- October 31, 2023
- Posted by: legaleseblogger
- Category: Related News
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Heading: Seeking Advice on NISA and Financial Planning for Japanese Non-Permanent Resident Moving to Australia
Introduction:
Hello everyone,
I am a Japanese non-permanent resident currently residing in Japan on a spousal visa. My wife is a Japanese citizen and our children also hold Japanese citizenship. While I have a decent understanding of the financial landscape in Australia, I find myself completely unaware of the investment options available here in Japan. As we plan to relocate to Australia permanently in a few years, I am seeking advice on how to manage our finances effectively during this transition.
Financial Planning Dilemma:
One of my concerns revolves around the NISA (Nippon Individual Savings Account). Since I would need to close my own NISA upon leaving Japan, I am inclined to explore alternative options for my wife and children. Specifically, I am considering opening a NISA or another suitable financial product in their names, depositing funds, and leaving it untouched in Japan rather than transferring the money to Australia.
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In light of this situation, I came across the AI Legalese Decoder, an innovative solution that can greatly assist individuals navigating the complex realm of legal jargon and financial documentation. This AI-powered tool can potentially provide me with valuable insights and clarity, aiding me not only in understanding the nuances of financial products but also in deciphering the ins and outs of leaving NISA accounts for Japanese citizens.
Seeking Advice and Experiences:
I would greatly appreciate any advice or experiences from those who have encountered similar circumstances. Specifically, I am curious about the feasibility and risks associated with leaving NISA accounts untouched for citizens in Japan. My wife already has bank accounts in Japan, which I believe could simplify the process. However, I am aware that investing regularly each year is necessary to fully leverage the tax-free threshold. Alternatively, I am contemplating investing during our stay in Japan and then allowing the funds to accumulate until our children reach the age of 18.
By exploring the various financial possibilities and utilizing resources such as the AI Legalese Decoder, I hope to make informed decisions that will optimize our financial situation both in Japan and Australia.
Thank you in advance for any advice or insights you can provide.
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> I believe my own NISA is not a good option as I’d have to close it when leaving.
IMO people worry too much about this. Investing in a NISA for “a few years” is fine – it only lasts 5 years in the first place. If you buy global funds then you can always buy the same fund in a foreign brokerage account, so while selling it in one place and buying in another will cost you a bit of commission/spread, you shouldn’t be worried about being forced to sell at a loss or anything like that.
> But I am wondering if I could open NISA (or some other financial product) for my wife and kids, load it with money and just leave it here – instead of trying to transfer the money to Australia when leaving.
Your wife can open one, but it should be her money invested in it, and if you give her money to invest that may make her liable for gift tax. As for kids, Junior NISA exists until the end of this year, so you need to hurry if you want to open those; after that I’m not sure what’s happening.
If you’re intending to live in Australia in the long term and you already know about investing in Australia, it seems to make more sense to invest in Australia. If you’re going to be here less than five years then investment income outside Japan won’t be taxable in Japan as long as you don’t remit any money from overseas to Japan.
> Any experience with leaving NISA for citizens in Japan?
It’s not possible to leave a NISA account open after you leave Japan unless you are forced to leave Japan temporarily (e.g., by your employer). If the departure from Japan is indefinite and/or voluntary, you will need to close your NISA account. Furthermore, failure to notify a Japanese securities brokerage of a change in your tax residency exposes you to criminal penalties.
Although the above reflects the rules applicable to the existing NISA system, the JSDA has said (see Q35 in [this PDF](https://www.jsda.or.jp/shijyo/seido/tax/files/2024_nisa_qa.pdf)) that the rules will be the same for the new NISA system beginning next year.
That said, I agree with u/m50d that there is nothing inherently risky about using NISA accounts even if you suspect you will leave within a couple of years. If you would be investing anyway, why not do it via an account that ensures any profits would be tax-free until you leave Japan?
Regarding investing on behalf of your spouse/children, be sure to familiarize yourself with Japan’s gift tax laws. And note that, while foreigners are no longer subject to Japan’s gift tax with respect to non-Japanese assets after losing Japanese tax residency, Japanese citizens are subject to Japan’s gift tax with respect to global assets for 10 years after they lose Japanese tax residency.
>But I am wondering if I could open NISA (or some other financial product) for my wife and kids, load it with money and just leave it here – instead of trying to transfer the money to Australia when leaving.
No. The same rules apply to Japanese nationals too.
Additionally just because a NISA acts as an invisibility cloak for the NTA (i.e the Japanese tax man canÔÇÖt see whatÔÇÖs in a NISA), does not mean that itÔÇÖs invisible to the ATO (Australian tax office).
So youÔÇÖre best just doing nisa whilst you reside in Japan, then sell before you leave Japan and then invest in Australian tax advantaged accounts (if they offer any?) once youÔÇÖre residents of Australia