This Cabinet Order comes into effect as of April 1, 1965; provided, however, that the provisions of Article 285 (Matters Deemed to Be Work, etc. in Japan) of the Order for Enforcement of the Income Tax Act as amended (hereinafter referred to as the "New Order") (limited to the part pertaining to work or other provision of personal services listed in paragraph (1), item (ii) of that Article) come into effect as of June 1 of that year.

Except as otherwise provided, the provisions of the New Order apply to income tax for 1965 and subsequent years, and for income tax for 1964 and earlier years, the provisions then in force continue to govern.

With respect to income tax on the part of the interest on deposits that are prescribed in Article 1, paragraph (3), item (iii) (Domestic Source Income) of the former Income Tax Act (Act No. 27 of 1947; hereinafter referred to as the "Former Act") and do not fall under Deposits and Savings prescribed in Article 2 (Scope of Deposits and Savings) of the New Order, which is due to be received before the date of enforcement of this Cabinet Order (hereinafter referred to as the "Effective Date"), the provisions then in force continue to govern.

A transfer listed in Article 4-5, paragraph (2), item (i) (Scope of Transfers of Securities Similar to Transfers of Business, etc.) of the Regulation for Enforcement of the Income Tax Act prior to amendment (hereinafter referred to as the "Former Order") that was made before the Effective Date is not to be included in the transfers referred to in Article 28, paragraph (1), item (ii) (Scope of Transfers of Securities Similar to Transfers of Business, etc.) of the New Order.

An amount paid by an individual or corporation on or after January 1, 1965 to the Small and Medium Sized Enterprise Retirement Allowance Cooperative Corporation pursuant to Article 2, paragraph (1) of the Supplementary Provisions (Treatment of Prior Accumulation Projects) of the Act Partially Amending the Small and Medium Sized Enterprise Retirement Allowance Cooperative Act (Act No. 107 of 1964) (including the case where it is applied mutatis mutandis pursuant to paragraph (2) of the Supplementary Provisions (Transitional Measures) of the Act Partially Amending the Small and Medium-sized Enterprise Basic Act, etc. for Revising the Scope of Small and Medium-sized Enterprises, etc. (Act No. 115 of 1973) and Article 7 of the Supplementary Provisions (Treatment of Prior Accumulation Projects) of the Act Partially Amending the Small and Medium Sized Enterprise Retirement Allowance Cooperative Act (Act No. 45 of 1980)) is deemed to be a contribution falling under the provisions of Article 70, paragraph (1) (Treatment of Contributions under Qualified Retirement Pension Contracts, etc.) of the New Order, and an amount paid by an individual to the Small and Medium Sized Enterprise Retirement Allowance Cooperative Corporation on or after that date is deemed to be a contribution falling under the provisions of paragraph (2) of that Article.

In applying the provisions of Article 74, paragraphs (2) and (3) (Special Provisions on Calculation of Years of Service for the Retirement Income Deduction) of the New Order, where the earlier severance pay or other such compensation prescribed in those provisions relates to payment made during the period from January 1, 1961 to December 31, 1963, the phrase "the period of service, etc. that formed the basis of calculating the period calculated in accordance with those provisions with respect to the lump-sum retirement payment, etc. (hereinafter in this Article referred to as "earlier severance pay or other such compensation")" in paragraph (2) of that Article is deemed to be replaced with "the period from the date of commencement of employment pertaining to the lump-sum retirement payment, etc. (hereinafter in this Article referred to as "earlier severance pay or other such compensation") until the day preceding the day on which the number of years equivalent to the number calculated by dividing by 50,000 yen the amount calculated for the earlier severance pay or other such compensation in accordance with Article 9, paragraph (1), item (vi), (a) (Retirement Income Deduction) of the former Income Tax Act (Act No. 27 of 1947) prior to amendment by the Act Partially Amending the Income Tax Act (Act No. 20 of 1964) (being the amount calculated on the basis of the years of service calculated without applying Article 7-4, paragraph (1), item (vii) (Calculation of Years of Service) (including as applied mutatis mutandis pursuant to paragraph (4) of that Article) of the former Regulation for Enforcement of the Income Tax Act (Imperial Ordinance No. 110 of 1947) prior to amendment by the Cabinet Order Partially Amending the Regulation for Enforcement of the Income Tax Act (Cabinet Order No. 69 of 1964); referred to as the "special deduction under the Former Act" in the following paragraph) (if a fraction less than one arises, the number with the fraction rounded down) has elapsed", and the phrase "the retirement income deduction under Article 30, paragraph (3) of the Act calculated for the earlier severance pay or other such compensation without applying the provisions of that paragraph" in paragraph (3) of that Article is deemed to be replaced with "the special deduction under the Former Act pertaining to the earlier severance pay or other such compensation".

①For an individual who holds Securities that give rise to business income as of January 1, 1965, the provisions of Article 106, paragraph (2) (Selection of Method of Valuation of Securities) of the New Order apply by deeming that the individual acquired those Securities on that day.

②The provisions of Articles 110 through 117 (Acquisition Price of Shares, etc. Acquired through Share Split, etc.) of the New Order apply to cases where an event prescribed in the provisions of Articles 110 through 116 of the New Order occurs on or after the Effective Date, and for cases where that event occurred before that date, the provisions then in force continue to govern.

①Where an individual 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 severance package reserves account") has, in connection with the conclusion of the retirement allowance mutual aid contract under Article 2, paragraph (1) of the Supplementary Provisions (Treatment of Prior Accumulation Projects) of the Act Partially Amending the Small and Medium Sized Enterprise Retirement Allowance Cooperative Act, paid the amount prescribed in Article 5 of the Supplementary Provisions (Transitional Provisions Concerning Amounts Paid to the Small and Medium Sized Enterprise Retirement Allowance Cooperative Corporation) with respect to the employees who formed the basis of the calculation of the amount of the severance package reserves account as of the day on which that contract took effect (hereinafter in this paragraph referred to as the "contract effective date"), if the amount set out in item (i) exceeds the amount set out in item (ii), that individual must reverse, out of the amount of the severance package reserves account as of the day of that payment, an amount equivalent to the amount calculated by multiplying the amount of the severance package reserves account as of the contract effective date by the ratio that the amount of the part of the amount set out in item (i) that is in excess (or, where that amount exceeds the amount so paid, the amount so paid) bears to the amount set out in item (i).

②In applying the provisions of Article 155, paragraph (1) (Reversal of the Amount of the Retirement Allowance Reserve Account) of the New Order in the case where the provisions of the preceding paragraph apply, the phrase "the items of paragraph (2) of the following Article" in item (vii) of that paragraph is deemed to be replaced with "the items of paragraph (2) of the following Article and Article 8, paragraph (1) of the Supplementary Provisions (Transitional Provisions Concerning Reserves for Severance Packages)".

In applying the provisions of Article 202 (Net Loss Amounts Pertaining to Losses on Business Assets Affected by Disaster, etc.) of the New Order, if part of the Net Loss prescribed in that Article is an amount deducted in the calculation of gross income, the amount of retirement income, or the amount of timber income for each year pursuant to Article 9-4, paragraph (3) (Deduction for Carryover of Losses on Business Assets Affected by Disaster, etc.) of the Former Act, the amount obtained by deducting that amount from the amount up to reaching the amount of losses prescribed in Article 202 of the New Order is the amount up to reaching that amount of losses.