Japan Agreement and foreign pension information 106-04038000

In Japan, national legislation requires the compulsory payment of social security contributions .The public pension system covers residents, most workers and some self-employed.

Contributions insure individuals against unemployment, disability and death and provides for income in the form of a pension once the person reaches retirement age.

The legislation is the responsibility of the Japanese government but administration and payment of insurance pensions is the responsibility of the central pension service and the various employee pension funds.

Public assistance programs provide benefits for those with low incomes, generally managed by regional governments.

The Agreement with Japan started 1 January 2009. There are no previous versions.

For Australia:

Department of Social Services (DSS)

For Japan:

Ministry of Health, Labour and Welfare - 厚生労働大臣

For Australia:

Australian Government Agency, Services Australia

For Japan:

Japan Pension Service - 日本年金機構

Note: funds for public servants, local officials and private school employees are also included.

For Australia:

International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for anything relating to double coverage. See Double Coverage.

For Japan:

See Competent Institution.

Under the Agreement with Japan, information held about customers may be exchanged between the Liaison Agencies to determine entitlement to payments under the Agreement (Article 23.2).

To allow broader information exchange, the Japanese claim form includes an authorisation for the Japanese liaison agency to notify Australia in all cases. A mail-out for customers in receipt of Japanese pension was undertaken at the start of the Agreement. The authority to exchange information must be recorded at the time claims are sent to Japan, see the Claims, forms and processes on the Australian payments tab.

For more information on bulk data exchange, see Exchange of information with agreement countries and the United Kingdom.

These forms are completed by Japan or the customer and are returned to International Services (CIS).

日本の連絡票 - Liaison Form from Japan (J/AU3)

• Section I - Information about the claim: provides information about the claim and claimant
• Section II - Confirmation of Data: certifies personal details of the claimant
• Section III - Information provided: details information provided by Japan
• Section IV - Information Needed: details information requested by Japan
• Section V - Remarks: free text and certification by Japanese liaison agency
• Section VI - Certificate for Periods of Coverage: certifies Japanese periods of coverage in months and total
• Section VII - Information on result of claim: provides details of the decision on Japanese claims.

Note: the Japanese Liaison Form provides annual rates during the arrears period and 2-monthly rates for the ongoing pension but must be coded as annual.

Australian claims under the Japanese Agreement may be lodged in some other Australian social security agreement countries.

Japan will not accept claims for Australian benefits under other Australian social security agreements.

See Claim Lodgement Matrix (CLM).

Australian disability pensions are not covered by the Agreement.

Although Japanese invalidity pensions may be claimed in Australia, they are not covered by the Agreement and policy advice is that there is no requirement to pursue a claim.

Any enquiries about Double coverage or certificates of coverage should be directed to the Australian Taxation Office (ATO) website.

The Agreement with Japan includes Double coverage provisions. Certificates of coverage are used to confirm exceptions.

See Double coverage/certificates of coverage information in International Social Security Agreements.

Any queries about taxation of pensions or the requirement to lodge a tax return should be directed to:

• In the other country - the tax authority in the other country directly
• In Australia - the Australian Taxation Office (ATO) website

For general information on taxation, including issuing Australian Payment Summaries, see the Taxation information in International Social Security Agreements.

Tax treaty

Australia has a double tax agreement with Japan. Pensions are only taxable in country in which the person is resident. Any tax deductions from one country may be used as a credit against any tax payable in the other country.

Tax deductions

Japanese pensions may have tax deducted (源泉徴収票 / 税額).

The gross rate of Japanese pension (before deductions) is maintained.

Japanese tax year

Japan uses the calendar year (1 Jan - 31 Dec) as the tax year.

Any queries about:

• Health insurance coverage in the other country - the customer should be directed to contact the health insurance authority in the other country, and
• Medicare coverage - should be directed to Medicare, see Medicare Consumers Program Support - Medicare Consumers Section - Medicare Branch

For general information on health insurance and Medicare coverage, see Health Insurance/Medicare information in International Social Security Agreements.

Australia does not have a reciprocal health agreement with Japan.

Pensioners in Japan may have a health insurance deduction taken out of their Japanese pension (介護保険 / 医療保険).

The gross rate of Japanese pension (before deductions) is maintained.

Japan has adopted the western style calendar in the form of Year/Month/Day but some notices may use the traditional Imperial calendar where the year reflects the reign of the emperor.

The current era, Hesei (平成), began on 8 January 1989 so 1989 is the first year of the period. Using this format, the date 8 January 1989 may be written as 1/1/8, H1/1/8, or 平1/1/8.

To convert a Japanese Imperial year in the Hesei era, add the value on the notice to 1988, for example, 20/12/31 = 31 December 2008.

Notes:

• If necessary, the previous era, Shōwa (昭和), lasted for 64 years from 25 December 1926 so, 7 January 1989 may be written as 64/1/7, S64/1/7 or 昭64/1/7.
• It is not appropriate to refer to a current emperor by this name as it technically only applies posthumously.

Japan does not recognise same sex relationships.

For Australia, the Agreement with Japan (Article 2.1) covers:

• Age Pension

Claims for Australian payments under agreements use the same methods and processes as domestic claims. See Claims for Australian payments under International Agreements.

Forms to claim an Australian payment in Japan can be obtained by contacting the Japanese authorities or International Services (CIS). Forms can also be downloaded from the Services Australia website. See the Resources page for a link.

Forms required:

For all payments:

• AUS140JP - Australian pension claim - Agreement with Japan
• Mod(iA)JP - Income and assets - Japanese

Forms can be lodged at any Japanese social security office.

Under the Administrative Arrangements, the Japanese Liaison Agency will send the claim to CIS with a completed Liaison Form including periods of coverage in Japan and Japanese pension details.

Note: the Japanese Liaison Agency will not verify the customer’s identity however if the Japanese Liaison Agency provide confirmation the customer is in receipt of a Japanese pension, their identity is considered to be confirmed. If identity is not confirmed in this manner, Australian claims lodged in Japan will need to have identity verified using the legacy Proof of Birth/Proof of Arrival and 100 points of identity documentation model.

See the Authorities, Institutions and Liaison Agencies on the General information tab for the Japanese Liaison Forms.

If a person is not an Australian resident and in Australia on the date the claim is made, they may use the Agreement to meet the residence rules for claims if, on that date, they are:

• an Australian resident, a resident of Japan or another Agreement country that accepts claims for Australian pension under another agreement (Article 14(a)), and
• physically present in Australia, Japan or that third country (Article 14(b))

Note: although a customer may be able to claim a payment while resident or present in a third country, they cannot be paid unless the Agreement also allows them to be portable. For example, the Agreement with Chile allows the same as normal portability so, as Disability Support Pension (DSP) is generally only portable for limited temporary absences, a person who is not resident in Chile is not portable. This means the DSP claim would be rejected.

The normal rules for working out the date a claim is ‘made’ and the start day apply to a claims under the Agreement with Japan, however, the Agreement also allows:

• the date of lodgement of a claim for an Australian payment in Japan to be used as the date of lodgement in Australia (Article 20.1)

See Claims for Australian payments under International Agreements) and Start Day (CLK) for coding assistance.

The Agreement allows:

• totalisation of periods of qualifying Australian residence and periods of coverage in Japan to meet any minimum periods to qualify for an Australian pension, for example, 10 years for Age Pension (Article 15.1)
• the total of any non-continuous periods of coverage in Japan to be considered to be continuous to meet any continuous residence requirement to qualify for an Australian pension (Article 15.2)

Notes:

• Overlapping periods are only counted once (Article 15.3)
• Policy advice is that adjoining periods of Australian qualifying residence and Japanese periods of coverage, with a break of up to 3 months in between, can also be considered to be continuous

To be able to use the totalisation provisions, a person who is not an Australian resident at the date of lodgement must have at least 12 months Australian Working Life Residence (WLR) in Australia of which six months must be continuous (Article 15.4(a)).

Note: unlike WLR for rate, this period cannot be rounded.

No minimum WLR is required if the person is an Australian resident at the date of lodgement (Article 15.4(b)).

The Agreement with Japan (Article 16.1) refers to the overall rate calculation contained in the Social Security (International Agreements) Act 1999 (S12(1)).

This means:

• customers paid under the Agreement who are outside Australia are paid a proportional rate according to their Australian Working Life Residence (WLR)
• Rate Limiter/Limited Rate applies, and
• additional child amounts are included in the proportional rate. These amounts are paid automatically as a component of the Australian pension if the customer is qualified (S14A, SS(IA)A 1999)

The proportional rate also includes the proportionalisation of the Japanese pension (Randisi concession) for use in the income test (Article 16.1). The rate of foreign pension used in the income test is the customer's Australian Working Life Residence divided by 300. The Agreement determines the Randisi proportion (300 months). This is different to the legislation that is used to determine the proportional rate (420 months in most cases).

Autonomous customers who are paid a proportional rate and in receipt of a Japanese pension will also have the Randisi concession applied to their Japanese pension (Article 16.2).

Although a person may be qualified for an Australian payment or portable outside Australia, if the customer has no WLR the rate of payment outside Australia will be nil.

Note: in some circumstances their partner’s WLR may be used. See Working Life Residence (WLR).

When a person is paid a proportional rate under an agreement, Rent Assistance (RA) cannot be paid. Other add-ons such as Energy Supplement and Pension Supplement are payable under normal add-ons portability rules. See Portability of Add-ons.

Examples of when a customer is paid a proportional rate includes (but not limited to):

• permanently overseas
• temporarily overseas longer than 26 weeks for age pension
• former resident transferring to the agreement for portability

Returns to Australia:

The proportional rate continues to apply for the first 26 weeks of a temporary return to Australia (Article 16.3).

If there is no change to the country of residence, any movement is considered temporary and a review is set to automatically change the rate after a continuous period of 26 weeks. If a delegate determines that a person has changed their country of residence, coding the information on the Country of Residence (CRES) screen will automatically apply the correct rate calculation.

For returns to Australia before 9 June 2018, manually code Temporary Return to Aust Ind on the Residence Savings (RSS) screen.

Customers in Australia under the Agreement are paid a direct deduction rate (Article 16.4). That is, all Japanese payments covered by the Agreement, including social welfare payments, are not assessed as income but will be deducted dollar-for-dollar from the maximum rate of the Australian payment before the application of the income or assets test.

Departures from Australia:

The inside Australia rate continues to be paid for the first 26 weeks of a temporary departure from Australia (Article 16.5).

The Agreement with Japan specifies the rate calculation that applies ‘where a benefit under the legislation of Australian is payable by virtue of this Agreement or otherwise, to a person who is outside the territory of Australia’ (Article 16.1). See Outside Australia in Rate calculation.

Note: ‘or otherwise’ refers to autonomous customers.

Payments exempt under the Agreement are generally exempt for autonomous customers (section 8(8)(zc) Social Security Act 1991).

See Assessment and exempt payments on the Japanese payments tab.

Under the Agreement, provided the customer remains qualified, Australian Age Pension is payable indefinitely in Japan (Article 5.1).

Portability to third countries for a customer paid under the Agreement is the same as for an autonomous Age Pension customer leaving Australia (Article 5.2). See Portability of payments.

If necessary, a customer in receipt of an autonomous payment covered by the Agreement may be able to transfer to the Agreement if they are in Japan when their normal portability period expires. The portability under the Agreement then applies, see Portability.

Note: the customer must meet the transfer requirements.

Once a customer transfers to the Agreement they are then considered to be paid by virtue of the Agreement and all provisions of the agreement apply, including rate of payment. See Rate Calculation.

See Transfers to international social security agreements.

A person who has sufficient Australian qualifying residence (or an exemption) can only transfer from the Agreement to autonomous if they are an Australian resident and in Australia.

On return to Australia, system processing will automatically transfer to from the Agreement to autonomous if the person is an Australian resident who has only used the Agreement to extend their portability while outside Australia.

Customers who transfer to autonomous may be affected by the former resident provisions if they leave Australia again within 2 years of becoming an Australian resident. See Former resident provisions.

For Australian payments made into bank accounts outside Australia. See Overseas Bank Account Details (OBAD)

• 老齢年金.-.Old Age Pension (AGE)

Note: includes Basic Pension and Employees’ Pension but does not include Old Age Welfare Pension (老齢厚生年金).

The requirement to claim Japanese pensions applies to Japanese AGE.

Note: although Japanese disability and survivor pensions are payable in Australia, they are not covered by the Agreement and policy advice is that there is no requirement to pursue a claim. See Claims, forms and processes.

Contributions paid by employers on behalf of employees.

Note: basic pension insurance is compulsory for residents and their families, even if not working.

The Eligibility and coding tab contains detailed information on Japanese payments that are subject to CFP legislation.

Claim packs available: AGE.

Claim packs for Japanese payments can be issued through the Foreign Pension System (FPS).

Note: customers who wish to voluntarily claim Japanese INV or SUR must be directed to the Japanese liaison agency, see the Exchange of Information and liaison forms on the General Information tab.

Specific requirements for Japanese claims:

The customer is to complete and provide the following:

Requests for Additional Information

Where information provided with the claim for Japanese pension is incomplete, Japan will send requests for information in Japanese direct to customers.

Return of foreign pension claim:

Under the Administrative Arrangements, Japanese forms can be lodged in Australia at any service centre.

• All foreign pension claims and supporting documentation must be scanned, and
• The original foreign claim form and copies of supporting documentation must be sent in paper form via internal mail to International Services (CIS). See Processing a foreign pension claim

All claims:

• 国民年金・厚生年金保険裁定請求書（を支給事由とする年金給付）(共済年金決定請求書兼用 - Claim for National Pension/Employees' Pension Insurance (For Old Age Pension) (Also for use for the Mutual Aid Pension) (AUS/J1)

International Services (CIS) only:

CIS will complete the following and attach to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

All claims:

Australia/Japan Agreement on Social Security Liaison Form (AUS187JP).

For assistance with creating and completing the liaison form, see: Agreement liaisons, NZ CICs and exchange of information.

Notes:

• Under the Agreement with JP, periods of employment or self-employment in Australia during periods of WLR must be confirmed (Article 1.1(g)). The AUS027JP is used. It is sent with the foreign pension claim
• When sending JP claims, the DEX Authorisation: field the Foreign Claim Details (FGD) screen must be updated to ‘YES’

Enquiries regarding claims for Japanese payments in Japan or a third country should be directed to the Japanese social security authorities. See the Authorities, Institutions and Liaison Agencies on the General information tab.

Japanese payments may be paid by direct deposit in Australia.

Any queries about the non-payment of Japanese pension should be directed to the Japanese pension authorities, See the Authorities, Institutions and Liaison Agencies on the General information tab.

Customers receive payments every 2 months but statements may provide either 2-monthly or annual amounts. Care must be taken with other statements as these are remittances and may reflect a lump sum, ongoing amount or combination of both. Coded as Freq: ‘ANN’.

Payments are made in AU dollars. However, foreign income must be recorded in source currency – Japanese Yen (JPY). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

Japanese payments are generally increased for cost of living (CPI) from 1st April each year but are only received in the June payment.

For more information on bulk exchanges of information with other countries, see International Data Exchange Program and auto-indexation of foreign pensions.

Japanese AGE is:

• proportionalised according to the customer’s WLR before being included in the income test where the Australian rate is proportional, including Agreement and autonomous customers (Article 16.1), and
• ordinary income in Australia for autonomous customers and direct deduction if paid under the Agreement (Article 16.4)

Each member of a couple is deemed to receive half of the total amount received by the couple (Article 16.6).

Note: the 26 week temporary departure and return provisions apply (Article 16.3 and 16.5).

Also see, Other known payments.

Amounts that are treated as a direct deduction under an agreement are exempt from the income test (section 8(8)(zc) Social Security Act 1991).

Note: payments that are exempt from the income test are included in a direct deduction rate, for example, under an agreement rate calculation or for Special Benefit.

There are no exempt payments under the Agreement with Japan.

Japanese Death Benefit ( 死亡一時金) may be exempt from the income test if payable to the person who incurred expenses associated with the bereavement. Otherwise is assessable as ordinary income over 12 months from date of receipt (s1073 Social Security Act 1991). See Other known payments.

The Eligibility and coding tab contains detailed information on the coding of Japanese payments covered by the Agreement.

Note: includes Basic Pension and Employees’ Pension but only one amount is coded.

The Agreement does not include embargo provisions.

Arrears debts for customers and their partners are raised under s1228A Social Security Act 1991 and recovered via normal methods under the Act. See Comparable Foreign Payment (CFP) lump sum arrears debts.

Notes:

• The Japanese Liaison Form provides annual rates during the arrears period and 2-monthly rates for the ongoing pension but must be coded as annual. Care must be taken with other statements as these are remittances and may reflect a lump sum, ongoing amount or combination of both. For lump sums that are not considered to be a foreign pension, for example, refunds of contributions, see Treatment of lump sums.
• if the customer has a claim in progress on FGS, but is not granted a foreign pension, FGD must be updated to FIN-NOM wen lump sum FID coding is completed
• Where an arrears period is not provided, the arrears period end date may be assumed to be the end of the month prior to the period for which the first regular 2-monthly payment is paid.

A contravention debt may also occur if the customer does not advise of the grant of their Japanese payment within their notification period. See Foreign Pension coding.

Life Certificates are not used by Japan.

Customers in Australia are sent notices at grant and will receive an annual statement each year.

Note: the Japanese Liaison Form provides annual rates during the arrears period and 2-monthly rates for the ongoing pension but must be coded as annual. Care must be taken with other statements as these are remittances and may reflect a lump sum, ongoing amount or combination of both. For lump sums that are not considered to be a foreign pension, for example, refunds of contributions. See Treatment of lump sums.

Payments are made in AU dollars. However, foreign income must be recorded in source currency – Japanese Yen (JPY). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the FPD screen must not be changed to the AU dollar amount.

Assessment: Ordinary income.

Coding: On the Foreign Pension Details (FPD) screen, coded as Type: ‘INV’ in the Basic Amount: field.

Assessment: Ordinary income.

Coding: On the Foreign Pension Details (FPD) screen, coded as Type: ‘SUR’ in the Basic Amount: field.

Assessment: May be exempt from the income test if payable to the person who incurred expenses associated with the bereavement. Otherwise it is an assessable lump sum, assessed as ordinary income over 12 months from date of receipt (s1073 Social Security Act 1991).

Coding: On the Foreign Income Details (FID) screen as Type: 'LMP'. See Treatment of lump sums.

For assistance with coding:

• other generic benefits paid by the Japanese Government (including by funds not covered by the Agreement), see Foreign Pension coding
• any other income received from Japan, see Foreign income and assets
• assessable lump sums, for example a refund of contributions or payout of a small pension, are assessed for 12 months from date of receipt. See Treatment of lump sums.

Note: if the customer has a claim in progress on FGS, but is not granted a foreign pension, FGD must be updated to FIN-NOM wen lump sum FID coding is completed.