Act on Special Measures Concerning Taxation

When calculating the amount of gross income of a resident whose revenue from salaries or other wages for the year exceeds 8,500,000 yen and who is a person with a particular disability, or who has a dependent less than 23 years of age, or has a spouse in the same household or a dependent who is a person with a particular disability, the amount equivalent to 10 percent of the amount after deducting 8,500,000 yen from the revenue from salaries or other wages for the year (or 10,000,000 yen, if the revenue from salaries or other wages exceeds 10,000,000 yen) is deducted from the amount of employment income for that year.

When calculating the amount of gross income of a resident who has, for the year, an amount of salary and other wages after the salary income deduction and an amount of miscellaneous income from public pensions or retirement packages, and for whom the total of the amount of salary and other wages after the salary income deduction and the amount of miscellaneous income from public pensions or retirement packages exceeds 100,000 yen, the remaining amount after deducting 100,000 yen from the total of the amount of salary and other wages after the salary income deduction (or 100,000 yen, if that amount exceeds 100,000 yen) and the amount of miscellaneous income from public pensions or retirement packages (or 100,000 yen, if that amount exceeds 100,000 yen) is deducted from the amount of employment income for that year (or, where the provisions of the preceding paragraph apply, the remaining amount after the deduction under that paragraph).

In the case referred to in paragraph (1), whether a resident falls under a person with a particular disability, or whether a person falls under a dependent less than 23 years of age or a spouse in the same household or dependent who is a person with a particular disability, is determined based on the circumstances as of December 31 of that year (or, if the resident dies, or there is an absence from Japan of the resident, during the year, as of the time of the death or the absence from Japan); provided, however, that if the person subject to the determination has already died at that time, it is determined based on the circumstances as of the time of the death.

In this Article, the meanings of the terms listed in the following items are as prescribed respectively in those items:

salary or other wage: a salary or other wage as prescribed in Article 28, paragraph (1) of the Income Tax Act;

person with a particular disability: a person with a particular disability as prescribed in Article 2, paragraph (1), item (xxix) of the Income Tax Act;

dependent: a dependent as prescribed in Article 2, paragraph (1), item (xxxiv) of the Income Tax Act;

spouse in the same household: a spouse in the same household as prescribed in Article 2, paragraph (1), item (xxxiii) of the Income Tax Act;

amount of salary and other wages after the salary income deduction: the remaining amount after deducting the amount of salary income deduction prescribed in Article 28, paragraph (3) of the Income Tax Act from the revenue from salaries or other wages (or, where the provisions of paragraph (4) of that Article apply, the amount equivalent to the amount of salary and other wages after the salary income deduction prescribed in that paragraph);

amount of miscellaneous income from public pensions or retirement packages: the amount listed in Article 35, paragraph (2), item (i) of the Income Tax Act (where the provisions of paragraph (5) of that Article apply, the amount calculated as if those provisions did not apply);

absence from Japan: an absence from Japan as prescribed in Article 2, paragraph (1), item (xlii) of the Income Tax Act.

With regard to the application of the provisions of Article 22 of the Income Tax Act where the provisions of paragraph (1) or paragraph (2) apply, the phrase "the amount of employment income" in paragraph (2), item (i) of that Article is deemed to be replaced with "the remaining amount after the deduction under Article 41-3-11, paragraph (1) or paragraph (2) of the Act on Special Measures Concerning Taxation (Income Amount Adjustment Deduction) from the amount of employment income".

With regard to the application of the provisions of Article 121, paragraph (3) of the Income Tax Act in the case where the provisions of paragraph (2) apply, the phrase "the amount of employment income" in that paragraph is deemed to be replaced with "the amount remaining after deducting, from the amount of employment income, the deduction under the provisions of Article 41-3-11, paragraph (2) of the Act on Special Measures Concerning Taxation (Income Amount Adjustment Deduction)".

Beyond what is specified in paragraph (3) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (1) or paragraph (2) are specified by Cabinet Order.

Where a resident is to receive payment, in a year, of a salary or other wage prescribed in Article 190 of the Income Tax Act to which the provisions of that Article apply (hereinafter referred to in this Article as a "salary or other wage"), if the resident has submitted a return stating to the effect that the resident seeks the application of the provisions of this paragraph, to the effect that the resident falls under the category of a Person with a Particular Disability referred to in paragraph (1) of the preceding Article, or the name and individual number (or, for a person who does not have an individual number, the name) of the Dependent or the spouse in the same household referred to in that paragraph, and other matters specified by Order of the Ministry of Finance, via the person paying the salary or other wage, to the district director having jurisdiction over the place for tax payment under Article 17 of that Act (or, where a designation has been made under Article 18, paragraph (2) of that Act, the place for tax payment so designated) for the income tax on that salary or other wage, then, with regard to the application of the provisions of Article 190 of that Act to that salary or other wage for that year, the amount of salary or other wage after the salary income deduction prescribed in item (ii) of that Article is the amount obtained by deducting an amount equivalent to the amount to be deducted under the provisions of paragraph (1) of the preceding Article from an amount equivalent to that amount.

The return prescribed in the preceding paragraph must be submitted no later than the day before the day on which the resident is to receive the last payment of a salary or other wage for that year from the person paying the salary or other wage referred to in that paragraph.

In the case referred to in paragraph (1), when the person paying the salary or other wage via whom the return prescribed in that paragraph is to be submitted has received the return, the return is deemed to have been submitted to the district director prescribed in that paragraph on the day on which the person received it.

A resident referred to in paragraph (1) who receives payment of a salary or other wage may, if the person paying the salary or other wage via whom the return prescribed in that paragraph is to be submitted satisfies the requirements specified by Cabinet Order prescribed in Article 198, paragraph (2) of the Income Tax Act, provide the matters to be stated in the return to that person paying the salary or other wage by electronic or magnetic means (meaning the electronic or magnetic means prescribed in that paragraph), in lieu of submitting the return. In this case, the provisions of the second sentence of that paragraph apply mutatis mutandis.

With regard to the application of the provisions of paragraph (3) in the case where the provisions of the preceding paragraph apply, the phrase "has received the return" in that paragraph is deemed to be replaced with "has been provided with the matters to be stated in the return", and the phrase "the person received it" is deemed to be replaced with "the person was provided with them".

Where the person paying the salary or other wage referred to in paragraph (1) who receives the submission of the return prescribed in that paragraph keeps, pursuant to the provisions of Order of the Ministry of Finance, a book stating the names, individual numbers and other matters of the Dependents or the spouse in the same household referred to in that paragraph (hereinafter referred to in this paragraph as "dependents and similar persons") that are to be stated in the return (limited to a book prepared upon receiving, before the submission of the return, the submission of a return prescribed in paragraph (1) or a return listed in any of the items of Article 198, paragraph (4) of the Income Tax Act from the resident referred to in paragraph (1) to whom the dependents and similar persons pertain), the resident is not required, notwithstanding the provisions of paragraph (1), to state the individual numbers stated in the book in the return prescribed in that paragraph that the resident submits to that person paying the salary or other wage; provided, however, that this does not apply if a name or individual number to be stated in the return differs from the name or individual number of the dependents and similar persons stated in the book.

Where the provisions of paragraph (1) apply, the following applies:

with regard to the application of the provisions of Article 2, paragraph (1), item (xlv) of the Income Tax Act, the phrase "through Chapter VI (Withholding at the Source)" in that item is deemed to be replaced with "through Chapter VI (Withholding at the Source) and Article 41-3-12, paragraph (1) of the Act on Special Measures Concerning Taxation (Income Amount Adjustment Deduction Pertaining to Year-End Adjustment)";

with regard to the application of the provisions of Article 198, paragraph (4) of the Income Tax Act, the phrase "the following returns" in that paragraph is deemed to be replaced with "the following returns or the return prescribed in Article 41-3-12, paragraph (1) of the Act on Special Measures Concerning Taxation (Income Amount Adjustment Deduction Pertaining to Year-End Adjustment)".

Where there is an amount of losses that has arisen in the calculation of the amount of real estate income of an individual for 1992 or any subsequent year, if the amounts included in necessary expenses in the calculation of the amount of real estate income for that year include an amount of interest on liabilities incurred to acquire land or a right existing on land (referred to as "land, etc." in the following paragraph) used for the business that generates real estate income, the amount calculated pursuant to the provisions of Cabinet Order as the portion of that amount of losses corresponding to that amount of interest on liabilities is deemed not to have arisen with regard to the application of the provisions of Article 69, paragraph (1) of the Income Tax Act and other provisions of laws and regulations concerning income tax.

The calculation of the amount of liabilities incurred to acquire land, etc. in the case where land, etc. used as the site of a building is acquired together with the building, and other necessary matters concerning the application of the provisions of the preceding paragraph are specified by Cabinet Order.

Where an individual who falls under the category of a specified partner (meaning, among partners who have concluded a partnership contract (including persons similar thereto who are specified by Cabinet Order; the same applies hereinafter in this paragraph), those other than a partner who is involved in decisions on the execution of business concerning the disposal or acquisition of important property pertaining to the partnership business or concerning large borrowings pertaining to the partnership business, and who personally executes the important parts of that business, such as negotiations for concluding contracts) or a specified beneficiary (meaning a beneficiary of a trust prescribed in Article 13, paragraph (1) of the Income Tax Act (including a person deemed to be a beneficiary prescribed in paragraph (1) of that Article pursuant to the provisions of paragraph (2) of that Article)) has real estate income arising from a partnership business or a trust in any year from 2006 onward, if, in the calculation of the amount of real estate income for that year, there is an amount specified by Cabinet Order as the amount of losses from real estate income arising from that partnership business or trust, the amount equivalent to that amount of losses is deemed not to have arisen with regard to the application of the provisions of Article 26, paragraph (2) and Article 69, paragraph (1) of that Act and other provisions of laws and regulations concerning income tax.

In this Article, the meanings of the terms listed in the following items are as prescribed respectively in those items:

partnership contract: A partnership contract prescribed in Article 667, paragraph (1) of the Civil Code and an investment limited partnership agreement prescribed in Article 3, paragraph (1) of the Limited Partnership Act for Investment, and contracts similar thereto in a foreign state (including those specified by Cabinet Order);

partnership business: A business carried on under each partnership contract.

Beyond what is prescribed in the preceding paragraph, Cabinet Order provides for the necessary particulars concerning the application of the provisions of paragraph (1).