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Changes coming in Japan's tax code from 2017

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Who says there's nothing new under the Rising Sun? Effective from New Year's Day, a number of changes will be forthcoming in Japan's tax code. And what's more, if you're in business for yourself and you'd like to render unto Caesar with plastic, reports Nikkan Gendai (Dec 17), you can make arrangements to do so. Read on.

The new system will be taking effect in just three weeks' time: from 8:30 a.m. on Wednesday, Jan 4, when the banks re-open for business after the New Year's break.

"Credit cards can't be used for taxes withheld from salaried wages," financial planner Yoshihiro Nagao tells the tabloid. "But they can be used for gift taxes, inheritance taxes or certain taxes related to automobile ownership. Company proprietors can use it to pay the 8% consumption tax, taxes on alcohol and tobacco, petroleum products and so on. And card holders are entitled to use any premiums, points or mileage accrued on their cards to obtain goods or services."

Now that's a real incentive.

Other changes will be taking effect from 2017. As certain medications such as pain-reducing adhesive plasters like Salonpas DX will no longer be dispensed by doctor's prescription, your annual outlays for OTC (over the counter) medications in excess of 12,000 yen per year can be added to other hospital receipts to apply for a tax deduction, with the maximum ceiling for OTC outlays set at 88,000 yen.

"So hang on to your drugstore receipts, even the ones for small amounts," Nagao advises.

Another change is that salaried workers over age 65 will now be obliged to make contributions to the unemployment tax scheme ("koyo hoken"). Of course, by the same token, workers over age 65 will be eligible to receive payouts, which can also be applied to those who need to take time off from work to provide care for an enfeebled family member. Unfortunately, paid child leave time will be cut from one year to six months.

Another change, to take effect from next October, is one likely to be heartily welcomed by workers of the foreign persuasion: the minimum number of years a worker must pay into the various Japan pension funds in order to be eligible to receive payouts, formerly set at 25 years, will be reduced to 10 years. That is, people who pay into the system for more than 10 years, but fewer than 25, who previously had not been eligible to collect, can now expect to receive pension payouts upon reaching the prescribed age.

The new laws are also expected to impact on the life insurance industry.

"With the current negative rates of interest, the life insurance companies' operating profits have sharply declined," notes Nagao. "This means that certain types of insurance that consumers use for savings, such as whole life, annuities, savings for children's' education and so on, are likely to become dead weights for the insurance companies, which have already begun increasing their premiums -- with more increases to be expected in the coming year. Some people have looked to policies or savings plans that involve foreign exchange, but the risks for these have also increased, so you'll need to be careful. It's smart to look for policies that will pay out a refund upon maturity."

© Japan Today

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Another change is that salaried workers over age 65 will now be obliged to make contributions to the unemployment tax scheme (“koyo hoken”). Of course, by the same token, workers over age 65 will be eligible to receive payouts, which can also be applied to those who need to take time off from work to provide care for an enfeebled family member. Unfortunately, paid child leave time will be cut from one year to six months.

It would certainly help if the writer of this article takes a look at this paragraph and edit as necessary. It makes it sound like someone over the age of 65 will only be able to get "paid child leave" for 6 months, instead of one year.

Now just how many seniors over the age of 65 need "paid child leave?"

Another change, to take effect from next October, is one likely to be heartily welcomed by workers of the foreign persuasion:

But please keep in mind that those who only pay in for the minimum of 10 years will receive benefits proportional to the amount paid into the system. Meaning it won't be much.

2 ( +3 / -1 )

Now just how many seniors over the age of 65 need "paid child leave?"

Mick Jagger?? :-)

Seriously, will it be allowed for grand-child care? If Abe wants more younger women in the workforce and there still aren't enough daycare places, then it could be that increasing numbers of Grans or Gramps will have to quit work to look after Junior.

those who only pay in for the minimum of 10 years will receive benefits proportional to the amount paid into the system. Meaning it won't be much

You aren't suggesting that it would be fair for people who have paid in only 10 years to get as much as those who have paid in for much longer?

If people have paid in, then they should get back proportionally. That includes the non-working, non-contributing housewives who currently get a free pension.

4 ( +4 / -0 )

But please keep in mind that those who only pay in for the minimum of 10 years will receive benefits proportional to the amount paid into the system. Meaning it won't be much.

Up to now it's been zero.

4 ( +5 / -1 )

"the minimum number of years a worker must pay into the various Japan pension funds in order to be eligible to receive payouts, formerly set at 25 years, will be reduced to 10 years. That is, people who pay into the system for more than 10 years, but fewer than 25, who previously had not been eligible to collect, can now expect to receive pension payouts upon reaching the prescribed age."

That is huge news! Very happy to hear it. Need to study and see the precise implications such as you need to be in Japan with a visa to get payouts, etc....

1 ( +1 / -0 )

How much money could be saved and used if the free pass for being a homemaker was eliminated?

3 ( +5 / -2 )

That is huge news!

All that glitters...

1 ( +3 / -2 )

The reduction in years of pension contributions needed to receive a pension is welcome, although I'm nearly at 25 years now anyway.

But don't expect to be living the life of Riley on your Japanese pension. I think the national pension scheme pays around Y80000 per month after 40 years contributions. If you pay in for 10 years you might get about Y20000 per month. Still, something is better than nothing. Company schemes should pay more, assuming they also reduce the number of years of payments required to 10.

0 ( +0 / -0 )

@Scrote "I think the national pension scheme pays around Y80000 per month after 40 years contributions. If you pay in for 10 years you might get about Y20000 per month." I paid in for 25 years and receive a montly payment of 38.000 yen from which 7.000 yen is deducted for kaigo (geriatric care). 31.000 yen per month is certainly not enought to live on.

3 ( +4 / -1 )

@Bambula "I paid in for 25 years and receive a montly payment of 38.000 yen from which 7.000 yen is deducted for kaigo (geriatric care). 31.000 yen per month is certainly not enought to live on."

OMG! That is scary,,, That won't even cover pocket money.

5 ( +6 / -1 )

If you paid kokumin nenkin only, the amount's not going to be much. Kigyo nenkin and/or Kosei nenkin, in which your employer contributes half, will be much more. In my case I paid 19 years of Kigyo and Kosei, plus 6 years of kokumin. After deductions for health insurance I get about 100,000 per month. Also receiving foreign social security based on what I paid during military service. Every little bit helps. Fortunately I don't have an extravagant lifestyle.

7 ( +7 / -0 )

Now just how many seniors over the age of 65 need "paid child leave?"

Mick Jagger?? :-)

He'll also need paid great-grandchild leave too!

2 ( +3 / -1 )

Until they fix the ridiculous 55% marginal tax rate, they're just tinkering.

1 ( +1 / -0 )

I had no idea that the pension payments were so low. I thought I would never get one so I never bothered to check into. Now that I am going to get a pension, on one hand the amount is disappointing and a small fraction of what they have taken from my pay. But as someone said above, it was zero so anything more than that is a blessing.

2 ( +2 / -0 )

For those whom have paid in less than 25 years.

There are many treaties Japan has with other countries that would entitle you to Japanese pension payments even if you haven't paid for the minimum required numbers of years. I.e. the number of years you've paid into your countries national pension scheme will be added tot the number of years you've been paying in Japan, thus entitling you to some money in Japan.

Reducing the requirement to 10 years will make it easier to reach entitlement even if you're not able to pay for 10 years in Japan.

Check japan.org , it will give you a lot of information, lot of legal stuff to read though :p

3 ( +3 / -0 )

Blacklabel - If the premiums were taken from your pay, you're likely paying kigyo/kosei nenkin, not kokumin nenkin; the pension for that tends to be a good bit higher. You should check it out.

3 ( +3 / -0 )

"NCIS Reruns" clarified it already.

It all depends what kind of pension system you paid into.

And all those who want to find out how much they will get (if at all), go to your nearest pension office and let them do the calculation. They were very helpful and answered all our questions. Looked pretty good for me with 25+ years in Japan and some money from Germany (they got this social security agreement).

2 ( +2 / -0 )

thanks for the advice and information, I will check it out. I hadn't considered it because it didn't apply to me until now. Any money back is better than nothing!

2 ( +2 / -0 )

Thanks for the great info everyone. Very helpful.

1 ( +1 / -0 )

couldn't correct... the correct link is japantax.org

1 ( +1 / -0 )

"your annual outlays for OTC (over the counter) medications in excess of 12,000 yen per year can be added to other hospital receipts to apply for a tax deduction,"

Is this correct? I haven't read up on this yet but the explanation I saw on TV the other day said you could take the "self-medication" OTC deduction OR the hospital cost deduction but not both. Also to take the OTC deduction there were other conditions needing to be fulfilled such as showing evidence that you underwent a regular (non-employer sponsored) health checkup or whatnot.

0 ( +0 / -0 )

If you are American and will collect Social Security and a Japanese Pension, you have to declare the Japanese Pension under a program called WEP. It was originally started to avoid double dipping. It really affects people badly.

0 ( +1 / -1 )

My wife told me that business owners hoping to pay their sales taxes or other such taxes through a credit card will be subject to a service charge of 1% or even more in some cases. I assume that this is the fee that the credit card companies are charging and it is simply being passed on, but this is an important point to consider if you really want to do it or not.

0 ( +1 / -1 )

The way the population is in decline means that there won't be a pension in the future as there won't be any funding for it......

-1 ( +0 / -1 )

Have trouble understanding taxes? That's why it's called a tax CODE,

-1 ( +0 / -1 )

Har har har ...

-1 ( +0 / -1 )

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