Income Tax Act

Miscellaneous income means income not falling under the category of interest income, dividend income, real property income, business income, salary income, retirement income, timber income, capital gains, or occasional income.

Miscellaneous income is the sum total of the amounts set forth in the following items:

the amount remaining after the public pension deduction is applied against the revenue from public pensions and retirement packages in the year;

the amount arrived at when the necessary expenses are deducted from gross revenues constituting miscellaneous income in the relevant year (other than income from public pensions and retirement packages).

The public pensions and retirement packages that the preceding paragraph provides for means:

pensions based on the provisions of the Acts prescribed in Article 31, item (i) and item (ii) (Lump-Sum Payments Deemed to Constitute Severance Pay and Other Such Compensation) and pensions as prescribed by Cabinet Order which are based on the systems prescribed in item (i) and item (ii) of that Article (including any similar payments; the same applies in item (iii));

public retirement packages (other than lump-sum early retirement packages) and pensions based on past service which are paid by a former employer;

pensions received based on the provisions of the Fixed-Benefit Corporate Pension Act (if any part of installment deposits contributed based on bylaws provided for in Article 31, item (iii) constitutes an amount borne by the member prescribed in Article 25, paragraph (1) (Members) of that Act (including a person who was formerly a member as prescribed in that paragraph) to whom the pension is paid, this is limited to the part of the pension received based on the provisions of the Fixed-Benefit Corporate Pension Act which constitutes the amount of that pension less the part of the amount borne by the member which is calculated pursuant to Cabinet Order as being part of the amount of pension so received) and other pensions that Cabinet Order prescribes as being similar thereto.

The public pension deduction prescribed in paragraph (2) is the amount that each of the following items prescribes for the category of case set forth in the item:

if the taxpayer's total income as prescribed in Article 2, paragraph (1), item (xxx) (Definitions), calculated as if there were no revenue from public pensions and retirement packages in the year (referred to as the "total income other than miscellaneous income from public pensions and retirement packages" in the following item and item (iii)), is 10,000,000 yen or less: the sum total of the following amounts (or 600,000 yen, if that sum total is less than 600,000 yen):

400,000 yen;

the amount that each of the following prescribes for the category of case set forth therein, as it applies to the amount remaining after 500,000 yen is deducted against the taxpayer's revenue from public pensions and retirement packages in the year:

if the remaining amount is 3,600,000 yen or less:25% of the remaining amount;

if the remaining amount is over 3,600,000 yen but not more than 7,200,000 yen: the sum total of 900,000 yen and 15% of the difference arrived at when 3,600,000 yen is deducted from the remaining amount;

if the remaining amount is over 7,200,000 yen but not more than 9,500,000 yen: the sum total of 1,440,000 yen and 5% of the difference arrived at when 7,200,000 yen is deducted from the remaining amount;

if the remaining amount is over 9,500,000 yen: 1,555,000 yen.

if the taxpayer's total income other than miscellaneous income from public pensions and retirement packages for the year is over 10,000,000 yen but not more than 20,000,000 yen: the sum total of the following amounts (or 500,000 yen, if that sum total is less than 500,000 yen):

300,000 yen;

the amount set forth in (b) of the preceding item.

if the taxpayer's total income other than miscellaneous income from public pensions and retirement packages for the year is over 20,000,000 yen: the sum total of the following amounts (or 400,000 yen, if that sum total is less than 400,000 yen):

200,000 yen;

the amount set forth in item (i), (b).

Except as provided otherwise, an amount is to be treated as part of the revenue that is used to calculate the Income in Each Class for the year or is to be included in the gross revenue that is used to calculate the same, if it is to be ascribed to revenues during the year (and the value of anything other than monies, rights, or any other economic benefit is to be treated as such or included therein, if it is ascribed to revenues during the year).

The value of a thing other than monies, rights, or any other economic benefit as referred to in the preceding paragraph is its value at the time the thing or rights are acquired or at the time the benefit is enjoyed.

Notwithstanding the provisions of paragraph (1), an amount is to be treated as a part of the amount of revenue that is used to calculate the interest income or dividend income for the year from interest on a bearer public and corporate bond; dividend of surplus (meaning a dividend of surplus as prescribed in Article 24, paragraph (1) (Dividend Income)) from a bearer share (including a bearer beneficiary certificate of a Bond-Based Investment Trust other than a Bond-Based Investment Trust Under Public Offering, and a beneficiary certificate linked to a bearer company bond-type beneficial interest; referred to as a "bearer share or similar interest" in Article 169, item (ii) (Income Tax Base for Separate Taxation), Article 224, paragraph (1) and paragraph (2) (Notice by Recipients of Interest, Dividends, and Similar Income), and Article 225, paragraph (1) and paragraph (2) (Payment Reports and Notice of Payment)); or distribution of proceeds linked to a bearer beneficiary certificate from a Loan Trust, Investment Trust, or Specified Trust That Issues Beneficiary Certificates, if the taxpayer is paid that amount during the year.

Except as provided otherwise, the amounts that are to be included in the necessary expenses that are used to calculate the real property income, business income, or miscellaneous income for the year (other than any business income or miscellaneous income arising from the felling of trees in forested land or the transfer of forested land, and other than miscellaneous income arising from a public pension or retirement package as prescribed in Article 35, paragraph (3) (Definition of Public Pensions and Retirement Packages)) are the costs of goods sold to generate the gross revenue in that income type or other expenses directly necessary to the taxpayer's acquisition of gross revenue in that income type, as well as sales expenses, general administrative expenses, and other expenses for business operations in the year that are meant to generate that type of income (excluding any expense, other than a depreciation allowance, for which the taxpayer's liability does not become fixed during that year).

Except as provided otherwise, the amounts that are to be included in the necessary expenses that are used to calculate business income, timber income, or miscellaneous income are planting expenses, acquisition costs, maintenance expenses, felling expenses, and any other expenses needed to cultivate or transfer forested land (excluding any expense, other than a depreciation allowance, for which the taxpayer's liability does not become fixed during that year).

Except as provided otherwise, the asset acquisition costs that are deducted to calculate capital gains are the sum total of the amount needed to acquire the assets plus the amounts of equipment expenses and improvement expenses.

If an asset generating capital gains is a house or other asset that depreciates due to use or with the passage of time, the asset acquisition costs provided for in the preceding paragraph are the amount arrived at when the sum total of the amounts set forth in each of the following items for the category of period between the acquisition date and the transfer date which is set forth in the item is deducted from an amount equal to the sum total provided for in the preceding paragraph:

any period during which the assets are used in business operations that are meant to generate real property income, business income, timber income, or miscellaneous income:the cumulative amount of the depreciation allowances for those assets which, pursuant to the provisions of Article 49, paragraph (1) (Calculating Depreciation Allowances for Depreciable Assets; Depreciation Methods), are included in necessary expenses that are used to calculate the real property income, business income, timber income, or miscellaneous income for each of the years that contain days within that period;

any period other than as set forth in the preceding item:the amount of depreciation in those assets during that period, as calculated pursuant to Cabinet Order and in accordance with the provisions of Article 49, paragraph (1).

If a Resident uses Inventory (including anything that Cabinet Order prescribes to be an equivalent asset) to benefit the household, or fells trees in forested land and uses them to benefit the household, an amount equal to the value of those assets at the time of use is included in the gross revenue that is used to calculate the Resident's business income, timber income, or miscellaneous income for the year in which the date of use falls.

If Inventory owned by a Resident (including forested land generating business income or anything that Cabinet Order prescribes as an asset equivalent to Inventory; hereinafter the same applies in this Article) has devolved due to circumstances as set forth in one of the following items, an amount equal to what is set forth in the applicable item is included in the gross revenue that is used to calculate the Resident's business income or miscellaneous income for the year in which the day that the circumstances occur falls:

an inter vivos gift (other than a gift to an heir that becomes effective on the death of a donor leaving an estate) or legacy (other than a universal legacy and other than a particular legacy left to an heir):the value of the Inventory at the time of the inter vivos gift or legacy;

a transfer for consideration at a conspicuously low value:the part of the difference between the amount of consideration and the value of the Inventory at the time of the transfer which is found, in essence, to have been given as a gift.

Calculation of business income, timber income, capital gains, or miscellaneous income if a Resident transfers Inventory acquired through an inter vivos gift, legacy, or transfer as set forth in the items of the preceding paragraph is as follows:

Inventory acquired through an inter vivos gift or legacy as set forth in item (i) of the preceding paragraph is deemed to have been acquired for the amount set forth in that item;

Inventory acquired through a transfer as set forth in item (ii) of the preceding paragraph is deemed to have been acquired for the sum total of the consideration for the transfer and the amount set forth in that item.

If a Resident engaged in agriculture harvests crops (but only rice, barley, wheat, or a crop prescribed by Cabinet Order), an amount equal to the value of the crops at the time of the harvest (hereinafter referred to as the "value of the harvest" in this Article) is included in the gross revenue that is used to calculate the Resident's business income for the year in which the date of the harvest falls.

The Resident is deemed to acquire a crop as referred to in the preceding paragraph for the value of the harvest at the time prescribed in that paragraph.

If a Resident has been granted by the issuing corporation a right that Cabinet Order specifies as a right to acquire shares without compensation or at an advantageous price, and the Resident, the Resident's heir, or any other person specified by Cabinet Order transfers the right to the issuing corporation, the provisions of this Act (other than Article 224-3 (Notice by Recipients of Consideration for Transferring Shares), Article 225 (Payment Reports and Notice of Payment), Article 228 (Report on Consideration for Transfer of Shares Received by the Person of Record), and the penal provisions relating to these provisions) apply by deeming the amount arrived at when the acquisition cost of the right is deducted from the amount of the consideration for the transfer to be the amount of revenue relating to business income, the amount of revenue from salary or other wages prescribed in Article 28, paragraph (1) (Salary Income), the amount of revenue from severance pay and other such compensation prescribed in Article 30, paragraph (1) (Retirement Income), the amount of revenue relating to occasional income, or the amount of revenue relating to miscellaneous income (other than that relating to public pensions and retirement packages prescribed in Article 35, paragraph (3) (Miscellaneous Income)), paid by the issuing corporation.