The government and ruling parties plan to establish a new system in fiscal 2015 to allow parents and grandparents to pass down a certain amount of money tax-free for their children's marriage, childbirth and child rearing, according to government sources.
The government intends to make the system effective for a limited period from April 2015 to the end of 2017. It is currently making preparations, with the upper limit to be set at 10 million yen (S$110,000) per child or grandchild.
Up to 15 million yen in educational funds, such as school expenses, is currently tax free until the end of 2015. The government intends to extend the term for about three years.
Gifts of up to 10 million yen from parents or grandparents to acquire housing are also tax-free at the moment. The government intends to increase the limit to 15 million yen from January 2015.
In each case, tax exemptions are applied only when people receive the funds as a lump sum. If these tax exemptions are fully utilized, up to 40 million yen per recipient will become tax-free.
These plans are expected to be included in the outline of tax system reforms for fiscal 2015, which the Liberal Democratic Party and its junior coalition partner Komeito are set to compile by Dec. 30.
A gift tax is imposed when a person receives financial assets that exceed ¥1.1 million in a single year. For example, if a person receives 10 million yen before the end of December this year, they must pay a gift tax of 2.31 million yen.
The government intends to avoid imposing such tax up to a specific amount in cases where the financial gift is used for certain purposes, including marriage, education and acquiring a residence.Speech