# Inheritance



## EJP1234

Hello everyone, I have a complicated scenario and was wondering if anyone could give me any advice on my situation. I am a Canadian citizen who has been living in Japan for less than a year. I just got married and my wife is a Japanese citizen. My father, who is also a Canadian citizen passed away many years ago and left me our family property in China. I just went back for a visit and found out that the house is worth over a million dollars Canadian. I want to go back to China next year to sell the property but am afraid of the tax implications in China, Japan, and Canada. I was thinking about doing a money wire transfer from China to my bank account in Japan but don't know what the implications are for transferring such a large quantity of money. Would I be taxed even though I'm a non-resident living here less than a year and under a spouse visa? Will the bank report to the government that 90 something million yen was transferred into a person's bank account? I want to be honest about declaring my inheritance from real estate in China and reporting it but don't want to get destroyed by the tax man. What should I do? If the tax in Japan is too high, I'm considering moving back to Canada or even moving to China, where my money should last me a lifetime. Any input would be greatly appreciated. Please and thank you.


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## larabell

Wow... an interesting situation indeed. First off, you should assume all the usual caveats about my advice and that of anyone else who may offer their opinions on this or any other discussion forum. I am not a tax specialist. If you want to be 100% sure of the tax implications of whatever you decide to do, you should consult tax experts in all three countries. That said, here's what I think...

Since you've been in Japan less than five years, you're considered a "non-permanent" resident for tax purposes. You're not taxed on unearned income you receive outside of Japan. That changes if the money is remitted to Japan. If you bring the money over here, the tax authorities will want their cut. And the bank will definitely report such a large transfer. I once transferred US $60,000 from a brokerage account in the States and the tax guys called me in to explain where the money came from (I had been in Japan more than five years at that point). Smaller transfers might escape the notice of the tax guys but I can't say for sure.

I don't know the situation in Canada. If you were a US citizen, the US would tax you on the income/inheritance... if they found out. You should ask someone who is familiar with Canadian tax law. I've heard that Japan and the US are fairly unique in their taxation of citizens living abroad and I doubt the Canadian tax authorities will find out about the money if you don't say anything. But it would be nice to at least know where you stand, legally.

If China taxes inheritance, you probably can't avoid paying tax there because the property transfer is almost certainly going to be reported. But... that may give you an out in both Canada and Japan. Many countries have dual-taxation treaties where you won't be taxed in your home country for income that was taxed in some other country (or vice-versa). Again, you need a tax expert to know for sure but it's possible that whatever tax you pay in China can be used as a credit for tax in Canada (and/or Japan, if you choose to bring some or all of the money over here) -- the theory being that you should only have to pay tax once. Be careful, though... if the tax you pay in China is lower than what you would owe in Japan and you bring the money over here, you'll could end up paying the difference on your Japanese tax return.

If there's a good possibility you'll wind up living in China in the near future, why not just leave the money there? You could put it in a Chinese bank that supports online transfers and then get a credit (or debit) card with that same bank. Banks should be falling over themselves to offer you a credit card if you put that much money in their bank, and... as far as I know... you're not taxed on credit card purchases you make in Japan and pay for in China. So that's a way you could use some of the money while you're here without ever having to actually transfer it and worry about it being taxed.

But... again... with a million dollars at stake you really should consult an expert. It certainly sounds like you can afford it now.


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## EJP1234

Thank you for your insights larabell. When I first arrived in Japan, I transferred about 2 million yen into my wife's account from my account in Canada and no one contacted us about that transaction. Perhaps that was considered too small and if I transferred 'small' amounts every month, i'm sure the tax man would come a calling. From the research that I've done so far, it looks like Japan would tax me 30% or more on a million dollars. Maybe I could just bring some of it here if I were to buy a home and live in Japan and get taxed on a smaller amount. I could leave the rest in a bank in China and get a debit/credit card and buy other things while I lived in Japan. It would also give me an excuse to go back to China every year to visit family and slowly bring back smaller amounts of money into Japan. Definitely complicated and I need to get as much help as I can get. Thank you for all your suggestions and I will tread slowly and carefully to find the best solution to my 'problem'.


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## lorgnette

You might consider which visa will you be applying and length of stay in China while waiting for house to be advertised, viewed and sold.


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