Explanation of taxes on gold trading! A detailed introduction to the calculation method of taxes on profits.
The price of gold continues to soar, and it is highly popular as an investment commodity. As the profits from buying and selling gold increase, the taxes also increase, so it is important to understand the tax implications related to gold in order to avoid losses in gold trading.
In this article, we explain in an easy-to-understand manner from the tax structure of buying and selling gold to methods to reduce taxes. Those who own gold or are considering buying and selling gold in the future, please take a look.
Overview of taxes on profits from gold trading
Profits generated from buying and selling gold are subject to taxation, but the tax rates and calculation methods vary depending on the purpose of the sale. For example, if an individual employee sells gold they personally own on a one-time basis, it falls under "capital gains income". On the other hand, if the buying and selling is done continuously for profit-making purposes, it is treated as "business income" or "miscellaneous income". Let's check each tax system below.
Business Income
Business income corresponds to income as a sole proprietor or freelancer, and includes cases where buying and selling gold is conducted for profit-making purposes. For business income, it is subject to comprehensive taxation, and progressive tax rates are applied to profits after deducting necessary expenses.
[Calculation Formula]
Total income amount - Necessary expenses = Business income (comprehensive taxation)
Capital gains
When temporarily selling gold held as personal assets, it falls under "capital gains". Sales within 5 years of holding are short-term capital gains, while sales exceeding 5 years are considered long-term capital gains, which are subject to deductions and reductions.
【Formula】
For ownership periods of within 5 years: Total income amount - (Acquisition cost + Transfer cost) - Special deduction amount of 0.5 million yen = Capital gains
For ownership periods exceeding 5 years: (Total income amount - (Acquisition cost + Transfer cost) - Special deduction amount of 0.5 million yen) × 1/2 = Capital gains
Miscellaneous income
Profits that do not fall under business income or capital gains are declared as "miscellaneous income". Comprehensive taxation applies to profits from trading gold bullion, and it is important to note that profits from futures trading are subject to separate taxation reporting (tax rate of 20.315%).
Tax calculation simulation for gold trading profits
In this section, let's simulate the income amounts for each case of gains from the transfer of 2 million yen in gold for 4 million yen.
In the case of gains from the transfer.
If the holding period is within 5 years: 4 million yen - 2 million yen - 0.5 million yen = 1.5 million yen
If the holding period exceeds 5 years: (4 million yen - 2 million yen - 0.5 million yen) × 1/2 = 0.75 million yen
* The amount of special deduction for gains from the transfer is 0.5 million yen for the total amount of gains from the transfer of gold for that year and total comprehensive taxation gains from transfers other than that. When the total amount of these gains from transfers is 0.5 million yen or less, the deduction can only be up to that amount.
Moreover, if there are gains from transfers in both cases ① and ②, the special deduction amount is limited to a total of 0.5 million yen for both ① and ② combined, and deductions will first be made from the gains of ①.
Tax-saving measures in gold trading
Profits earned from trading gold are subject to income tax and must be calculated by "comprehensive taxation." Since progressive tax rates apply to comprehensive taxation, the higher the income, the higher the tax rate. Therefore, legitimate tax-saving measures to reduce income are crucial. Taxes can be minimized through the following methods:
Storage of purchase certificates.
When purchasing gold, a "calculation document" is provided as proof of purchase. The calculation document includes details such as "purchase date", "gold market price on the purchase date", "product name", "fineness", and "weight". If this calculation document is lost, 95% of the selling price will be considered as the profit from the sale, leading to a significant increase in income. Therefore, it is important to carefully store the calculation document.
Utilization of long-term capital gains.
Long-term capital gains can benefit from a significant tax-saving effect by multiplying 1/2 of the profit by the special deduction amount of 0.5 million yen. However, it is necessary to hold the asset for at least 5 years to qualify as long-term capital gains before selling.
Utilization of income deductions.
By utilizing iDeCo or small business mutual aid premiums and choosing "comprehensive taxation", it is possible to reduce the progressive tax rate by increasing income deductions. For example, iDeCo allows for income deductions based on the amount invested, with a maximum annual deduction of 0.816 million6 yen for self-employed individuals and 0.276 million6 yen for company employees.
By contributing an annual premium of 0.84 million yen to the small business mutual aid premiums, the full amount of the premium becomes eligible for income deductions. The increase in income deductions leads to a decrease in taxable income, resulting in a reduction in the income tax rate.
However, financial products eligible for income deductions have specific requirements for each subscription, so be sure to check with each institution before utilizing them.
The difference in taxes between trading gold and other assets.
The tax on profits from trading gold is treated as 'comprehensive taxation,' unlike the transfer of stocks, land, and buildings. For example, when selling listed stocks, a fixed tax rate of 20.315% (income tax 15%, resident tax 5%, special income tax for reconstruction 0.315%) is imposed.
However, profits from trading gold are calculated by combining with other incomes such as employment income and real estate income, resulting in a higher income tax rate for higher incomes. Additionally, higher incomes have an impact on social insurance premiums and resident taxes.
If the highest tax rate is reached, a tax rate of 55% (income tax 45% + resident tax 10%) will be applied, resulting in paying more than half of the income in taxes.
Summary
Have you deepened your understanding of the tax system and tax-saving methods for trading gold? By carefully planning the timing of gold sales, storage methods, and utilizing income deductions, significant tax savings can be expected. By correctly understanding the taxes on trading gold based on this article, you can reduce the taxes you pay, secure funds for new investment opportunities.
【Reference】
National Tax Agency 'No.3161 Income from Transfer of Gold Bullion'Income from the transfer of Kinchi Gold No. 3161 | National Tax Agency
Frequently Asked Questions (FAQ)
Q1: How much tax will be incurred on profits from trading gold?
A1: Depending on the type of income, the calculation method for profits varies, and a progressive tax rate (5% to 45%) is imposed based on the taxable income amount.
Q2: Are there any ways to reduce taxes on profits from gold trading?
A2: By devising methods such as the timing of sale, storage methods, and utilizing income deductions such as 'iDeCo' or 'Small Business Mutual Aid Premiums', it is possible to reduce taxes.