GaijinTax.Com

Step 1 shows you how to fill out the “Receipts & Expenses From (Front)”.  To download a blank English version of this Japanese tax document in pdf format, please go to our Tax Forms page >>>here< <<.

To download the complete Japanese tax form used in this example , please rightclick and save the image below.

Now it’s time to get to work!

1. Name & Address

Fiscal Year: 2008 (Heisei “20″)

Name: John Smith (ジョン　スミス）

Address: 702 Green Mansion, 5-14-3 Azabu, Minato Ku, Tokyo.

Phone Number: (mobile) 090-1234-5678

Business Type: Teaching

Fill out your name, address and phone number (mobile number is fine, too).  Write your name in Japanese katakana above your English name if you know how to.   You can always look at your bank card if you really get stuck.

As for business type, for many of you it will be teaching/training/consulting.  Some people also put publishing as they may write blogs or submit short articles into magazines.  Remember that this is NOT your current job/employment, but your own independent business for which you will be claiming expenses.

In the two square boxes in the heading, write the tax year in Heisei (the Japanese calendar).  2008 is “20″, 2007 is “19″.

Don’t worry about a Trade Name, Association, and Licenced Tax Accountant, you can leave these sections blank.

2. Revenue

Sales (Receipts): 588,700yen

Total: 588,700yen

This is where you declare your income which you generated from your private teaching or other sources.  Remember that you don’t need to have given your Japanese students receipts when they paid you, as long as you are honest and declare some sort of income.   In our example, we have total sales of 588,700yen.  Try to be as accurate as possible.

Leave Household Consumption and Other Receipts blank, and enter the same figure, 588,700 for Total as you did for Sales (Receipts).

3. Costs & Balance

Balance: 588,700yen

This is for inventory costs.  In our example, our English teacher provides a teaching service to Japanese students, so he doesn’t actually have inventory.  So this section is mostly blank.  So the Balance at the bottom should equal the Total from Revenue above, 588,700yen.  Too easy!

4. Expenses

Depreciation: 133,600yen

Rent: 560,000yen

We cover Depreciation in the ‘Receipt & Expenses (Back)’ section, but basically business items which you purchase up to 100,000yen, for example a printer or TV, can be fully deducted in that financial year.  For items exceeding 100,000yen, you need to depreciate them over 2 or more years, depending on the item.  There is a list detailing the different durations.  In out example we use a 1,200,000yen motorbike, which is depreciated over 3years.

The main thing to look at here is Rent.  This will probably be one of your biggest Japanese tax deductions, but just how much can you deduct?  Well, as much as is appropriate.  If you have a 1 room apartment which you use for both your own personal living and teaching students on the coffee table, then it becomes a little hard to separate the two in terms of physical space.  However, up to 50% could be reasonable if you work out of home a fair bit. In our example, Rent is 560,000yen.  Again, this calculation is looked at in more detail in the ‘Receipts & Expenses (Back)’ section.

5. Other Expenses 1

Utilities: 54,000yen

Now this and the next column, strategically named ‘Other Expenses 1′,  is where the real deductions begin, and are what make this foreigner’s guide to Japanese tax  really worth your while.

Utilities are your Water, Gas and Electricity costs.  Similar to rent, you deduct the amount proportionate to your business use, not all of it.   In our example, we use 50% (same as our rent portion).   Monthly bills for an individual tend to be around 9,000yen in total, so that’s a the number we used for our example.

Taxes & Duties refer to any business items which you imported and paid customs duties on – generally blank.

Packing & Freight Costs are and postal or shipping costs which you incurred – generally blank.

6. Other Expenses 2

Travel Expenses: 653,200yen

Communication: 96,000yen

Entertainment: 118,700yen

Insurance Premiums: 21,500yen

Maintenance: 32,500yen

Consumable Supplies: 327,600yen

Welfare: 126,000yen

Sub-Total: 1,429,500yen

Total Expenses: 2,123,100yen

This is a bit of a lengthy one, but very simple nevertheless – and is where most of our Japanese Tax deductions are made!

Travel Expenses can include costs for public transport and taxis, however the big things are bullet trains, domestic and international air travel, and hotel accommodation.  Essentially, this is where you put your business trip expenses.  As an English teachers, you may travel for many business reasons – to research foreign cultures for discussion in class activities, to investigate teaching techniques practiced in other countries, to analyze the market situation for possible expansion of your teaching business, to seek out teaching opportunities in Hokkaido, etc.  In our case, we use 653,200yen.  This included business trips to the USA, Hokkaido, HongKong and Thailand.  We touch this a little in the ‘Receipts & Expenses (Back)’ section.

Communication refers to your Internet connection and phone bill.  Simlar to utilities, we use 50% as our split between business and personal use.

Advertising, if you did any.  Generally left blank.

Entertaining is the cost you incurred while building relationships with current and potential clients, and other possible business contacts.  It can include dinners, gifts, concert tickets and so on.  Just make sure to get a receipt from the restaurant before you leave (although receipts are not required to do your tax return, they do help to have as hard evidence).  In our example, we use 118,700yen.

Insurance Premiums are if you paid insurance for your home, car, etc.  Our example is 21,500yen – 20,000yen home insurance and 23,000yen motorbike insurance – but deducted at only 50% as our home and motorbike is split 50/50 between personal and business use.

Maintenance is for equipment, car/bike etc.  maintenance or repair costs.  We put 32,500yen, which is 50% of the 65,000yen maintenance/repair costs for the year.

Consumable Supplies is a very broad and  important category.  Office stationary, furniture (under 100,000yen), and other items which you bought for your business, most likely go here.  This can include your computer and  printer (for preparing lessons), mobile phone handset, TV & DVD player for watching movies as lesson activities, stationary, books, the list goes on.  Just be sure to split the usage between business and personal.  Items over 100,000yen need to be depreciated and are looked at in the next section.  Our consumables came up to 327,600yen.

Welfare is your personal well-being as your own employee.  Annual company trip and things related to your well being can go here.  Our 10,500yen/month gym membership came up to 126,000yen in this example.

Misc. is for whatever didn’t fit in the above categories.

Sub-Total is the total of ‘Other Expenses 1′ and ‘Other Expenses 2′.  So DO NOT include your Rent or Depreciation amounts here – we do that next.  Our amount is 1,429,500yen.

Total Expenses is Sub-Total + ‘4. Expenses’, which includes rent and depreciation.  This is how much you are going to reduce your income by!!!  We have 2,123,100yen (133,600 depreciation + 560,000 rent + 1,429,500 other).

7. Net Income

Total (excluding Family Deduction): -1,534,400yen

Net Income: -1,532,400yen

This section refers to your net BUSINESS income, and does not include your employment income (inc. withholding tax).

Total (ex. Family Deduction) is your Balance from ‘2. Costs’, minus your expenses.  In our case, we have a large business loss, so expect this to be a large, negative figure.   In Japan, negative amounts are represented by a triangle in the space before the number, so don’t forget the triangle!  We have -1,534,400yen.

Family Employee Deduction doesn’t relate to most of you so leave it blank.

Net Income should be the same as Total above.  We have -1,534,400yen.

8. Details Of Salaries & Wages

This is only used if you have employees to whom you’ve paid a salary or wage.  They don’t have to be Japanese.  However we think that for most of you reading this guide, your are probably teaching English or trying to establish yourself and do not have any employees.  So leave this blank.

9. Details Of Rewards & Fees Paid To Accountants, Lawyers, etc.

This is only used if you have paid an accountant, lawyer, etc.  Again for the most of you, this is left blank. (and why are you using GaijinTax.Com if you are using an accountant?!?)

10. Name Of Family Employees (Redundant)

Family Employees are family members you have paid for some sort of help with your business.  If your wife helps you with some administrative work and you give her a salary for example.   For most, leave this blank.

Congratulations – you have finished the most complicated part of this entire Japanese Tax thing!!!  Easier than you expected, right?  Time for Step 2…

 

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