“If you don’t find a way to make money while you sleep, you will work until you die.”-Warren Buffett

NISA

Nippon individual savings account

Nippon (Japan) Individual Savings Account, a tax exemption scheme for investment by individuals, which was launched in January 2014.

NISA is intended for any residents of Japan aged 20 or more. With the NISA account, all individuals are eligible for an exemption of the 20% levy on income from capital gains and dividends from annual investments of up to 1.2 million yen (approximately US $10,000) made over a five-year period as long as they reside in Japan. Under the current legislation, tax-exempted investment can be made through NISA up to 10 years starting in 2014 for a cumulative investment of 5 million yen (approximately US$50,000). The main features of NISA are listed in Appendix 1 and a graphic illustration of its tax exemption structure is shown in Appendix 2.

Features

“Money comes only to those who know the Business”

Who is eligible?

Anyone who lives in Japan and is at least 20 years old..

What income is exempt from tax?

Dividends and capital gains from investment in listed shares, stock
investment trusts, etc. through a NISA.

Where can a NISA account be opened?

– It can be opened at securities firms (for investing in listed stocks, stock
investment trusts, ETFs and REIT) and banks (only for investing in stock
investment trusts).

How many NISA accounts can be set up by one person?

Only one.

Annual investment limit

1.2 million yen
(12,00000)
Any amount not used in the current year cannot be carried over to the next year.

How long is the tax-exempt period?

5 years at longest. After the 5 year period, the investor can hold onto the asset and invest up to ¥1 million yearly under the NISA scheme. Thus the
scheme offers a total tax-exempt duration of up to 10 years.

Account opening period

Until the start of 2023

Note….

You cannot open a NISA account (general NISA/tsumitate NISA) at multiple financial institutions. Only one account can be opened per person.

Change financial institution

Changeable every year

normally if you buy a stock and the price goes up, you can sell it for a profit. This is called a capital gain, and is subject to taxation. In a normal account, if you have a stock where the price has fallen you can sell it at a loss and write off the loss against the gain on the first stock. For example, if you make a 10,000 yen profit (capital gain) from selling stock A, and you sell stock B at a loss of 8,000 yen, you only have to pay capital gains tax on 2,000 yen. This process is not allowed in a NISA account.
the way assets in NISA account avoid paying capital gains tax is that the price is reset when the five years is up or when you sell the assets. For example, if you buy a stock in your NISA account for 1,000 yen and five years later it is worth 3,000 yen, the government will consider 3,000 yen as the purchase price. You will only have to pay capital gains tax on any subsequent rises in the price. On the other hand, if the stock price falls to 600 yen five years later that will be considered the purchase price, and you would have to pay capital gains tax if it went back up to 1,000 yen and you sold it.

[Example] If you purchase 1,200,000 yen (2,400 shares) of stock A at 500 yen per share, you will receive an annual dividend of 10 yen.

10 yen x 2,400 shares = 24,000 yen For
specified and general accounts, tax is
24,000 x 20.315% = 4,875 yen .

In the case of selling the beside stock A because it made a profit of 20% after one year

1,200,000 yen x 20% = 240,000 yen For
specified or general accounts,
240,000 yen x 20.315% = 48,756 yen will be taxed.