Sell inherited gold bullion, move the proceeds into a relative's account, run your own balance down — and say nothing, even to your own tax accountant. The tax office knew anyway, before the audit began. Why? Because the moment you sell gold bullion for more than ¥2 million in Japan, the dealer reports your name, My Number and the amount to the tax office. This instalment of Tax Audit Files reads a published NTA case about the reporting system that makes hiding pointless — and how inherited bullion is actually taxed.
The case: "if my balance is low, they cannot tell"
The tax office had already learned, from information on file, that the taxpayer had disposed of gold bullion. No income tax return had been filed, so an audit was opened.
Once underway, examiners confirmed that the sale proceeds had been paid into the taxpayer's bank account — and that most of the money had then left it, as cash withdrawals and transfers to relatives.
Asked to explain, the taxpayer admitted knowing that a capital gains return was required, transferring the proceeds into relatives' accounts to run the balance down in the belief that "the tax office would not be able to tell" — and concealing the sale even from the engaged tax accountant.
The gain was assessed, and these acts were treated as concealment, attracting the heavy additional tax.
The "information on file": the report was made the moment you sold
The payment record for transfers of gold bullion
Dealers who trade in gold bullion must, when buying from an individual for more than ¥2 million, file a payment record with the tax office stating the seller's address, name, My Number, the type and weight of the bullion, the amount and the date (in force since January 2012).
The timeline shows every act of hiding came too late: the report was triggered at the counter, before the money even landed. Moving funds afterwards does not erase income — it only builds the evidence of intent that the heavy additional tax requires. Transfers into relatives' names and concealment from one's own tax accountant are textbook material for a concealment finding.
How inherited bullion is actually taxed
| Point | Rule |
|---|---|
| Special deduction | Capital gains enjoy a ¥500,000 annual special deduction |
| Long-term halving | Held over 5 years: only half the gain (after the deduction) is aggregated with other income |
| Inherited bullion | You inherit the deceased's acquisition cost and date — not the value at inheritance. Gold bought cheaply decades ago produces a large gain |
| No records | Without purchase records, deemed cost is 5% of the sale price — 95% of the price becomes taxable gain |
Find the purchase documents among the estate papers before selling. And note: splitting sales into sub-¥2-million lots does not remove the filing obligation — dealers keep identity records, repeated sales are visible, and deliberate splitting itself reads as intent.
FAQ
Q. How does the tax office learn that I sold gold?
A. Dealers buying gold bullion from an individual for more than ¥2 million must file a payment record with the tax office giving the seller's address, name, My Number, the bullion's type and weight, the amount and the date. The transaction is reported under your name at the point of sale.
Q. If I move the proceeds to another account or withdraw cash, can it still be traced?
A. Yes. The sale itself is already on record, and in an audit bank movements are reconstructed through enquiries to financial institutions. In the published case, transfers to relatives' accounts and concealment from the tax accountant were treated as concealment, attracting the heavy additional tax.
Q. How is tax calculated on inherited bullion?
A. As a capital gain aggregated with other income. You inherit the deceased's cost and acquisition date; a ¥500,000 special deduction applies, and if total holding exceeds five years only half the remaining gain is taxed. Without purchase records the deemed cost is 5% of the sale price, which is severely unfavourable.
Q. No audit notice has come yet. What can I do now?
A. File voluntarily before advance notice of an audit and the penalties fall sharply — the non-filing penalty drops to 5% in principle. Left until after an audit it runs 15–30%, and 40% if concealment is found.
Sources
This article is general information. Consult a tax office or a licensed tax accountant.
