Hello everyone! I have a question regarding global taxation of Canadian TFSAs from Japan. I did not find any similar question when I searched the sub, so please forgive me if this is question is a duplicate somehow. (I found this one which is similar but not as detailed. I also checked the wiki but did not see anything regarding this issue)
Backstory:
Very close to 5 years ago, I moved to Japan from Canada (Canadian citizen), not intending to stay for longer than a couple of years. However, I ended up staying due to job/family. As a result, at the end of this year, I will reach 5 years in Japan (date "X"). From my understanding, I am currently a non-permanent tax resident, and after date "X", I will be a permanent tax resident. (I confirmed this point with the NTA helpline)
I left a TFSA account back in Canada (composed of both GIC and mutual funds). I have not contributed to it nor withdrawn from it since leaving Canada. I understand that after I become a permanent tax resident on date "X", I need to report and pay income tax on my global income, which includes this TFSA somehow.
Questions:
My questions are the following:
\1. In each of the scenarios, what are the potential tax obligations?
- If I dissolve my TFSA before becoming a permanent tax resident (and do not remit the contents to Japan)
- If I dissolve my TFSA after becoming a permanent tax resident (and do not remit the contents to Japan)
- If I do absolutely nothing with my TFSA before/after becoming a permanent tax resident
\2. Are each of these taxes above relative to the prior year's valuation, or the valuation when I acquired the TFSAs before ever coming to Japan?
\3. Does anyone know how a TFSA with GIC/mutual funds might be filed in Japanese tax returns given that my employer already does my 年末調整 every year? Or have a source I can look at to figure out how to file this properly? I saw the NTA has an online tool which I am hoping I can use for this?
I am a complete newbie to this kind of thing, but I am trying to do it properly. After I clarify as much as I can, I will call the NTA helpline again and confirm my understanding of the rules with them.
If anyone has read this far, thank you very much! I would appreciate any ideas and reading material!
by akiei
2 comments
Following
> 1. In each of the scenarios, what are the potential tax obligations?
What income is generated on that TFSA? Or what income do you expect there in the future?
Dividends? Interest? Capital gains from selling stocks?
> If I dissolve my TFSA before becoming a permanent tax resident (and do not remit the contents to Japan)
You can avoid being taxed on capital gains by Japan.
> If I dissolve my TFSA after becoming a permanent tax resident (and do not remit the contents to Japan)
You will have to pay tax in Japan on the capital gains from that dissolution.
> If I do absolutely nothing with my TFSA before/after becoming a permanent tax resident
Nothing, necessarily. But of course if that account generates income, e.g., from dividends, you need to pay taxes in Japan every year.
> 2. Are each of these taxes above relative to the prior year’s valuation, or the valuation when I acquired the TFSAs before ever coming to Japan?
The latter.
Capital gains (for Japanese tax) would be calculated based on JPY cost basis when you acquired the securities in that account (so you need to know the exact date), per security. If you have made acquisitions of the same security several times you need to take a weighted average of all these to determine that security’s cost basis.
> 3. Does anyone know how a TFSA with GIC/mutual funds might be filed in Japanese tax returns given that my employer already does my 年末調整 every year? Or have a source I can look at to figure out how to file this properly? I saw the NTA has an online tool which I am hoping I can use for this?
Your employer cannot file taxes on any income other than the employment income.
I don’t know what a GIC is, but if you get dividends yourself on that TFSA, that’s income to declare in yearly tax return filings (確定申告) by you. If the fund itself reinvests dividends internally, that is not income to Japan. It would be *indirectly* taxed later if you were to sell / dissolve, as capital gains.
Yes, there is a an online tool (in Japanese). It’s not super hard. But first try to read up a bit more on what kind of income exists and how it may apply to your investments.
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