Tax Benefits of Donation to Nintei (Certified) NPO

Transcription

1 Tax Benefits of Donation to Nintei Certified) NPO

2 1 Deduction for Donation from Individuals Tax Deduction / Tax Credit) Tax Individual Resident Tax World s Topclass Tax Deduction Rate! You can receive a tax credit for up to 50% of your donation. tax is deductible with no exception. Resident tax is deductible under certain conditions. It is required to file tax returns declare refunds). Calculation formula for Tax You can choose the more beneficial one Tax Credit Total amount of 2,000yen ) 40% = Annual donation Minimum allowance) OR Amount of Tax refund For Tax) Deduction for Tax Total amount of 2,000yen Annual donation Minimum allowance) ) Tax Rate = 5%~45%) The maximum amount of deduction is 25% of the income tax. The maximum amount of deduction for both, Tax credit and tax deduction is 40% of the total annual income. Amount of Tax refund For Tax) Calculation formula for Individual Resident Tax Tax Credit Only Total amount of Annual donation 2,000yen Minimum allowance) Prefectural resident tax: 4% + Municipal resident tax: 6% = Maximum 10% in total. The maximum amount one can donate is 30% of total annual income. ) 10% at maximum = Amount of Tax refund For Individual Resident Tax)

3 2 Include Corporate Donations into Special deduction Corporation Tax Encouraging corporations contribution to the society! Total amount of corporate donations that can be included into expenses is approximately 3 to 5 times larger compared to General rules. The added amount of Regular deduction and Special deduction can be included into expenses. Applicable not only for profitmaking corporations but NPOs as well. Calculation formula / Example of the maximum amount of donation that can be included in expenses Corporations with Capital fund Companies, Union, etc.) Ex ) Capital : 10 million : 5 million Corporations with No Capital fund NPOs, etc.) Ex) : 5 million Regular deduction General rules) Capital as of the Fiscal year end 10 million x 0.25% + 5 million x 2.5% ) x 1/4 = 37,500 yen 0.25% + 2.5% ) 1/4 1.25% 5 million 1.25% = 62,500 yen Special deduction The amount of Capital 0.375% % ) 1/2 6.25% 10 million x 0.375% +5 million x 6.25% ) 1/2 = 175,000 yen 5 million 6.25% = 312,500yen 212,500 yen deductible 375,000 yen deductible

4 3 Tax Exemption for Donation of Inherited Assets 1) Inheritance Tax Giving back to the society with inherited assets! Tax exempted when one donated inherited assets. Be aware of DEEMED TRANSFERRED INCOME TAX of noncash inherited property such as real estates and securities. Legacy donation by will Donation of Inherited assets by heirs Inheritance Tax Donations to NPOs including noncertified NPOs), general incorporated associations/ foundations are exempt. Public interest incorporated association A : TaxExempted NPO B : TaxExempted If tax exemption results in reducing the amount of inheritance tax wrongfully, taxation applies. Only donations to Certified NPOs and Public interest corporations are exempt. Gakko Hojin Educational incorporated institution) C : TaxExempted Nintei Certified) NPO D : TaxExempted Tax / Resident Tax Legacy donation to Listed organizations 1) may be applied for tax deduction when quasifinal return of the deceased is filed within 4 months from death. 1) Each local government has the list of TaxExempted organizations on its website. Donations to Listed organizations 1) can be applied for tax deduction. ) Beware of the threshold!.

5 3 Tax Exemption of Donated Inherited Assets 2) Inheritance Tax Calculation formula / Example for Inheritance Tax Taxable amount of Inherited assets 60 million yen Total amount of inheritance) 18 million yen Donated inherited assets ) 2 million yen Legacy donation) = 40 million yen A basic deduction 30 million yen + 6 million yen 2 people The number of legal heirs) ) = 42 million yen B Reference In this case, approximately 900,000yen of inheritance tax will be levied if legacy donation / inheritance were not donated. In this case, the taxable amount of inheritance is smaller than the basic deduction, therefore; inheritance tax is exempted! A < B

6 4 Deemed Donation for profit making activities Corporation Tax for the Nintei Certified) NPO Reduce corporate tax and Increase activity funds for Nintei Certified) NPO! Reducing Nintei Certified) NPO s tax burden to 50% less or more! Reduces corporation tax) Either 50% of profit or 2 million yen, the larger amount can be deductible expenses. Deemed donation can be applied to costs for activities and/or disbursement for donation. NonNintei Non Certified) Nintei Certified) +2.5 million yen Profit income) million yen Deemed donation 2 million yen Make the most of Tax incentives! Corporation tax and others : 2.5 million X approximately 20% = 500,000 yen of Tax burden Profit ) Tax rate) Corporation tax and others : 0.5 million X approximately 20% = 100,000 yen of Tax burden Tax rate) Make the most of Deemed donation to reduce corporate tax and increase internal revenue sources!