the price of the units varied over the years, I didn't know how to calculate the gain as I didn't know which units I was selling - the ones I bought in, say 2011, or those bought in say 2015, at a considerably different price. Say i bought 100 units in a fund for $100 in year one and then added 100 units in year 2 at a cost of $150 and then bought, say, 50 units in year 3 at $200 because the price has risen, then in year 4 I sell 70 units. To know the gain, I needed to know if they were all units bought at the year 1 price or at the year 2 price or maybe year 3 with some of year 2 etc. The gain would differ and that is what I didn't now how to do and was trying to get the info for. I knew how many units I had sold and what i got for them, of course, but the gain would differ depending on when I had bought those sold units. Had they sold the units bought in year 1, or year 2 or a combination? And that's what nobody could tell me - which precise units I had sold."