1. Introduction
In the year-end adjustment procedure from October 2020, employees are able to submit electronic data for applying deductions, replacing the attachment of paper documents on applications such as the “Application for Deduction for Insurance Premiums for Employment Income Earner” and the “Application for Deduction for Special Credit for Loans, etc. Related to a Dwelling (Specific Additions or Improvements, etc.).”
Further, in connection with the personal portal site, “Mynaportal,” employees can receive certificates for deductions via electronic data from insurance companies and complete to fill out the application forms automatically. The introduction of electronic submission of documents will mitigate the year-end adjustment paperwork which used to be complex and troublesome for both companies and employees. In this News, we will mention the summary of digitization in the year-end adjustment procedure.
2. Advantages of digitization
Digitization in the year-end adjustment procedure will be beneficial not only to administrators in companies but also to employees from the reasons below.
・Cost and time efficiency
By digitizing all procedures, a series of administrative work including printing, handing out, and collecting papers is not required anymore. It also enables users to access the data anywhere or anytime.
・Reduce inquires between companies and employees
In cases where employees use the software for the year-end adjustment known as “Nencho-Software,” it will calculate the amount of deductions for insurance premiums and others automatically; hence, companies will no longer be required to double-check employees’ calculations.
・Increased accuracy
In cases where employees use electronic certificates for insurance premiums deductions, companies will no longer be required to check the amount of deductions with the original documents.
・Save space and cost
By preserving employees’ data electronically, companies can save the space for paper storage and its cost.
3. Documents allowed to submit electronically
【Applications for year-end adjustment】
・ Application for dependent exemption
・ Application for spouse exemption
・ Application for basic exemption*
・ Application for exemption of amount of income adjustment*
・ Application for deduction for insurance premiums
・ Application for deduction for housing loan debts*
【Certificates for deductions】
・ Certificates for deductions for insurance premiums (limited to life insurance premiums (new・former), personal pension premiums (new・former), nursing care insurance premiums, and earthquake insurance premiums)*
・ Certificate for special credit for housing loan debts*
・ Certificate for year-end balance (balance certificate for housing loan debts)*
* Applications allowed to submit electronically on or after October, 2020
4. Preparation for digitization
In order to receive electronic applications from employees, companies must submit the “application for the approval for electronic submission of the matters to be stated on the applications regarding withholding” to the tax authority. Companies should also be well-prepared for the installation of the software suitable for digitization, notice to employees, and improvements of the existing payroll systems.
5. Conclusion
This year’s new way of the year-end adjustment will be more beneficial for companies which have already started digitization in some parts of the process. Even if it seems difficult to apply electronic submission from this year, the introduction of digitization will be highly recommended for the future year-end adjustment procedure.
References (Japanese)
National Tax Agency “Enhancement of digitization in year-end adjustment procedure (from 2020)”
National Tax Agency “FAQ regarding digitization in year-end adjustment procedure and Nencho-Software and others”
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