Act on Special Measures Concerning Taxation

In the case where, during the period from April 1, 2013 to March 31, 2026, an individual (limited to a person under 30 years of age on the day of concluding the education fund management contract) has acquired a beneficial interest in a trust (referred to as a "beneficial interest in a trust" hereinafter in this Article) under an education fund management contract between a lineal ascendant of the individual and a trust company (limited to one that has obtained a license under Article 3 or Article 53, paragraph (1) of the Trust Business Act, and including a financial institution prescribed in Article 1, paragraph (1) of the Act on Engagement in Trust Business by Financial Institutions that conducts trust business prescribed in that paragraph pursuant to that Act; referred to as a "trustee" in the following paragraph and paragraph (12)), in the case where the individual has deposited money acquired by a written gift from a lineal ascendant of the individual as deposits or savings, under an education fund management contract, at a business office, office or any other place equivalent thereto that is located in the area where this Act is in force (referred to as a "business office or similar place" hereinafter in this Article, except in paragraph (9)) of a bank, etc. (meaning a bank or any other financial institution specified by Cabinet Order as a financial institution that accepts deposits or savings; the same applies in the following paragraph and paragraph (4)), or in the case where the individual has purchased securities, under an education fund management contract, at a business office or similar place of a financial instruments business operator prescribed in Article 2, paragraph (9) of the Financial Instruments and Exchange Act (limited to a person that conducts type I financial instruments business prescribed in Article 28, paragraph (1) of that Act; the same applies in the following paragraph and paragraph (4)) with money acquired by a written gift from a lineal ascendant of the individual or anything specified by Cabinet Order as similar thereto (referred to as "monies, etc." hereinafter in this Article), the value of the portion of the value of that beneficial interest in a trust, money or monies, etc. that corresponds to the amount up to 15,000,000 yen (or, in the case where there is an amount that has already not been included in the taxable value for gift tax by the application of the provisions of this paragraph, the balance remaining after deducting the amount not so included) is not included in the taxable value for gift tax; provided, however, that this does not apply in the case where the individual's total income amount prescribed in Article 2, paragraph (1), item (xxx) of the Income Tax Act for income tax for the year preceding the year that includes the day on which the individual acquired that beneficial interest in a trust, money or monies, etc. exceeds 10,000,000 yen.

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

education funds: the following money:

admission fees, tuition fees and other money specified by Cabinet Order that are paid directly to a person that establishes a school prescribed in Article 1 of the School Education Act (Act No. 26 of 1947), a specialized training college prescribed in Article 124 of that Act, a miscellaneous school prescribed in Article 134, paragraph (1) of that Act or any other facility specified by Cabinet Order as similar thereto (referred to as a "school, etc." in (b) and in paragraphs (13) and (16));

money paid directly to a person other than a school, etc. as consideration for the provision of services relating to education, and any other money specified by Cabinet Order that is paid directly in order to receive education;

education fund management contract: a contract for the purpose of managing education funds necessary for the education of an individual (referred to as the "donee" hereinafter in this Article), which is any of the following:

a contract concerning a trust between a lineal ascendant of the donee and a trustee, in which the following matters are stipulated:

the principal purpose of the trust is the management of education funds;

the assets that the trustee accepts as its trust property are limited to monies, etc.;

the donee is made the beneficiary with regard to all of the benefits of the trust;

other matters specified by Cabinet Order;

a contract concerning ordinary deposits or any other deposits or savings specified by Order of the Ministry of Finance between the donee and a bank, etc., in which the following matters are stipulated:

in the case where deposits or savings are withdrawn to be appropriated to the payment of education funds, the donee submits or provides the receipts, etc. prescribed in paragraph (9) to the bank, etc.;

other matters specified by Cabinet Order;

a contract concerning custody of securities between the donee and a financial instruments business operator, in which the following matters are stipulated:

in the case where the donee has received delivery of money through the transfer or redemption of securities or for any other reason, to be appropriated to the payment of education funds, the donee submits or provides the receipts, etc. prescribed in paragraph (9) to the financial instruments business operator;

other matters specified by Cabinet Order;

return for tax exemption of education funds: a return stating that the person seeks the application of the provisions of the main clause of the preceding paragraph, the name and domicile or residence of the donee, and other matters specified by Order of the Ministry of Finance;

tax-exempt contribution amount: the total of the amounts stated in a return for tax exemption of education funds or in a statement of additional tax-exempt education funds prescribed in the main clause of paragraph (4) as amounts to which the provisions of the main clause of the preceding paragraph are to apply;

amount of education fund expenditure: the total of the amounts for which the fact of the payment of education funds has been confirmed and recorded, pursuant to the provisions of paragraph (10), at a business office or similar place of the handling financial institution (meaning a trustee that has concluded an education fund management contract with a lineal ascendant of the donee, or a bank, etc. or financial instruments business operator that has concluded an education fund management contract with the donee; the same applies hereinafter in this Article, except in paragraph (9)).

The provisions of the main clause of paragraph (1) apply only if the donee seeking the application of the provisions of the main clause of that paragraph has submitted the return for tax exemption of education funds to the district director with jurisdiction over the donee's place for tax payment, via the business office or similar place of the handling financial institution stated in that return for tax exemption of education funds, by the day on which the trust is created, the day on which the deposits or savings are deposited, or the day on which the securities are purchased.

In the case where a donee (limited to a person under 30 years of age) has already submitted a return for tax exemption of education funds (limited to the case where the amount stated in that return for tax exemption of education funds is less than 15,000,000 yen), if, within the period prescribed in paragraph (1) and under the education fund management contract relating to that return for tax exemption of education funds, the donee newly acquires a beneficial interest in a trust through an act of a lineal ascendant of the donee, deposits money acquired by a written gift from a lineal ascendant of the donee as deposits or savings at a business office or similar place of a bank, etc., or purchases securities at a business office or similar place of a financial instruments business operator with monies, etc. acquired by a written gift from a lineal ascendant of the donee, the donee may receive the application of the provisions of the main clause of paragraph (1) only if the donee has submitted a return stating that the donee seeks the application of the provisions of the main clause of that paragraph with regard to the value of that beneficial interest in a trust, money or monies, etc., and other matters specified by Order of the Ministry of Finance (referred to as a "statement of additional tax-exempt education funds" in the following paragraph through paragraph (7)) to the district director with jurisdiction over the donee's place for tax payment, via the business office or similar place of the handling financial institution to which that return for tax exemption of education funds was submitted, by the day on which the trust is newly created, the day on which the deposits or savings are deposited, or the day on which the securities are purchased; provided, however, that this does not apply in the case where the donee's total income amount prescribed in Article 2, paragraph (1), item (xxx) of the Income Tax Act for income tax for the year preceding the year that includes the day on which the donee acquired that beneficial interest in a trust, money or monies, etc. exceeds 10,000,000 yen.

In the cases referred to in the preceding two paragraphs, when a return for tax exemption of education funds referred to in paragraph (3) or a statement of additional tax-exempt education funds referred to in the preceding paragraph has been received by the business office or similar place of the handling financial institution prescribed in those provisions, that return or statement is deemed to have been submitted to the district director prescribed in those provisions on the day on which it was received.

A return for tax exemption of education funds may not be submitted in the case where the donee has already submitted a return for tax exemption of education funds (excluding the case where the education fund management contract relating to the return for tax exemption of education funds already submitted has terminated because it fell under the reason listed in paragraph (16), item (v)), and the business office or similar place of a handling financial institution may not accept a return for tax exemption of education funds or a statement of additional tax-exempt education funds in the case where the amount stated in the return for tax exemption of education funds as the amount to which the provisions of the main clause of paragraph (1) are to apply exceeds 15,000,000 yen, or in the case where the total of the amounts stated, as amounts to which the provisions of the main clause of that paragraph are to apply, in the return for tax exemption of education funds and the statements of additional tax-exempt education funds already accepted with regard to the education fund management contract relating to the statement of additional tax-exempt education funds exceeds 15,000,000 yen.

A donee who intends to submit a return for tax exemption of education funds or a statement of additional tax-exempt education funds pursuant to the provisions of paragraph (3) or (4) may, in lieu of submitting that return or statement, provide the matters to be stated in that return or statement to the business office or similar place of the handling financial institution prescribed in those provisions by electronic or magnetic means (meaning a method using an electronic data processing system or any other method using information and communications technology; the same applies in paragraph (7) of the following Article). In this case, the donee is deemed to have submitted that return or statement to the business office or similar place of that handling financial institution.

With regard to the application of the provisions of paragraph (5) in the case where the provisions of the preceding paragraph apply, the phrase "a return for tax exemption of education funds referred to in paragraph (3) or" in that paragraph is deemed to be replaced with "the matters to be stated in a return for tax exemption of education funds referred to in paragraph (3) or", the phrase "a statement of additional tax-exempt education funds referred to in the preceding paragraph has" with "the matters to be stated in a statement of additional tax-exempt education funds referred to in the preceding paragraph have", and the term "received" with "provided".

A donee who receives the application of the provisions of the main clause of paragraph (1) must, by the day specified in each of the following items according to the category of cases listed in those items selected pursuant to the provisions of Cabinet Order, submit or provide to the business office or similar place prescribed in the main clause of paragraph (1) of the handling financial institution prescribed in paragraph (2), item (v) the receipts or other documents relating to money appropriated to the payment of education funds (including electronic or magnetic records (meaning records made in an electronic form, a magnetic form or any other form that cannot be perceived by the human senses, which are used in information processing by computers; the same applies in paragraph (13), paragraph (15), item (i) and paragraph (23)); the same applies hereinafter in this paragraph) that certify the fact of that payment (excluding those relating to educational expenses to which property acquired by a gift subject to the provisions of Article 21-3, paragraph (1), item (ii) of the Inheritance Tax Act has been appropriated, and receipts, etc. prescribed in paragraph (9) of the following Article relating to money appropriated to the payment of marriage and child-rearing funds prescribed in paragraph (2), item (i) of that Article which have been submitted, pursuant to the provisions of that paragraph, to the business office or similar place prescribed in the main clause of paragraph (1) of that Article of the handling financial institution prescribed in paragraph (2), item (v) of that Article, and including, in the case where the payment is of an amount equal to or less than the amount specified by Order of the Ministry of Finance as a small payment, the documents specified by Order of the Ministry of Finance as documents in which the fact of that payment has been stated or recorded; referred to as "receipts, etc." hereinafter in this Article):

in the case where the donee receives withdrawals exclusively by the method of withdrawing an amount equivalent to the money appropriated to the payment of education funds: the day on which one year elapses from the date of payment stated or recorded in those receipts, etc.;

in cases other than the case listed in the preceding item: March 15 of the year following the year that includes the date of payment stated or recorded in those receipts, etc.

The business office or similar place of a handling financial institution must confirm, by the receipts, etc. submitted or provided by the donee pursuant to the provisions of the preceding paragraph, that the money withdrawn has been appropriated to the payment of education funds, make a record of the amount and date of the payment stated or recorded in those receipts, etc., and retain those receipts, etc. and that record (including the records under the provisions of paragraph (12), items (i) and (iii)) by the method specified by Order of the Ministry of Finance during the period from the day on which it received those receipts, etc. until the day on which six years have elapsed after March 15 of the year following the year that includes the day on which the education fund management contract relating to that donee terminated.

In the case listed in paragraph (9), item (ii), if the total amount of money withdrawn during a year is less than the total of the amounts confirmed as having been appropriated to the payment of education funds by the receipts, etc. submitted or provided as having been appropriated to the payment of education funds during that year (limited to those by which it can be confirmed, from the date of payment stated or recorded in those receipts, etc. or other records, that they were appropriated to the payment of education funds during that year), the amount to be recorded by the business office or similar place of the handling financial institution pursuant to the provisions of the preceding paragraph is limited to the total amount of the money so withdrawn.

In the case where the donor (meaning a lineal ascendant of the donee who has created a trust with the donee as the beneficiary under an education fund management contract with a trustee, a lineal ascendant of the donee who has made a written gift to the donee of money for making deposits or savings under an education fund management contract, or a lineal ascendant of the donee who has made a written gift to the donee of monies, etc. for purchasing securities under an education fund management contract; the same applies hereinafter in this Article) dies during the period from the day on which the donor created the trust under the education fund management contract relating to the application of the provisions of the main clause of paragraph (1), the day on which the donor made a written gift of money for making deposits or savings under the education fund management contract relating to the application of the provisions of the main clause of that paragraph, or the day on which the donor made a written gift of monies, etc. for purchasing securities under the education fund management contract relating to the application of the provisions of the main clause of that paragraph, until the day of termination of that education fund management contract, the following provisions apply:

the donee relating to the donor must, upon learning of the fact that the donor has died, promptly notify the business office or similar place of the handling financial institution that the donor has died. In this case, the business office or similar place of the handling financial institution that has received the notification must record the date on which the donor died and the amount specified by Cabinet Order as the balance remaining after deducting the amount of education fund expenditure (or, in the case where there has been a correction under the provisions of paragraph (21), the amount after that correction, and, for the education funds listed in paragraph (2), item (i), (b), up to a limit of 5,000,000 yen; the same applies in paragraphs (17) and (18)) from the tax-exempt contribution amount as of that date (referred to as the "remaining managed balance" hereinafter in this paragraph and in paragraph (17));

with regard to the donee relating to the donor, the provisions of the Inheritance Tax Act and other laws and regulations concerning inheritance tax apply by deeming the remaining managed balance to have been acquired from the donor by inheritance (or, in the case where the donee is a person other than an heir of the donor, by bequest; the same applies in paragraph (17));

the business office or similar place of a handling financial institution must, upon learning that the provisions of the preceding item have been applied, record the remaining managed balance relating to that application;

with regard to the application of the provisions of Article 19 of the Inheritance Tax Act to a donee who has acquired no property other than the remaining managed balance from the donor by inheritance or bequest, the term "bequest" in paragraph (1) of that Article is deemed to be replaced with "bequest (excluding the case where property is deemed to have been acquired by inheritance or bequest pursuant to the provisions of Article 70-2-2, paragraph (12), item (ii) of the Act on Special Measures Concerning Taxation (Tax Exemption for Gift Tax Where a Lump-Sum Gift of Education Funds Is Received from a Lineal Ascendant))".

The provisions of the preceding paragraph (excluding the part relating to item (i)) do not apply in the case where, on the date of death of the donor referred to in that paragraph, the donee falls under any of the following cases (in the case falling under the case listed in item (ii) or (iii), limited to the case where the donee has submitted or provided a document (including an electronic or magnetic record) clarifying that fact together with the notification under the provisions of item (i) of that paragraph; referred to as the "case of being under 23, etc." in paragraph (15)); provided, however, that this does not apply if the total of the taxable values for inheritance tax calculated on the assumption that the provisions of item (ii) of the preceding paragraph do not apply to any of the persons who have acquired property from the donor by inheritance or bequest (including a gift relating to property acquired by gift from the donor which is subject to the provisions of Article 21-9, paragraph (3) of the Inheritance Tax Act (including as applied mutatis mutandis pursuant to Article 70-2-6, paragraph (1), Article 70-2-7, paragraph (1) (including as applied mutatis mutandis pursuant to Article 70-2-8) or Article 70-3, paragraph (1))) (referred to as the "total taxable value for inheritance tax relating to the donor" in the following paragraph, paragraph (15), item (i) and paragraph (20), item (iv)) exceeds 500,000,000 yen:

the case where the donee is under 23 years of age;

the case where the donee is enrolled at a school, etc.;

the case where the donee is receiving education and training (meaning education and training prescribed in Article 60-2, paragraph (1) of the Employment Insurance Act; the same applies in paragraph (16)).

The total taxable value for inheritance tax relating to the donor referred to in the proviso to the preceding paragraph is to be calculated based on the value of the property and the amount of the liabilities that formed the basis for calculating the amount of inheritance tax before the day on which it becomes impossible to make a reassessment or determination, etc. prescribed in Article 58, paragraph (1), item (i), (a) of the Act on General Rules for National Taxes pursuant to the provisions of Article 70, paragraph (1) or (3) of that Act or Article 36 of the Inheritance Tax Act.

In the case where the donee referred to in paragraph (13) has fallen under the case of being under 23, etc., when the due date for filing the return filed by the due date under the provisions of Article 27, paragraph (1) of the Inheritance Tax Act relating to the death of the donor referred to in that paragraph has passed, the following provisions apply:

the donee must promptly submit or provide to the business office or similar place of the handling financial institution the documents specified by Order of the Ministry of Finance as documents found to be necessary for confirming whether the total taxable value for inheritance tax relating to the donor exceeds 500,000,000 yen (including electronic or magnetic records; referred to as "confirmation documents, etc." in this paragraph);

the business office or similar place of the handling financial institution referred to in the preceding item must, based on the matters stated or recorded in the confirmation documents, etc. referred to in that item, make the record under the provisions of paragraph (12), item (iii) with regard to the person to whom the provisions of item (ii) of that paragraph have been applied;

the business office or similar place of the handling financial institution referred to in item (i) must retain the confirmation documents, etc. referred to in that item pursuant to the provisions of Order of the Ministry of Finance.

An education fund management contract is to terminate on the earliest of the days specified in the following items according to the category of reasons listed in those items:

the donee has reached 30 years of age (excluding the case where the donee is enrolled at a school, etc. or is receiving education and training on the day on which the donee reaches 30 years of age (limited to the case where the donee has notified the business office or similar place of the handling financial institution, pursuant to the provisions of Cabinet Order, that the donee falls under either of these cases)): the day on which the donee reaches 30 years of age;

the donee (limited to a person 30 years of age or older; the same applies in the following item) has not notified the business office or similar place of the handling financial institution, pursuant to the provisions of Cabinet Order, that there was a day during the year on which the donee was enrolled at a school, etc. or received education and training: December 31 of that year;

the donee has reached 40 years of age: the day on which the donee reaches 40 years of age;

the donee has died: the day on which the donee died;

in the case where the value of the trust property relating to the education fund management contract has become zero, the amount of deposits or savings relating to the education fund management contract has become zero, or the value of the securities held in custody under the education fund management contract has become zero, an agreement has been reached between the donee and the handling financial institution to terminate that education fund management contract: the day on which that education fund management contract terminates based on that agreement.

In the case where an education fund management contract has terminated because a reason listed in any of the items of the preceding paragraph (excluding item (iv)) has occurred, if there is a balance remaining after deducting the amount of education fund expenditure (including the remaining managed balance deemed to have been acquired by inheritance pursuant to the provisions of paragraph (12), item (ii); the same applies in the following paragraph) from the tax-exempt contribution amount relating to that education fund management contract, the following provisions apply:

that balance is included in the taxable value for gift tax of the donee relating to that education fund management contract for the year that includes the day specified in the relevant item of the preceding paragraph (excluding item (iv));

with regard to the application of the provisions of Article 70-2-5, that balance is deemed to be general gift property prescribed in paragraph (3) of that Article.

In the case where an education fund management contract has terminated because the reason listed in paragraph (16), item (iv) has occurred, the balance remaining after deducting the amount of education fund expenditure from the tax-exempt contribution amount relating to that education fund management contract is not included in the taxable value for gift tax.

In the case where an education fund management contract has terminated, the head of the business office or similar place of the handling financial institution must submit a report stating the name and domicile or residence of the donee relating to that education fund management contract and other matters specified by Order of the Ministry of Finance (referred to as a "report on the termination of an education fund management contract" in paragraphs (23) and (24)) to the district director with jurisdiction over the donee's place for tax payment by the last day of the second month following the month that includes the day on which that education fund management contract terminated (or, in the case where that education fund management contract terminated because the reason listed in paragraph (16), item (iv) has occurred, the day on which the head of the business office or similar place of the handling financial institution learned of that reason).

When the district director learns of any of the following facts, the district director is to notify the head of the business office or similar place of the handling financial institution of that fact and other matters specified by Order of the Ministry of Finance:

money that the donee has withdrawn from the business office or similar place of the handling financial institution to be appropriated to the payment of education funds has not been appropriated to the payment of education funds;

returns for tax exemption of education funds relating to the donee have been submitted to the business offices or similar places of two or more handling financial institutions, or the tax-exempt contribution amount relating to the donee exceeds 15,000,000 yen;

the donee's total income amount prescribed in Article 2, paragraph (1), item (xxx) of the Income Tax Act for income tax for the year preceding the year that includes the day on which the donee acquired from the donor the beneficial interest in a trust, money or monies, etc. relating to the application of the provisions of the main clause of paragraph (1) exceeds 10,000,000 yen;

the total taxable value for inheritance tax relating to the donor of the donee comes to exceed 500,000,000 yen, or comes to be 500,000,000 yen or less, as a result of a reassessment under the provisions of Article 24 or Article 26 of the Act on General Rules for National Taxes, a determination under the provisions of Article 25 of that Act, or the filing of a tax return form filed after the due date or an amended return form.

When the head of the business office or similar place of a handling financial institution has received a notification from the district director under the provisions of the preceding paragraph (limited to a notification relating to the facts listed in item (i) or (iv) of that paragraph), the head must correct the record referred to in paragraph (10) (including the record under the provisions of paragraph (12), item (iii)) based on that notification.

Beyond what is provided for in paragraphs (3) through (11), paragraph (16) and the preceding three paragraphs, necessary matters concerning the application of the provisions of paragraph (1), paragraphs (12) through (15), paragraph (17) and paragraph (18) are specified by Cabinet Order.

When it is necessary for an investigation concerning the submission of a report on the termination of an education fund management contract, the relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office may ask questions of a person who is obligated to submit that report on the termination of an education fund management contract, inspect that person's books and documents concerning education fund management contracts (including, where electronic or magnetic records have been created or retained in lieu of the creation or retention of those books and documents, those electronic or magnetic records; the same applies in paragraph (20) of the following Article and Article 70-13, paragraph (4), item (iii)) and other articles, or request the presentation or submission of those articles (including copies thereof).

When it is necessary for an investigation concerning the submission of a report on the termination of an education fund management contract, the relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office may retain articles submitted in the course of the investigation.

The relevant official of the National Tax Agency, the Regional Taxation Bureau, or the tax office, when asking questions, conducting an inspection, or requesting presentation or submission pursuant to the provisions of paragraph (23), must carry an identification card and present it to the person concerned when requested.

The authority of the relevant officials under the provisions of paragraphs (23) and (24) must not be construed as being granted for the purpose of criminal investigation.

Beyond what is provided for in the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (24) are specified by Cabinet Order.