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Tax exemption on lump sum gifts related to education expenses [updated on April 22, 2019]

From April 2019, a portion of the "measure for tax exemption on lump sum gifts related to education expenses" has been amended. Details are listed below.

This measure was introduced in 2013 to allow grandparents (donors) to give up to ¥15 million (*1) in a lump sum to each child/grandchild (donee aged 20 years of age or older but younger than 50 years of age) free of tax to pay for education expenses. To be subject to this measure, donors need to open bank accounts in the donee’s name so that the donee can withdraw funds.

For more information, visit the Ministry of Education, Culture, Sports, Science and Technology homepage by clicking here.

The outline of the revision

  • The measure will be applicable until March 31, 2021.
  • The opened bank account is closed on the day the relevant donee turns 30 years of age under the previous law, but the age limit will be raised to 40 years of age if the donee is still in school. (*2)
  • Introduction of an income cap (if the donee's total income for the previous year of the donor's lifetime gifting exceeds ¥10 million, the tax exemption will not be applied.)
  • The scope of education expenses for donees 23 years of age or older will be restricted to school expenses and education and training expenses subject to education and training benefit plans (this excludes culture lesson expenses). (*2)
  • If the donor passes away within 3 years after his/her lifetime gifting and the donee is 23 years of age or older, gift tax will be levied on the unspent amount of the gift remaining in the bank account (this excludes cases in which the donee is still in school).

*1 Expenses paid to individuals/organizations other than schools are limited to ¥5 million.

*2 To be enforced from July 1, 2019

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