1. Interest Income Interest income includes interest from bonds, debentures, and interest on savings, as well as distributions from earnings derived from investment and loans trusts. In general, income tax is withheld by the payer at the time of payment. Interest earned on savings with overseas banks not subject to withholding tax must be declared. Interests on loans to individuals or companies do not fall under the category of interest income. They are classified either as miscellaneous income or business income.
2. Dividend Income Dividend income includes payments received as surplus and distribution of profits of investment trusts (excluding corporate management investment trusts such as public and corporate bond investment trusts and public offering bonds). Individuals deemed as having paid separate taxation at source do not need to declare this income in their returns because the tax procedure has been completed when it was withheld at source.
3. Real Estate Income Income from real estate includes income from leasing land, building, property right, sailing vessel, aircraft, etc. Down payment, contract renewal fee, fee for transfer of title are generally treated as income from real estate. However, down payment, etc. arising from setting up land-leasing right may be classified as income from capital gain.
4. Business Income Business income includes income derived from wholesale and retail commerce, hotels and restaurants, manufacturing, construction, finance, transportation, maintenance, and any income derived from sales of products or services. It also includes income of doctors, lawyers, writers, actors and actresses, professional baseball players, traveling salespersons, carpenters and those involved in fisheries or similar enterprises.
Business income encompasses agricultural income defined as income from agricultural production, fruit growing, sericulture, rearing of poultry and livestock, the manufacture of straw goods or similar activities, and dairy farming.
5. Employment Income Employment income includes salaries, wages, amounts paid to former employees based on prior service, pensions other than lump-sum pensions, bonuses and similar amounts, reduced by the earned income deduction. Allowances (cost of living allowances, child education allowances, medical allowances, tax allowances, housing allowances, etc.) and fringe benefits (benefits received on employer-provided housing with low or no rent payments and benefits received on a employer-provided loan with low or no interest rate) are included in employment income.
6. Retirement Income Retirement income includes retirement allowance, severence pay, lump sum payment from social insurance systems, and any other payments triggered by retirement from employment.
7. Forestry Income Forestry income include income derived from lumbering or the transfer of timber.
8. Capital Gain Income Capital gains income includes income from the transfer of tangible and intangible property, but does not include income from the sale or transfer of land or buildings or the proceeds of sales of inventory or other property continuously transferred in business.
9. Occasional Income Occasional income is incidental income of a nonrecurring nature that does not fall into the aggregate assessment income tax categories of interest income, dividend income, lease income, business income, employment income or capital gains.
10. Miscellaneous Income Miscellaneous income is income that does not fall into any other category of income. Common miscellaneous income includes annuity from insurance system and income of a nonrecurring nature such as interest received from a loan to a friend and/or a family member.
Thinking about working in Japan? Preparing to move overseas almost becomes a full-time job in the final weeks of your departure. Many people quit their jobs weeks before so they can devote their time to preparation. But what about your health insurance? Short-term health insurance plans are a great solution. ↓
Below are links to Certified Social Insurance and Labor Consultants providing services in English. Also below are useful links related to working in Japan and links to women balancing career and personal happiness. WJA realizes and promotes women's increasing value in the labor market.