Blue Tax Payer Benefits

Overview

In Japan, a self-assessment system has been established for income taxes, where taxpayers correctly calculate the income amount and tax amount according to the applicable tax law and pay tax by themselves.

In order to correctly calculate and declare the amount of income generated during the year, it is necessary to record the status of daily transactions related to the income and necessary expenses, as well as to retain the documents created and received for the transaction.

For those who maintain a certain standard of bookkeeping practice and make correct declaration based on the bookkeeping, there is a blue return system where filers can receive advantageous treatment in the calculation of income.

Those who have real estate income, business income and timber income can file the blue return.

Submission of an application for blue tax filing status has to be done by whichever is later, either two months from the commencement or March 15th.

Advantage 1

• JPY 100,000, 550,000 or 650,000 special deduction

If your run rental business, rental scale is a “business scale” and e-file tax return, special deduction is JPY 650,000.

The business sale is 5 housings or 10 rooms, or more rental.

Advantage 2

• Family salary deduction
• Assuming that your real estate rental business is “the business sale”, you can pay salary to your family member who helps your real estate rental business as long as your family member does not have a proper job or is not a student. Salary needs to be arm’s length price.
• Application needs to be filed to tax office.