Foreign Pensions In Japan
Receiving Foreign Pensions in Japan:
Except for US or Canada (See later), if the source country of the Pension has a Tax Treaty with Japan, then (according to the treaties that I have checked so far - usually Article 17) the pension income is only taxable in the country of residence; i.e. Japan, and not in the other country.
The pension is probably paid net, subject to Withholding in the other country. In order to have the pension paid gross without Withholding Tax being deducted, it is necessary to file a form in the remote country claiming the provision of the Treaty.
The Pension should then be paid gross in the other country, with no taxes withheld. The Pension will be then be taxable in Japan, but it would not be necessary to claim a Foreign Tax Credit.
You need to submit PAYG Withholding Variation Application (Online or Paper NAT 2036) to reduce the amount of pay as you go (PAYG) tax withheld from income paid to you in the application year, and the payer (Aus Broker) can't vary the withholding rate until they receive an official variation notice from the ATO. You can submit the application in April for the following Tax Year starting in July.
The DWP does not deduct tax under PAYE when making payments of the state pension. If HMRC believes that there is tax payable then they should issue you with a Self Assessment tax return or, for the 2016/17 tax year onwards, they should issue a Simple Assessment of your tax bill. If there is a double taxation agreement in force between the UK and your country of residence (Japan - there is) it is likely that this agreement will provide for the country of residence to have primary taxing rights over the pension.
Non-US Citizen / non-Green Card Holder
You have to correctly submit a Form W8-BEN to claim the reduced rate under a tax treaty between the foreign person's country of residence and the United States.
US Citizen / Green Card Holder
Unfortunately the US retains the right to tax its Citizens / Green Card Holders, and anyone who gives up US Citizenship or Residence for tax purposes for up to 10 years after the fact, who should pay the Tax in the US. Declare the Pension Income Gross (before those US Taxes) in Japan, and then claim the Foreign Tax Credit for the amount of tax paid in the US.
The wording of Article 20 of the Canada Japan Tax Treaty is internally self contradictory, and so it may not be possible to claim eligibility for reduction of Withholding Tax.
Whilst Article 20 Paragraph 1 says that any income not specifically detailed in previous articles would only be taxed in the country of residence, Paragraph 3 of the same article says that each country will maintain the right to tax that income originating in that country, which, according to Paragraph 1 is only taxable in the other country...
You might try:
CRA Form NR301 (PDF): Use this form to declare eligibility if you are a nonresident individual (or a non-individual like a trust or corporation) taxpayer residing in a country where Canada has a tax treaty. Send this form to receive the reduced rate of tax or exemption on all or certain income. Claim exemption from Withholding on Pension Income under Article 20 Paragraph 1 of the Canada Japan Tax Treaty.
Many thanks to the following RetireWiki.jp users for writing this article: