Cho Jae-2016-3128 ( October 28, 2016)

The burden of proving that the transferred land was directly cultivated as a requirement for the reduction or exemption of capital gains tax on self-arable land;

The burden of proof on the direct cultivation of the transferred land as a requirement for the reduction of capital gains tax on self-arable land is against the person liable for tax payment who asserts the reduction of capital gains tax, and the actual use of the plaintiff's assertion is insufficient to prove the fact.

Article 69 of the former Restriction of Special Taxation Act (Amended by Act No. 13560, Dec. 15, 2015)

2016Gudan1538 Revocation of Disposition of Imposing capital gains tax

A Kim A

AA Head of the Tax Office

July 19, 2017

October 25, 2017

1. The plaintiffs' respective claims against the defendants are dismissed in entirety.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 144,166,40 for the Plaintiff on August 2, 2016 shall be revoked.

1. Details of the disposition;

A. On May 29, 1984, the Plaintiff acquired and owned 1,987m2 (hereinafter “instant farmland”) of AAAdong 191-15, AAdong 1987m2 (hereinafter “instant farmland”) and transferred the instant farmland to DoD on August 17, 2015.

B. On October 1, 2015, the Plaintiff applied for reduction or exemption of capital gains tax on the farmland of this case to the Defendant under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter the same).

C. As a result of the investigation of capital gains tax against the Plaintiff, the Defendant: (a) determined that the Plaintiff did not meet the requirements for reduction and exemption of self-farmland for eight years; (b) on August 2, 2016, the Plaintiff corrected and notified the Plaintiff of the capital gains tax (hereinafter “instant disposition”).

D. On August 24, 2016, the Plaintiff filed an appeal with the Director of the Tax Tribunal for adjudication on August 24, 2016, but was dismissed on October 28, 2016.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In the event that the Plaintiff transfers AAA, AA, Dong A, 191-16, Dong A, Dong 191-16, Dong A, and Dong AAA, located adjacent to the instant farmland on or around September 2005, the Plaintiff was recognized as a self-employed person. Although the Plaintiff was supported by his father KimA in cultivating the instant farmland, it is recognized as a self-employed person even if he cultivated his family or parent before applying the self-employed criteria under Article 66(13) of the Enforcement Decree of the Restriction of Special Taxation Act. According to the farmland ledger, the purchase receipt of agricultural materials, etc., and confirmation of the fact of cultivation by neighboring residents, etc., the Plaintiff’s labor force was invested for more than 1/2 years in the instant farmland, and thus, it is reasonable to deem that the Plaintiff met the requirements for reduction and exemption of capital gains tax under Article 69 of the former Restriction of Special Taxation Act

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Article 69(1) of the former Restriction of Special Taxation Act provides that a tax amount equivalent to 100/100 of capital gains tax shall be reduced for income accruing from the transfer of land directly cultivated by a resident prescribed by the Presidential Decree who resides in the seat of farmland for not less than eight years by means prescribed by the Presidential Decree. The legislative purpose of this provision is to promote agriculture and rural communities by preventing external farmland speculation based on Article 121(1) of the Constitution, which declares the principle of Gyeong Gyeong-do, as a State’s duty, in order to liquidate the litigation system, which is a major legal relation, and to eliminate inefficiency of the utilization of farmland caused by absence.

(2) The meaning of "direct cultivation"

Article 69 (1) of the former Restriction of Special Taxation Act (amended by Act No. 4666 of Dec. 31, 1993) provides that the term "direct farming", which is defined as the requirement for reduction or exemption of capital gains tax, has been used in the law, and since the above amendment, the term "direct farming" has been continuously used until the date of the amendment, but the term "direct farming" has been newly established in the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19329 of Feb. 9, 2006). Article 66 (12) of the same Enforcement Decree of the same Act provides that "direct farming" means that a resident is engaged in cultivating or cultivating crops or perennial plants on his own land, or cultivating or cultivating them with his own labor, not less than 1/2 of them after the date of entry into force. In addition, the above Enforcement Decree provides that the term "direct farming" means cultivating or cultivating them with his own labor, even if it directly engages in other occupation, it cannot be deemed that it constitutes a new occupation (see Supreme Court Decision 20120.

In full view of the introduction of the term "direct farming" and the developments leading up to the establishment of the definition, the relevant provisions of the former Income Tax Act and the legislative purpose of the regulations on reduction and exemption of capital gains tax on self-Cultivating farmland as seen earlier, the term "direct farming" under Article 69 (1) of the former Restriction of Special Taxation Act is a concept to realize the legislative purpose of "direct farming" as a concept to realize the legislative purpose of preventing the speculation of farmland in non-owned land and reducing the tax burden of self-employed farmers for not less than 8 years, so as to promote agriculture and rural communities, it is necessary to directly input of 1/2 or more of the farmland with the location of the farmer and the farmland, time (on a regular basis) or one-half or more of the farmers. Accordingly, the farmland owner shall be excluded from the reduction and exemption of capital gains tax.

(3) Whether the Plaintiff directly cultivated the farmland of this case

First, as alleged by the plaintiff, when transferring AAA-A-dong 191-16, 143 square meters on or around September 2005, it appears that the transfer was made on or before February 9, 2006, the enforcement date of the provision that "direct farming" was "direct farming" even if the transfer was approved in the case of transfer on or after the enforcement date of the above provision. On the other hand, the farmland of this case cannot be recognized as self-cultivation in the case where the family cultivated as it was transferred after the enforcement date of the above provision, and thus, it cannot be recognized as the plaintiff's father Kim Young-young even if the plaintiff cultivated his father Kim Young-young.

Next, with respect to whether the Plaintiff cultivated or cultivated at least 1/2 AA from 00 to 200, it is reasonable to acknowledge that the Plaintiff directly cultivated the land from 20,000 won to 10,000 won for 20,000 won for 10,000 won for 20,000 won for 20,000 won for 10,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,00 won for 20,000 won for 20,000 won for 1,000 won for 20,000 won for 1,000 won for 20,000 won for 3,00.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.