Whether a school juristic person may be exempted from special surtax on income accrued from transfer.

If a school foundation established under the Private School Act intends to be exempted from special surtax on any income accruing from the transfer of basic property owned by it for educational business, it shall submit an application for exemption within the reporting period of tax base and tax

The contents of the decision shall be the same as attached.

(a) Procedural requirements to exempt a school foundation from special surtax on any income accruing from the transfer of its basic property for the purpose of using it for educational business;

(b) Whether donations may be included in deductible expenses where a school foundation fails to comply with the tax accounting principles that keep separate accounting accounts of profit-making business and non-profit business;

(a) Where a school foundation established under the Private School Act intends to be exempted from special surtax on any income accruing from the transfer of basic property owned by it for the purpose of using it for educational business, it shall submit an application for exemption within the reporting period of

(b) Even though a school foundation fails to comply with the tax accounting principles that keep separate accounting accounts of profit-making business and non-profit business accounts, the inclusion of income generated from profit-making business in deductible expenses shall not be denied;

(a) Articles 59-3(2)3 and 59-3(3) of the former Corporate Tax Act (Elimination by the Regulation of Tax Reduction and Exemption Act, Act No. 4165, Dec. 30, 1989); Article 124-8(4) of the Enforcement Decree of the same Act (defens by the Presidential Decree No. 12878, Dec. 30, 1989); (b) Article 2(4) of the Enforcement Decree of the Corporate Tax Act; Article 24(1) of the Enforcement Rule of the same Act; Article 49(3)1 of the Regulation of Tax Reduction and Exemption Act

Supreme Court Decision 88Nu10794 Decided July 25, 1989 (Gong1989, 1308) and 89Nu7351 Decided April 27, 1990 (Gong190, 1185)

1. The Defendant’s disposition of imposition of corporate tax of KRW 34,374,030 as of October 17, 1991 and of KRW 2,642,780 as corporate tax against the Plaintiff and the defense tax of KRW 17,895,30 as of KRW 2,642,780 is revoked. The remainder of the Plaintiff’s claim is dismissed. 3. The remainder of the Plaintiff’s claim is dismissed on December 1, 1991.

1. Disposition by the defendant

원고는 학교법인으로서 그 소유의 수익용 기본재산인 ㅇㅇ ㅇㅇ군 ㅇㅇ면 ㅇㅇ리 ㅇㅇ의 20 외 21필지를 타에 임대하여 1989.3.1.부터 1990.2.28.까지의 사업연도 동안 임대료 합계 금 6,425,000원 상당의 수입을 얻었으나 그 임대수입에 대하여 법인세 과세표준 및 세액 신고를 하지 아니하였고, 1989.6.30. 위 토지를 금 48,632,994원에 양도하여 금 47,520,066원 상당의 양도차익을 얻었다고 하여 피고가 법인세법 제32조, 제9조의 규정에 의하여 위 임대료수입과 양도차익을 위 사업연도의 법인세 과세표준에 익금가산하여 법인세액을 산출하고, 한편 원고가 위 양도차익에 대한 법인세 특별부가세의 면제신청을 법인세 과세표준신고와 함께 소정기한 내에 제출하지 아니하였다는 이유로 법인세 특별부가세액을 산출하여 법인세액의 경정결정을 한 후, 피고가 1991.10.17. 원고에 대하여 법인세 합계 금 34,374,030원(특별부가세 금 17,839,020원 포함) 및 방위세 금 2,642,780원이 부과처분을 한 사실은 당사자 사이에 다툼이 없다.

2. Determination on imposition of special surtax among corporate tax

The plaintiff, as a school foundation established under Article 10 of the Private School Act, spent not only the total amount of transfer of the above land, which is the basic property for the plaintiff's profit, to establish school teachers and dormitories, but also submitted the application for exemption of special surtax along with the report of corporate tax base on May 15, 190. Thus, it asserts that the transfer of the above land is illegal to impose the special surtax of this case on the defendant as the object of exemption of special surtax under Article 59-3 (2) of the former Corporate Tax Act and Article 124-8

According to Article 59-3(2) and (3) of the former Corporate Tax Act and Article 124-8(4) of the Enforcement Decree of the same Act (the above provision was deleted by the Addenda to the Regulation of Tax Reduction and Exemption Act amended by Act No. 4165, Dec. 30, 1989; incorporated into the same purport under the Regulation of Tax Reduction and Exemption Act), income accruing from transfer of basic property owned by a school foundation established under the Private School Act for the purpose of using it for educational business shall be subject to exemption from special surtax. However, a corporation which wishes to be exempted from special surtax must submit an application for exemption from special surtax determined by the Ordinance of the Ministry of Finance and Economy along with the tax base return for the business year to which the transfer date belongs. Meanwhile, pursuant to Article 26(1), Article 26(2) and (5) of the Corporate Tax Act, a domestic corporation liable to pay special surtax shall report its tax base and tax amount on income for each business year within 15 days after the date of expansion of the settlement of accounts for each business year, and the above provision shall not be applied to the above tax exemption date.

However, when considering the whole purport of pleading in the statement Eul evidence Nos. 3-1 through 11 and Eul evidence Nos. 4-1 through 27 (the whole purport of pleading overlaps with the evidence Nos. 4-1 through 9), the plaintiff transferred the land of this case with the permission of disposal of basic property from the Minister of Education during the business year from March 1, 1989 to February 28, 1990, and on May 15, 1990, the plaintiff filed an application for exemption of corporate tax and special surtax with the defendant on the same purpose as the plaintiff's corporate tax base return on May 30, 1990 again, and the plaintiff did not submit a balance sheet or income statement, etc. in relation to the above tax base return. Accordingly, according to the interpretation result and recognition result of the above Acts and subordinate statutes, it cannot be viewed that the plaintiff's tax base return was not made on the date of settlement of accounts after the end of the business year 1989, and it cannot be viewed that the above tax base return was not made.

3. Determination on imposition of remaining corporate tax and defense tax

우선 법인세법 제18조 제1항, 같은법시행령 제42조 제16호에 의하면, 비영리법인이 정관에 규정된 고유의 목적을 달성하기 위하여 당해 수익사업에서 생긴 소득을 그 법인의 고유의 목적에 지출하는 금액은 지정기부금으로서 당해 사업연도의 소득금액에 100분의 20을 곱하여 산출한 금액만을 손금에 산입하도록 되어 있지만, 이에 대한 특례규정으로서 조세감면규제법 제49조 제3항에 의하면, 학교법인 등이 수익사업에서 발생한 소득을 그 법인이 운영하는 학교의 학교교육 또는 사회복지사업을 위하여 지출하는 기부금은 당해 사업연도의 소득금액의 범위 안에서 이를 그 사업연도의 손금에 산입할 수 있다고 규정되어 있는바, 갑 제4호증의 7, 갑 제5호증의 1 내지 12, 갑 제6호증의 1,2,3,4, 갑 제7,8호증의 각 1,2의 각 기재에 변론의 전취지를 보태어 보면, 원고는 그 법인의 장부상 수익 사업회계와 비영리사업회계를 구분하는 복식부기의 구분경리방식을 취하지 아니한 채 단식부기의 방법에 의하여 위 토지의 양도대금과 임대수입(대지료와 재산매각대)을 원고 법인의 세입항목에 해당하는 재산수입으로만 기장한 후, 그 수입금으로 원고가 설립, 운영하는 ㅇㅇ중학교의 체육장부지 매입비로서 금 27,174,000원, 운동부 기숙사의 매입비로서 금 6,186,060원, 학교교사의 계단공사비로서 금 16,500,000원 등을 지출하고는 당해 사업연도의 결산서상에 이를 원고의 재산조성비로만 기재하여 처리하였던 사실을 인정할 수 있고, 위 각 부지 및 기숙사의 취득원인일자가 1988.8.31.로서 당해 사업연도에 해당하지 않는다고 하더라도 중도금과 잔금의 지급이 당해 사업연도에 이루어졌다고 보이므로(갑 제5호증의 10,11,12 등 참조), 위 인정에 방해가 되지 아니하며, 그 밖에 위 인정을 뒤집을 증거가 없다.

According to the above laws, regulations and facts of recognition, since the plaintiff, a school corporation established under Article 10 of the Private School Act, has disbursed the whole amount of the rent revenue and the transfer amount corresponding to the income amount for the pertinent business year for school education, this should be included in the expenses as a donation in calculating corporate tax, it shall be included in the calculation of losses. However, the defendant's measures are unlawful, and the plaintiff's assertion on this is justified

However, the defendant argues that it is legitimate to deny inclusion in deductible expenses and to treat it out of the company, on the ground that the plaintiff as a non-profit corporation did not conduct legitimate accounting by separate accounting of profit-making business and profit-making business of a non-profit corporation under Article 2 (4) of the Enforcement Decree of the Corporate Tax Act. Thus, Article 2 (4) of the Corporate Tax Act provides that when a non-profit corporation runs a profit-making business or imports a profit-making business, it shall keep separate accounting of assets, liabilities, and profits and losses belonging to the source of profit-making business or profit-making business (hereinafter referred to as "profit-making business") and those belonging to other business (non-profit business) which is not a profit-making business. Accordingly, according to Article 24 (1) of the Enforcement Rule of the Corporate Tax Act, the division of accounting shall be made by classifying the earnings and losses for each business or income that must be classified under the corresponding provisions into separate accounting separate from the corporation's account books. However, the provisions of the above Enforcement Rule and the Enforcement Rule provide that it shall not be deemed as null and void as tax accounting principle.

However, there is no evidence to prove that the plaintiff's account for profit-making business and non-profit business are lawfully kept in the account book in accordance with the tax accounting principles prescribed in the above provision, but in such a case, it should be deemed that there is a legal basis in order to take unfavorable tax measures against the plaintiff who is the taxpayer (it does not have the effect of tax exemption or non-taxation due to the inclusion of corporate tax in deductible expenses, but it does not have any exception to the exemption or non-taxation itself. Thus, the defendant's argument that the above provision does not apply to the inclusion of donations in deductible expenses without strict interpretation. Further, if the above provision on inclusion in deductible expenses does not comply with the tax accounting principles as in the above special surtax, there is no explicit provision to deny inclusion in deductible expenses or add addition to gross income. If a corporation established a private school as the plaintiff and operated a private school as well as the corporation bears a large amount of corporate tax contrary to its expectation because it is erroneous or incomplete in the accounting principles, the defendant's argument that the corporation should not be accepted in calculating the income of the above school corporation in accordance with the tax accounting principles.

However, since the Plaintiff’s failure to perform the separate accounting as above constitutes a case where the account holder failed to keep the account books and keep the account books, an inorganic additional tax may be imposed as corporate tax pursuant to Article 41(1) of the Corporate Tax Act (amended by Act No. 4282, Dec. 31, 1990).

Ultimately, in calculating the tax base of the Plaintiff’s transfer income or rental income by treating it as a contribution used for educational purpose and calculating the tax base of the Plaintiff’s transfer income or rental income, it would eventually become zero and the corporate tax shall not be imposed. Accordingly, the Plaintiff’s assertion on this part is reasonable, but the Plaintiff is obliged to bear an inorganic additional tax pursuant to the provisions of the Corporate Tax Act. However, in calculating that amount, 56,280 won [amount of income x 1/100 + 6,425,00 + 49,860,060 + 49,060: 1/100 under the Act on the Calculation of Fractional Calculation of National Funds].

Meanwhile, according to the statement in Eul evidence No. 1-3, the defense tax imposed by the defendant against the plaintiff is the tax base of the general corporate tax except special surtax, and since the imposition disposition of the above corporate tax is recognized to be illegal, the above defense tax disposition incidental thereto should be revoked as illegal (However, since the defense tax amount of the above special surtax is deemed omitted, this part of the defense tax can be imposed separately by the defendant).

4. Conclusion

Therefore, the corporate tax to be borne by the Plaintiff shall be KRW 17,895,300 (17,839,020 +56,280) including the above special surtax and the inorganic additional tax. Thus, the portion exceeding the legitimate corporate tax amount of the disposition of imposition of the above corporate tax, etc. against the Plaintiff and the disposition of imposition of the defense tax shall be revoked in an unlawful manner. In other words, the Plaintiff’s claim of this case shall be justified within the scope of the above recognition, and the remaining claims shall be dismissed. It is so decided as per Disposition.