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[gav71]

Hi all:)

After a lot of searching (thanks for the links Glenski) and visits to an accountant, I still have important unanswered tax questions (from the Japanese side of things) and was hoping someone might be able to help me...

So far I have come up with the following information...

Australia has a tax treaty with Japan, but it would seem to be different to the US-Japan agreement. If Australians enter Japan with a 'Certificate of Residency' (from Australia), they do not pay any Japanese income or residency tax for two years, but have to pay Australian tax on the amount earned in Japan. Unfortunately, unlike the US agreement, tax is paid after the first 6K AUD is earned. It would seem that Australians can also enter Japan as non-residents if they meet Australian non-residency requirements for tax purposes, but are expected to pay all Japanese taxes on money earned in Japan. Sorry for my long winded explanation...my questions relate to the second scenario and concern tax from the Japanese side ...

1. When entering Japan (without a Certificate of Residency from Australia) would I be considered a non-resident or a non-permanent resident according to Japanese tax law and/or my employer?

If considered a non-resident than it would seem that a flat 20% tax rate would apply for the first year. If considered a non-permanent resident, than it would seem that the normal progressive tax rate system would apply for all time spent in Japan and that the residency tax would start after the first year. If considered a non-permanent resident, it would definitely be preferable from a savings perspective to enter Japan without the Australian Cert of Residency and pay Japanese tax.

I am not good with taxation normally and am struggling with this situation. Unfortunately, it looks like the decision must be made before entering Japan, so I'll have to jump one way or the other. I was hoping someone could please help with the residency status question and also check whether my Japanese tax rate estimates seem correct.

All advice and suggestions greatly appreciated.

[G Cthulhu]

Japanese taxes are lower, so you want to be a tax resident of Japan. You are either a tax resident of japan or Australia. There is no "free" year (which is how I read part of your question). If you enter Japan without Australian tax residency (certificate or otherwise) then you need to fill out a tax declaration letter (from the Australian embassy) where you declare yourself a tax resident of Japan.

That's it. Nothing else to it.

The only downside is that you *must* stay outside Australia for the period required for a residency test (364 cont. days?) and *inside* Japan for the period they require for tax residency (181 days?).

[gav71]

Thanks heaps G Cthulhu.

The ATO has changed the non-residency rules for the forthcoming year, but I think 6 months away from Australia is the time requirement needed to fulfill the non-residency status.

Much appreciated

gav