After reading various posts in this sub, as well as this document which details some gift tax exceptions, I still don't have a firm understanding of potential Gift Tax exposure for an overseas recipient of money (university student) gifted from a resident of Japan. In this case, the following context applies:
- The person gifting the money is a permanent resident in Japan (not a Japanese national)
- The person gifting the money is the parent of the recipient
- The recipient has never been a Japanese resident
- The recipient is studying outside of Japan (not a Japanese national)
- The recipient has previously been listed by the parent as a dependent for tax purposes (on Tax Returns in Japan)
The main things I'd like to understand are as follows:
- It appears that the parent of the recipient is able to transfer money to pay for educational fees (cost for the course, transportation, books etc.) without any gift tax being levied on the recipient. Is this correct?
- If the recipient is working a part-time job, what is the income threshold at which point #1 above would no longer be true (i.e. how much would the recipient need to earn before being liable for Gift Tax on educational expenses paid by the parent)?
- Same question as #2, but as related to the recipient's living costs — is the threshold different in this situation (i.e. how much would the recipient need to earn before being liable for Gift Tax on living costs paid by the parent)?
- If the parent usually declares the recipient as a dependent on Tax Returns in Japan, it appears that, if the recipient were to earn 1.03 million JPY (or more), then the parent would no longer be able to claim a dependent deduction when filing a Tax Return in Japan
- Does money that the dependent receives from the parent, for educational and living expenses, contribute towards the 1.03 million JPY threshold?
- If the dependent deduction can not be claimed by the parent when filing a Tax Return in Japan, does this have any implications on how the NTA sees the recipient of the educational/living expenses (i.e. is the recipient still considered a dependent who is exempt from Gift Tax on educational/living expenses, regardless of whether or not the parent can claim the dependent deduction)?
It would be great to have some clarity on these matters.
by lifesideways