I had been wondering for some time if there may be some changes coming for NISA after the current scheduled end date of 2023. The good news is that changes are indeed coming, but it is nothing too severe.
You may remember that NISA is the Japan Individual Savings account, designed to encourage Japanese investors to invest in the stock market. Capital gains and dividends from NISA are exempt from the 20% tax over the investment period. It has actually been pretty successful with around 14 million people using the system across the three account types. (General, Tsumitate and Junior NISA) Of those, approximately 11.75 million people have invested some ¥17.9 trillion into the General NISA system.
So what is going to change? Well the Junior NISA is being discontinued in 2023, and the Tsumitate NISA will be extended as is until 2042, so the main changes come in the General NISA account:
1. General NISA is being extended for 5 years from 2024 to 2028.
2. Contributions will be split into 2 tiers:
The first tier is for up to ¥200,000 per year and this amount must be invested in “Stable Investments” – what is meant by this is collective investments such as funds and ETFs that have been approved by the Financial Services Agency. This is to encourage diversification and sensible investment. There are currently 184 funds and ETFs that have been approved for this.
In Tier 2 you can invest up to ¥1,020,000 per year. There are fewer restrictions on this tier so you can buy funds, ETFs and individual stocks. It looks like there will be some restrictions on highly leveraged funds, but you can pretty much expect to be able to access the same assets as you can now in General NISA.
This means the total investable per year has increased by ¥20,000 to ¥1,220,000 yen. It looks like you have to fill up the Tier 1 ¥200,000 before you can invest in Tier 2 assets.
3. If you started your NISA after 2019, you will be able to rollover the holdings in your General NISA to the New NISA. NISA started before 2019 will not be eligible for rollover.
It also seems that Tier 1 assets from New NISA will be eligible to be rolled over to Tsumitate NISA after the five year investment period. However you will only be able to rollover the book cost, the amount you invested rather than the actual value of these holdings. So if you invest ¥200,000 and it goes up to ¥400,000, you can only roll over ¥200,000 yen.
I have pieced this information together from a couple of different articles, which are in Japanese. I’m pretty confident I have the main facts correct, but there are probably a few minor details that I haven’t fully understood yet. Will update if I think I missed anything. For now, rest assured that NISA will still be available as an investment option to you from 2024 onwards!
Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.
Smart Money Asia 