The Supreme Court has decided that a 1968 tax notice imposing inheritance as well as income taxes on the beneficiaries of life-insurance money paid in the form of a pension is illegal. The ruling was the culmination of a lawsuit filed against tax authorities in 2005 by a Nagasaki housewife. She deserves praise for her courage to take on tax authorities and for her perseverance to fight it out.
The 49-year-old woman's husband died in October 2002. Because he held a life insurance policy with a pension cotract, she obtained the right to receive a lump sum of 40 million Yen and a pension payout of 2.3 million Yen every year for 10 years. Tax authorities decided that the lump-sum payment and about 60 percent of the 23 million Yen in annual payments should be regarded as inherited assets. After basic deductions, no inheritance tax was levied on the lump-sum payment; income tax, however, was to be imposed on the annual payment portion.
Read this news article on Japan Times.
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