Tax & Filing 2026

Paid in Dollars, Converted to Yen, and It Came Out Higher. That Extra Is a Different Income.

The two layers of a foreign-currency payout, worked out from Article 57-3 of the Income Tax Act, Basic Ruling 57-3-2 and the NTA's published Q&A cases.

Two layers

The payout in yen / the currency move after it

TTM

The default conversion rate (Ruling 57-3-2)

Continuous

The condition for using TTB / TTS

9 slides

The same money gets priced twice

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A $1,000 payout. ¥145 on the day it was confirmed, ¥153 on the day you converted. The ¥8,000 gap is not payout.

What you earned for the work was the $1,000. The ¥8,000 appeared because the price of a currency moved between confirmation and conversion — somewhere entirely outside the job you did.

💡 The part earned as payout and the part created by the currency move arrive mixed together in one transfer (figures here are an illustration, not real rates)

Layer one: the yen figure on the day the payout arose

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Income Tax Act, Article 57-3(1), as the NTA describes it: where a resident carries out a foreign-currency transaction, the yen equivalent is “the amount converted at the foreign exchange rate at the time the foreign-currency transaction was carried out,” and the various categories of income for the year are computed on that figure.

①

What the provision looks at is the moment of the transaction — not the day you convert, not the day you file

②

An affiliate payout is consideration for “the provision of services.” The yen figure at the rate on the day it was confirmed is the payout income

⚠️ “I haven't converted it yet, so it isn't income yet” does not hold. Leave the dollars sitting there and the calculation still happens

Which rate — TTM, TTB, TTS

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	Default	Proviso, for income from a business
Revenue (your payout)	TTM (mid-rate) on the transaction date	TTB on the transaction date, on continuous application
Purchases and expenses	TTM (mid-rate) on the transaction date	TTS on the transaction date, on continuous application
Whose published rate	As a rule, your principal financial institution. A reasonable rate is accepted if used continuously (Note 1)
Days with no rate	Use the rate of the nearest preceding day (Note 3(1))

⚠️ The proviso applies to computing income from a “business” giving rise to real estate, business, timber or miscellaneous income. The condition is continuous application — not switching each year to whichever is favourable

Layer two: recognised, or not recognised

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✅ Not recognised: so long as deposit and withdrawal happen in the same foreign currency, there is “no substantive change in the state of holding that foreign currency” — NTA Q&A, “Treatment of exchange gains and losses on deposits into and withdrawals from foreign-currency deposits”

⚠️ Recognised: buy an asset with the foreign currency and “an asset carrying new economic value (its valuation at the time of purchase) has flowed in from outside, so what had been no more than a valuation difference is considered to have been realised as an amount to be received under Article 36 (Amount of Revenue) of the Income Tax Act”

💡 The line is drawn by whether the state changed, not by how large the sum is. Neither case deals with converting to yen itself — for your own situation, ask your competent tax office or a licensed tax accountant

No rate on record, nothing to reconstruct

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Where foreign currency was acquired more than once, the NTA's Q&A shows a method computing an average rate by analogy to Article 118(1) of the Income Tax Act Enforcement Order (figures from the published case).

✍️

Rate per dollar held: [¥10,000,000 + ¥5,600,000] ÷ $150,000 = ¥104

＝

Exchange gain: (¥120 − ¥104) × $120,000 = ¥1,920,000

⚠️ That arithmetic only works because when, at what rate and how many dollars are all known. Lose one of the three and there is no average to take

On the downside there is no way out

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NTA No.1500: “A loss arising in the computation of miscellaneous income cannot be aggregated with other categories of income.”

If an exchange loss falls into miscellaneous income, a yen rally leaves you nothing to set against employment income. The treatment is not symmetrical — taxed on the way up, no offset on the way down.

📁

Revenue from business-related miscellaneous income two years prior above ¥3m → keep cash and deposit transaction records; above ¥10m → attach a statement of revenue and expenses (No.1500)

💡 The measure is the year before last. If you plan to grow from here, start keeping the documents this year rather than later

Paid in USDT? The framework changes here

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A foreign-currency transaction under Article 57-3 means a transaction where payment is made in a foreign currency. Crypto-assets sit under a separate framework.

🪙

NTA, “Tax treatment of crypto-assets and the related computation statements (December 2025)”: profit from selling or using a crypto-asset is, except where it arises incidentally to an act generating one of the income categories such as business income, as a rule classified as miscellaneous income and requires a tax return

📊

The acquisition-cost statements come in a moving-average version and a total-average version; use the total-average one with an exchange operator's annual transaction report

⚠️ A stablecoin's treatment can differ with its status under the Payment Services Act. Reason from “it tracks the dollar, so it is basically dollars” and the whole calculation goes off

Keep the two numbers, not the impression

List this year's payouts in four columns: confirmation date, foreign-currency amount, currency, receiving account (one row per payment)

Add a column for the rate used, and fill it in as each payment lands

Write down in one line where your rate comes from — what is asked for is continuous application

Keep conversion records on a separate sheet from the payout list, and track USDT and the like apart from foreign currency

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These slides are a general explanation of the mechanism, not tax advice. Income categories, conversion methods and whether you must file are individual determinations for your competent tax office or a licensed tax accountant. Trading carries the risk of losing your principal