Examination-2016-0038 (20 June 2016)

In order for direct cultivation to be recognized, it is necessary to directly input more than 1/2 of the farmers and farmland at the location, time and place of the farmland, or the farmers themselves.

In order for a direct cultivation to be recognized, a direct cultivation needs to be carried out in the location of farmers and farmland, in the vicinity of time, or in the direct labor force of one-half or more of the farmers themselves, and the cultivation of farmland by employing another person in the state of occupation other than agriculture and cultivation of farmland on a intermittent basis shall be excluded from capital gains tax reduction.

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

2016Gudan5981 Revocation of Disposition of Imposing capital gains tax

Maximum AA

AA Head of the Tax Office

July 12, 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 disposition of imposition against the Plaintiff on December 1, 2015 is revoked.

1. Details of the disposition;

A. On July 22, 1994, the Plaintiff owned a 3,174m2 (hereinafter “instant farmland”) donated by his father from AA, AA, A, A, A, 141-3, 3174m2 (hereinafter “instant farmland”), and transferred it to DD on April 15, 2013.

B. On June 27, 2013, 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 determined that the Plaintiff did not meet the requirements for reduction and exemption of capital gains tax for self-farmland for eight years, on the ground that the Plaintiff had separate earned income and had the Plaintiff paid by proxy for the farmland in this case to another person (hereinafter “instant disposition”). On December 1, 2015, the Defendant corrected and notified the Plaintiff of capital gains tax for 2013 (hereinafter “instant disposition”).

D. The Plaintiff filed an objection on January 6, 2016, but was dismissed. On April 20, 2016, the Plaintiff filed an appeal with the Commissioner of the National Tax Service for adjudication on April 20, 2016, but was dismissed on June 20, 2016.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff owned the farmland of this case for about 18 years and 7 months until the transfer by donation, and cultivated crops by inserting more than 1/2 of the direct labor force while residing in the farmland of this case or in the adjoining area. 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. However, the Defendant’s disposition of this case on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Legislative purpose of the Act on Reduction and Exemption of Transfer Income Tax for Self-Cultivating Farmland

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 or exempted on income accruing from the transfer of land cultivated directly by a resident prescribed by Presidential Decree who resides in the farmland area for not less than eight years by means prescribed by Presidential Decree. The legislative purpose of this provision is to promote agriculture and rural communities by preventing the speculation of land out of the country in accordance with Article 121(1) of the Constitution, which declares the principle of light-to-land freedom as the State's duty in order to liquidate the tenant system, which is a major legal relation, and to eliminate the inefficiency of the use of farmland caused by the absence of such system.

(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 provisions, 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, and thereby, it is necessary to directly input of more than 1/2 of the farmers and the farmland in the place, time (on a regular basis) or one-half or more of them. Accordingly, it should be excluded from capital gains tax reduction and exemption if the owner of farmland employs another person with occupation other than agriculture and cultivates the farmland on a intermittent basis only while cultivating the farmland.

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

As evidence consistent with the plaintiff's assertion, Gap evidence Nos. 3 through 7 (a certificate of cultivation, certificate of sale of farming materials, certificate of Do administration, purchase of farming materials, and certificate of Do administration) exists. However, the certificate of cultivation is signed and sealed by seven neighboring residents of the land of this case on the same printed material that "it is confirmed that the above person cultivated rice shed directly as above." It is difficult to recognize the plaintiff's self-defense immediately. The certificate of purchase of farming materials and the receipt of Do administration materials is also a simple receipt prepared by the same supplier from 202 to 2011, even though each receipt was prepared by the same supplier, it is hard to recognize that the plaintiff's self-defense was not prepared more than 10 years, and it is hard to recognize that the plaintiff's testimony and correction of the above farming materials and the above 2A evidence is not sufficient to directly prove that the plaintiff's testimony and correction of the farming materials and the above 10th, even if all were not prepared by the same supplier.

The plaintiff worked for the AAA Agricultural Cooperative and suffered a maximum amount of DDD personnel's annual income from the 1996 to the 2012. The plaintiff's main business is the above AAA Agricultural Cooperative, and the farming business in the farmland in this case is an incidental business.

Although a person who sets up a farmer's house can be seen as having received various benefits, such as discount purchase of fertilizers, agricultural chemicals, etc., and preferential rights when purchasing rice, the plaintiff did not participate in the agricultural cooperative located in the farmland of this case (the plaintiff was residing in the farmland of this case, but residence in the AA City after September 10, 204).

The LAA, the head of the farmland in this case, was aware of the Plaintiff’s face in this court’s testimony, and the farmland in this case was only twice a week, but it was stated that the Plaintiff did not do so even once a week.

Before about 10 years prior to or about 10 years prior to the Defendant’s official in charge and the Plaintiff’s confirmation letter, the two states to the effect that she received money from the Plaintiff from the Plaintiff through his relative son, and that she would use his own agricultural machinery, and that she would have received shed, she would have received her farmland from around 194, when she received her father’s maximum number of agricultural machinery, not from around 194, when she received her father’s assistance in cultivating her farmland.

The Plaintiff asserted that, based on statistics of the Statistics Korea, even if the annual working hours required for rice shed from around 2005 to around 2013 are merely about 66 hours per week, the Plaintiff met self-defense requirements even if the Plaintiff directly cultivated the instant farmland under the occupation of 1/2. However, according to the inquiry report to the Commissioner of the Statistics Korea, the average working hours per 10a (1,000 square meters) and per 20 hours per year were less than 10 hours per year and less than 1,68 hours per year from around 205 to 2013, it appears that the Defendant’s average working hours per 1,000 square meters per year were less than 2,000 hours per year, and it appears that the Defendant’s 3,174 square meters per week were less than 2,000 hours per annum, and thus, it appears that the Defendant’s 2,000 square meters per annum were less than 6,000 square meters per year.

3. Conclusion

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