Order for Enforcement of the Income Tax Act

The following apply to the application of the preceding two Articles where a Resident has concluded a retirement allowance mutual aid contract that falls under a system relating to retirement allowance mutual aid operated by the Organization for Workers' Retirement Allowance Mutual Aid or by a specified retirement allowance mutual aid organization prescribed in Article 74, paragraph (5) (Approval of Specified Retirement Allowance Mutual Aid Organizations) or another contract similar thereto (hereinafter in this Article referred to as a "retirement allowance mutual aid contract, etc."), or a qualified retirement pension contract prescribed in Article 20, paragraph (3) (Special Provisions on Corporation Tax on Retirement Pension Funds) of the Supplementary Provisions of the Corporation Tax Act (hereinafter in this Article referred to as a "qualified retirement pension contract") or another contract similar thereto (hereinafter in this Article referred to as a "qualified retirement pension contract, etc."), where a Resident has established an employees' pension fund prescribed in Article 3, item (xii) (Definitions) of the Supplementary Provisions of the 2013 Employees' Pension, etc. Amendment Act (hereinafter in this Article referred to as an "employees' pension fund"), or where a Resident has implemented a defined-benefit corporate pension prescribed in Article 2, paragraph (1) (Definitions) of the Defined-Benefit Corporate Pension Act (hereinafter in this Article referred to as a "defined-benefit corporate pension") or a corporate-type pension plan prescribed in Article 2, paragraph (2) (Definitions) of the Defined Contribution Pension Act (hereinafter in this Article referred to as a "corporate-type defined contribution pension"):

where it is provided in the retirement allowance rules that the severance package paid to an employee includes benefits under a retirement allowance mutual aid contract, etc. or qualified retirement pension contract, etc., or benefits under the rules pertaining to a defined-benefit corporate pension prescribed in Article 3, paragraph (1) (Implementation of Defined-Benefit Corporate Pensions) of the Defined-Benefit Corporate Pension Act (hereinafter in this Article referred to as the "defined-benefit corporate pension rules"), the amount of the severance package prescribed in Article 154, paragraph (1), item (i), (a) or (b) (Transfer Limit for Severance Package Reserves Account) for that employee is the amount of the payments, out of the amount of the severance package calculated under those retirement allowance rules on the assumption that the employee retires for personal reasons, other than the benefits under that retirement allowance mutual aid contract, etc. or qualified retirement pension contract, etc. and the benefits under those defined-benefit corporate pension rules (hereinafter in this Article referred to as the "retirement allowance paid by the employer");

in the following cases, the amount of the severance package prescribed in Article 154, paragraph (1), item (i), (b) for an employee in service as of December 31 of that year (or, if that Resident dies in the middle of the year, at the time of death; the same applies hereinafter in this Article) is the amount of the retirement allowance paid by the employer that would become payable for that employee if the retirement allowance rules as of that day for that employee were applied as of December 31 of the year preceding that year:

where, owing to an amendment of the retirement allowance rules, a change to a retirement allowance mutual aid contract, etc. or qualified retirement pension contract, etc., or a change to the defined-benefit corporate pension rules, with respect to the severance packages for those among the employees in service as of December 31 of that year who have been continuously in service since December 31 of the year preceding that year, all or part of the amount that was to be paid as a severance package on that day has come to be paid, as of December 31 of that year, as benefits under a retirement allowance mutual aid contract, etc. or qualified retirement pension contract, etc., benefits from an employees' pension fund, or benefits under the defined-benefit corporate pension rules;

where, owing to the implementation of a corporate-type defined contribution pension or a change to the corporate-type pension plan rules prescribed in Article 4, paragraph (3) (Standards for Approval) of the Defined Contribution Pension Act, the retirement allowance rules have been amended and, with respect to the severance packages for those among the employees in service as of December 31 of that year who have been continuously in service since December 31 of the year preceding that year, an amount equivalent to all or part of the amount that was to be paid as a severance package on that day has been paid, as of December 31 of that year, to the asset administration organization of the corporate-type pension plan under Article 54, paragraph (1) (Transfer of Assets from Other Systems) of that Act;

with respect to a Resident who has concluded a qualified retirement pension contract, has established an employees' pension fund, or has implemented a defined-benefit corporate pension or a corporate-type defined contribution pension, and for whom the amount specified in Article 155, paragraph (1), item (ii) calculated without applying the provisions of this item for the year that includes the day on which the Resident came to fall under a case set forth in (a) or (b) of the preceding item in a year up to and including that year (hereinafter in this item referred to as the "pre-adjustment excess over the accumulated limit") has arisen as a result of coming to fall under that case, the accumulated limit prescribed in Article 155, paragraph (1), item (ii) for each year from the year in which the pre-adjustment excess over the accumulated limit first arose through the year preceding the first year in which the amount of the severance package reserves account prescribed in Article 54, paragraph (2) (Reserves for Severance Packages) of the Act that was carried over from the year preceding that year as of December 31 of that year (where, by inheritance (including universal legacy) in that year, there is an amount of the severance package reserves account that is deemed under paragraph (2) of the following Article to be held by that Resident, including that amount of the severance package reserves account; referred to in (a) as the "balance of the reserve for retirement allowances carried forward") is equal to or less than the accumulated limit prescribed in Article 155, paragraph (1), item (ii) calculated without applying the provisions of this item as of that day (hereinafter in this item referred to as the "pre-adjustment accumulated limit") is the lesser of the amounts set forth in (a) and (b):

the balance of the reserve for retirement allowances carried forward as of December 31 of that year;

the amount obtained by adding, to the pre-adjustment accumulated limit for that year, the amount calculated by dividing the pre-adjustment excess over the accumulated limit by seven and multiplying the result by the number obtained by deducting from seven the number equivalent to the number of years from January 1 of the year following the year that includes the day on which the Resident came to fall under a case set forth in item (ii), (a) or (b) to December 31 of that year (where that number exceeds seven, seven; hereinafter in this item referred to as the "number of years of the elapsed period") (where the sum of the past service contribution amount prescribed in Article 156-2, item (iv) (Meaning of Terms) of the Order for the Enforcement of the Corporation Tax Act and other amounts specified by Ministry of Finance Order paid during the period from the year following the year that includes the day on which the Resident came to fall under that case to that year exceeds the amount calculated by multiplying the pre-adjustment excess over the accumulated limit by the number of years of the elapsed period and dividing by seven, the remainder after deducting the amount equivalent to the excess portion) (for the year that includes the day on which the Resident came to fall under that case, the sum of the pre-adjustment accumulated limit and the pre-adjustment excess over the accumulated limit for that year).

Where a Resident who has an amount of the severance package reserves account prescribed in Article 54, paragraph (2) (Reserves for Severance Packages) of the Act (hereinafter in this Article referred to as the "amount of the retirement allowance reserve account") dies, the following amounts, out of the amount of the retirement allowance reserve account at the time of death, are to be included in gross revenue in calculating the amount of business income of the Resident for the year that includes the day of death:

where none of the Resident's heirs is a person who has succeeded to the Resident's business that is to generate business income, continues to employ the Resident's employees, and has obtained the district director's approval to submit a Blue Return for the income tax for the year that includes the day of the Resident's death (including a person who has submitted the written application under Article 144 (Application for Approval to File a Blue Return) of the Act for that income tax): the full amount of that amount of the retirement allowance reserve account;

where any of the Resident's heirs is a person prescribed in the preceding item: the amount obtained by deducting from that amount of the retirement allowance reserve account the amount calculated by multiplying that amount by the proportion that the year-end required retirement allowance payments pertaining to the employees set forth in the preceding item whom the heir continues to employ bear to the year-end required retirement allowance payments prescribed in Article 154, paragraph (1) (Transfer Limit for Severance Package Reserves Account) as of the time of the Resident's death.

Where a Resident who has an amount of the retirement allowance reserve account dies and the case falls under the case prescribed in item (ii) of the preceding paragraph, the portion, out of the amount of the retirement allowance reserve account at the time of death, other than the amount set forth in that item is, for the purpose of the application of the preceding three Articles and the preceding paragraph, deemed to be the amount of the retirement allowance reserve account held by the Resident's heir at the time of death.

Where an heir to whom the provisions of the preceding paragraph have applied is a person who has submitted the written application under Article 144 of the Act for the income tax for the year that includes the day of death of the Resident referred to in that paragraph, and that application has been dismissed, that heir must reverse the amount of the retirement allowance reserve account referred to in that paragraph as of the day of the dismissal.

Where a Resident who has succeeded by inheritance (including universal legacy; the same applies hereinafter in this Article) to the decedent's business that is to generate business income and has obtained the district director's approval to submit a Blue Return for the income tax for the year that includes the day of the inheritance (including, among those who have submitted the written application under Article 144 of the Act for that income tax, those not falling under the preceding paragraph) has, in that year, transferred to the severance package reserves account an amount to be applied to the severance packages payable upon the retirement of those among the decedent's employees who continue in service and have not received payment of severance packages from the decedent, the amount under Article 154, paragraph (1), item (i) is calculated for that amount by deeming the day of the decedent's death to be the December 31 of the preceding year prescribed in Article 154, paragraph (1), item (i), (b) (Transfer Limit for Severance Package Reserves Account), and, where the decedent had established retirement allowance rules on the day of death, deeming those retirement allowance rules to be the retirement allowance rules in effect as of that December 31 of the preceding year.

Where a Resident prescribed in the preceding paragraph calculates, in the year that includes the day of the inheritance, the amount of the retirement allowance reserve account to be reversed under Article 155, paragraph (1), item (i) (Reversal of Amount of the Retirement Allowance Reserve Account) upon the retirement of those among the employees of the decedent (limited to a decedent for whom there is an amount of the retirement allowance reserve account deemed under paragraph (2) to be held by that Resident on the day of death) who continue in service and have not received payment of severance packages from that decedent, the Resident is to calculate the amount of the severance package under that item by deeming the day of death to be the December 31 of the preceding year prescribed in that item, and deeming the retirement allowance rules that the decedent had established on the day of death to be the retirement allowance rules in effect as of that December 31 of the preceding year. In this case, the amount of the retirement allowance reserve account to be reversed is limited to the amount of the retirement allowance reserve account deemed under paragraph (2) to be held by that Resident.