8 Whether reduction or exemption has been made for 8 years

Even if the fact that land has been cultivated as farmland is recognized, it is not presumed that the owner is self-sufficient, but the fact that the land has been self-refised as farmland should be proved by the transferor who asserts such fact.

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

2018Gudan10270 Revocation of Disposition of Imposing Transfer Income Tax

A Kim a

b Head of the Tax Office

May 23, 2018

June 27, 2018

1. The plaintiff's claims against the defendants are all dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant imposed capital gains tax of KRW 57,211,580 (including additional tax) on the Plaintiff on November 3, 2016.

The cancellation shall be revoked.

1. Details of the disposition;

A. On June 22, 2015, the Plaintiff: (a) transferred, on September 15, 2015, a 506m2 (hereinafter referred to as “instant land”) located in the Sindo-si Do-ri 000 square meters; (b) on September 15, 2015, the Plaintiff filed a preliminary return on capital gains tax by applying the reduction or exemption provisions for self-arable farmland under Article 69 of the Restriction of Special Taxation Act (Amended by Act No. 13560, Dec. 15, 2015; hereinafter the same) to the Defendant.

B. On November 3, 2016, the Defendant issued a correction and notification of the capital gains tax of KRW 57,211,580 (including additional tax) for the year 2015 on the ground that “the instant land falls under the land for non-business not for the self-farmland of eight years, but for non-business.” (hereinafter “instant disposition”).

C. On January 11, 2017, the Plaintiff appealed and filed an appeal with the Tax Tribunal on May 2, 2017. However, on September 4, 2017, the judgment dismissing the Plaintiff’s appeal was issued.

[Ground of recognition] Gap evidence 1 to 5, Eul evidence 1, 2, 4, and 8, and the purpose of all pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff’s place of residence was within 19km from the location of the instant land, and was a rice shed for four to five consecutive years after the purchase of the instant land. From that point to that point, crops were cultivated, such as bean, shoulder, spawd, and spawd, from that point of view, until 2007, and dry field crops were cultivated on the instant land in the site in 2015. From 2000 to two years, the Defendant excluded the above period from the period of self- cultivation on the ground that the Plaintiff was working for a company located outside the location of the instant land, but the place where the Plaintiff actually worked was ordinarily residing in the distance for cultivating the instant land at the site of the said company. Accordingly, the instant disposition was unlawful on the premise that the Plaintiff did not meet the requirements for reduction and exemption of capital gains tax.

B. Relevant statutes

It is as shown in the attached Table related statutes.

C. Determination

(1) According to Article 69(1) of the Restriction of Special Taxation Act and Article 66(1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 26600, Oct. 23, 2015; hereinafter the same), the tax amount equivalent to 100/100 of the capital gains tax shall be reduced on the income accruing from the transfer of land directly cultivated from the acquisition by a resident residing in a location of the farmland to the transfer of such land by the method prescribed by Presidential Decree for not less than eight years. In addition, according to Article 66(13) of the same Enforcement Decree, the term “direct cultivation” as referred to above means that a resident is engaged in the cultivation of crops or the growing of perennial plants on his/her own farmland or cultivating or growing at least half of the farming works with his/her own labor.”

In light of the literal meaning of the above provisions and the developments leading up to the enactment, "direct cultivation of farmland which meets the requirements for reduction or exemption of capital gains tax for self-farmland for 8 years is recognized as having cultivated directly regardless of the ratio of self-working force for persons engaged in agriculture regardless of their own ability ratio, and it is reasonable to determine that persons engaged in part of agriculture for reasons such as having other occupation, not full-time engaged in agriculture, have cultivated directly only when the ratio of self-working force, except for family members, etc., during the whole farming work

In addition, even if the fact that the land was cultivated as farmland is not presumed to have been cultivated, the owner is not presumed to have done so, and the fact that the land was cultivated as farmland should be proved by the transferor who asserts such fact (see, e.g., Supreme Court Decisions 92Nu11893, Jul. 13, 1993; 94Nu96, Oct. 21, 1994).

(2) In the instant case, the following circumstances acknowledged by the health belt, Eul evidence Nos. 3 and 7, Eul evidence Nos. 6, Eul evidence Nos. 6, and Eul evidence Nos. 6’s overall purport of the film and pleading, i.e., (i) the Plaintiff’s most land appears to have been used as a site including parking lots from around 2008 to 2014; (ii) it is difficult to recognize the fact of cultivation; and (iii) the Plaintiff was paid wages from a construction company, etc. during the period of self cultivation; and (iv) some of them appears to have been directly cultivated of the instant land; (iii) there is no objective material using pesticides, fertilizers, farming machinery, etc.; and (iv) there is no evidence about harvested material; (iii) the Plaintiff’s sentence was resided in the neighboring land; and (v) the Plaintiff’s punishment was transferred along with the punishment at the time of pre-assessment review and objection; and (v) the Plaintiff’s allegation that it was not sufficient to recognize the Plaintiff’s own land for 506 years.

3. Conclusion

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