Hitori-Oyakata Rosai Premiums: A Deduction, Not an Expense

This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.

For a sole-proprietor tradesperson (hitori-oyakata) in construction who takes out special enrolment in workers' accident compensation insurance (rosai), the premiums are not a necessary business expense; they go into the "social insurance premium deduction" on your tax return. The reason is that the National Tax Agency's Taxanswer explicitly lists "premiums borne under the provisions for special enrolees in workers' accident compensation insurance" as covered by the social insurance premium deduction. On the other hand, the dues and joining fee of the hitori-oyakata association that acts as your enrolment desk are necessary business expenses. Get this distinction wrong and you either have the premiums you booked as an expense denied, or you forget the deduction and pay too much tax. This article sorts out the bookkeeping account, where to write the amounts on Table 1 and Table 2 of the return, how much the deduction gives back, and what basic daily benefit amount to choose, using Ministry of Health, Labour and Welfare (MHLW) and National Tax Agency materials.

The short answer: premiums are a deduction, dues are an expense

What you paid	Treatment	Bookkeeping account	Where it goes on the return
Special enrolment premiums for rosai insurance	Social insurance premium deduction (not an expense)	Owner's drawings (where paid from the business account)	Table 1 "social insurance premium deduction"; in the breakdown on Table 2, "rosai insurance (special enrolment)" and the amount
Annual association dues, joining fee, administrative handling charge	Necessary business expense	Membership dues (or handling charges)	The expense column of the statement of earnings and expenses or the blue return financial statement
National Health Insurance and National Pension premiums	Social insurance premium deduction	Owner's drawings	Tables 1 and 2 (entered together with the rosai premiums)

Source: National Tax Agency, Taxanswer No.1130 "Social insurance premium deduction" (the scope of social insurance premiums)[National Tax Agency]

The reason special enrolment premiums are not an expense is that rosai insurance is not a "cost incurred for the business" but "insurance that protects the person", the same character as health insurance or the National Pension. Rosai premiums a business owner pays for employees are an expense, but your own special enrolment portion is a deduction. Keep the two apart.

How much you pay, and how much the deduction gives back

Special enrolment premiums are set by "basic daily benefit amount x 365 days x premium rate". The premium rate for a hitori-oyakata in construction is 17/1000 (from April 2024; unchanged for fiscal 2026 as well)[MHLW, special enrolment premium rate table].

Basic daily benefit amount	Annual premium (construction, 17/1000)	Tax returned by the deduction (someone on a 20% rate, rough figure)	Leave compensation (per day, 80%)
3,500 yen	21,709 yen	about 4,300 yen	2,800 yen
5,000 yen	31,025 yen	about 6,200 yen	4,000 yen
8,000 yen	49,640 yen	about 9,900 yen	6,400 yen
10,000 yen	62,050 yen	about 12,400 yen	8,000 yen
14,000 yen	86,870 yen	about 17,400 yen	11,200 yen
20,000 yen	124,100 yen	about 24,800 yen	16,000 yen
25,000 yen	155,125 yen	about 31,000 yen	20,000 yen

Source: MHLW, "Guide to the special enrolment system (for hitori-oyakata and other self-employed people)", Table 4, list of basic daily benefit amounts and premiums[MHLW]. "Tax returned" is a rough figure for someone paying 10% income tax plus 10% resident tax

What is easy to miss here is that the social insurance premium deduction works against income tax and resident tax, but does nothing for National Health Insurance premiums. The income-based part of National Health Insurance is calculated on "income minus the 430,000 yen basic deduction", and income deductions such as the social insurance premium deduction are not subtracted. If the premiums were allowed as an expense, business income itself would fall and the National Health Insurance bill would come down too, but because they are a deduction that does not happen. On premiums of 60,000 yen a year, that is a difference of about 6,000 yen in a municipality with an income-based rate around 10%. For how National Health Insurance is calculated, see how National Health Insurance premiums are calculated.

How to book it and how to fill in the return

Bookkeeping: paid from the business account means "owner's drawings". The entry is "owner's drawings 62,050 / ordinary deposit 62,050". If you paid from a personal account, you need not record it in the books at all. Dues are booked as an expense, for example "membership dues 12,000 / ordinary deposit 12,000". Association invoices often put the premium and the dues on a single sheet, so split the breakdown when you record it.
Table 2: the type and amount in the "social insurance premium deduction" column. Write "rosai insurance (special enrolment)", "National Health Insurance" and "National Pension" with the amount paid for each, and total them. For the National Pension use the figure on the deduction certificate, for National Health Insurance the notice of amounts paid, and for rosai the amount on the receipt or payment certificate issued by the association.
Table 1: the total from Table 2 goes in "social insurance premium deduction". If you use the online return preparation corner, it is carried across automatically.
No certificate need be attached, but keep it. The National Pension deduction certificate has to be attached (or can be omitted with e-Tax), but there is no statutory deduction certificate for special enrolment rosai premiums and nothing has to be attached. Keep the association's receipt for five years.

Do not enter the premiums on the blue return financial statement or the statement of earnings and expenses. Putting them in the expense column understates business income, and it will be denied in a tax audit. "I booked the whole amount paid to the association as membership dues" is a common mistake on hitori-oyakata returns.

Choosing the basic daily benefit amount: cheaper is not better

The basic daily benefit amount is applied for by you, anywhere between 3,500 yen and 25,000 yen, and decided by the head of the prefectural labour bureau. It is tempting to pick a low amount because the premium is lower, but leave compensation and the disability and survivors' benefits are all set by this figure. The MHLW guide warns as much: a low amount makes the premium cheaper but the benefits smaller too, so choose an appropriate figure.

Leave compensation is 80% of the daily amount (60% plus a 20% special payment). On a daily amount of 10,000 yen that is 8,000 yen a day from the fourth day off. On 3,500 yen it is 2,800 yen, which comes to only 84,000 yen even if you are off for a month. A hitori-oyakata has no sickness allowance under health insurance, so rosai is the only income protection when you cannot work.
Set it close to what you actually earn in a day. If someone earning 20,000 yen a day enrols at 5,000 yen, the compensation in a month lost to injury is 20% of their earnings. Compare the difference in annual premiums (about 93,000 yen between 5,000 yen and 20,000 yen) as the "premium on an income protection policy". In most cases it is cheaper than private income protection insurance.
Changes run by fiscal year. To change from the next fiscal year, apply between 2 and 31 March; changes for the current year are also possible during the annual renewal period. You cannot change it after an accident has happened.
Enrolment part-way through the year is pro-rated monthly. Join in October and you pay six months' worth.

Rosai benefits are tax-free, and leave compensation you receive is not included in your tax return. For what rosai actually pays out, see the difference between rosai leave compensation and the sickness allowance.

What is covered: contracted site work, and commuting

Rosai pays out for a hitori-oyakata only for things such as "acts directly necessary to the contract", "work at the contracted construction site and acts directly incidental to it", "in-house work clearly based on the contract", and "transporting machinery or products for the contracted work"[MHLW, guide]. Commuting accidents are covered as well. Conversely, an injury during sales activity or clerical work at home is not an employment injury.

The benefits are the same as for an employee: medical treatment (the full cost of care), leave (80% of the daily amount from the fourth day), disability (a pension or lump sum according to the grade), survivors' benefits (a pension, or a lump sum of 1,000 times the daily amount plus a 3 million yen special payment), funeral costs and nursing care. The reason a prime contractor asks for proof of enrolment as a condition of entering the site is this coverage.

Choosing an association, and what happens if you incorporate

The premium is the same whichever association you use. It is a national premium set by the basic daily benefit amount and the industry, so there is no difference between associations. Where they do differ is dues, joining fees and administrative handling charges (from about 6,000 yen to the twenty-thousands a year), how quickly they issue the certificate of enrolment, and how much help they give with rosai claims. An association advertising "cheap premiums" may be setting a low basic daily benefit amount, so check.
Dues are an expense, premiums are a deduction. Look at the breakdown on the invoice and split the entries.
If you incorporate and become the company's director, switch from hitori-oyakata special enrolment to "special enrolment for small and medium-sized business owners" (through a labour insurance administration association). As for tax treatment, if the company bears the premium it is deductible for the company. On deciding whether to move from sole proprietorship to a company, see micro corporations and social insurance premiums.

Frequently asked questions

Until last year I filed with the premiums as an expense. What should I do?

The correct treatment is the social insurance premium deduction. Taking them out of expenses and into the deduction often leaves income tax and resident tax at much the same level, but in the National Health Insurance calculation your business income rises, which pushes the premiums up. To fix past years, use an amended return (if the tax goes up) or a request for correction (if it goes down); if you are unsure, ask the tax office. Splitting it correctly from this year does not mean you are obliged to go back and fix earlier years.

I pay the rosai premiums for my wife and child. Can I claim them as my deduction?

Where you pay the social insurance premiums of a spouse or relative who shares your household finances, they go into the deduction of whoever paid. If family members are specially enrolled as hitori-oyakata working on the same site and the head of the household pays those premiums, they are the head of the household's deduction.

I am a hitori-oyakata registered for the invoice system. Is consumption tax charged on rosai premiums?

No. Rosai premiums are a tax-exempt transaction and they do not qualify for the purchase tax credit either. Association dues are outside the scope of consumption tax where there is no consideration involved, but a part that amounts to consideration for a service, such as an administrative handling charge, can be a taxable purchase. Check how your association's invoice is broken down.

Summary

A one-person contractor's special-enrollment workers' comp premium is not a deductible business expense; it goes into the social insurance premium deduction on the tax return.
Annual dues, enrollment fees, and administrative fees for a one-person contractors' association are deductible business expenses. Keep them itemized separately on invoices.
The construction industry premium rate is 17/1,000. At a benefit base daily amount of ¥10,000, the annual premium is ¥62,050.
The social insurance premium deduction reduces income tax and resident tax, but not national health insurance premiums.
The benefit base daily amount is the basis for payments such as workers' comp leave benefits. Choose an amount close to your actual daily earnings rather than the cheapest option.

Reference links (sources)

This article is based on the materials below. Premium rates are revised from time to time, so please check the latest rate table when you enrol or renew.

Note: this article is general information. For an individual decision on your return, check with the tax office or a tax accountant; for rosai benefits, check with the Labour Standards Inspection Office.