Where previous farmland is transferred within three years, whether capital gains tax is exempted by substitute land for farmland.

In order to be eligible for non-taxation of capital gains tax by substitute land for farmland, since the cultivation period of the previous farmland must be at least three years, it is not eligible for non-taxation if the previous farmland is transferred for public works within three years.

Article 89 of the Income Tax Act

Article 153 of the Enforcement Decree of the Income Tax Act

1. The appeal is dismissed.

2. The costs of appeal are assessed against the Plaintiff.

Although all of the records of this case and the judgment of the court below and the grounds of appeal were examined, the argument on the grounds of appeal by the appellant falls under Article 4 of the Act on Special Cases Concerning the Procedure of Appeal, and therefore, the appeal is dismissed under Article 5 of the same Act. It is so decided as

[Supplementary High Court 2007Nu1804 ( August 31, 2007)]

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant's disposition imposing capital gains tax of KRW 52,583,920 on the plaintiff on April 8, 2005 shall be revoked.

1. Details of disposition;

The following facts may be acknowledged by adding up the purpose of the whole pleadings to each entry in Gap evidence 1-1, 2, Eul evidence 1-3, and Eul evidence 4-1 to 9:

가. 원고는 2003. 5. 12. ΟΟΟ도 ΟΟ시 ΟΟ면 ΟΟ리 ΟΟΟ-ΟΟ번지 외 2필지 2,453㎡(이하 '이 사건 토지'라 한다)를 취득하여 자경하다가 2005. 11. 1. ΟΟΟ도에 공익사업용으로 협의양도하고, 그 대토로 2004. 12. 1.과 2005. 2. 7. ΟΟΟ도 ΟΟ시 ΟΟ동 ΟΟΟ-Ο번지의 4필지 4,463㎡와 ΟΟΟ도 ΟΟ시 ΟΟ면 ΟΟΟ번지의 1,324㎡(이하 합쳐서 '취득 토지'라 한다)를 취득한 다음, 이 사건 토지의 양도소득을 농지의 대토에 의한 비과세소득으로 신고하였다.

B. However, the Defendant calculated capital gains tax based on the standard market price on April 8, 2006 on the ground that the Plaintiff’s land holding period is less than three years, and imposed capital gains tax of KRW 52,583,920 on the Plaintiff on April 8, 2006.

2. Whether the instant disposition is lawful

(a) Relevant statutes;

It is as shown in the attached Form.

B. Determination

(1) 관계 법령에 의하면, 농지의 대토에 대한 양도소득세 비과세는 ① 종전토지 및 새로 취득하는 토지가 농지일 것, ② 양도 후 1년 내에 새로이 농지를 취득할 것(선취득의 경우 1년 내에 소유농지를 양도할 것), ③ 새로이 취득하는 농지의 면적이 양도 농지 면적 이상이거나 그 가액이 양도농지 가액의 2분의 1 이상일 것, ④ 자경농민이 경작상 필요에 의하여 취득할 것, ⑤ 새로운 농지 취득 후 3년 동안 농지소재지에 거주하면서 경작할 것, ⑥ 종전의 농지소재지에서 3년 이상 거주하면서 경작했을 것(2001. 1. 1. 이후 양도분부터 추가로 적용되는 요건임)이라는 요건을 모두 갖춘 경우에 인정되는 것이라고 할 것이다. 그런데 이 사건에서 원고가 이 사건 토지를 2003. 5. 12. 취득하였다가 그로부터 3년이 지나지 않은 2005. 11. 1. ΟΟΟ도에 공익사업용으로 협의 양도한 사실은 앞에서 본 바와 같으므로, 원고의 이 사건 토지의 양도는 위 ⑥의 요건을 갖추지 못하여 비과세의 대상이 되지 아니한다고 할 것이다.

(2) Under Article 153(5) of the Enforcement Decree of the Income Tax Act, the Plaintiff is deemed to have cultivated farmland within three years after residing in the location of the instant land for at least three years, and the Plaintiff is deemed to have cultivated farmland under the Land Expropriation Act for at least three years, and thus, the Plaintiff’s assertion that this case’s land satisfies the requirements for self-sufficiency for at least three years. However, even though Article 153(5) of the Enforcement Decree of the Income Tax Act does not cultivate newly acquired farmland for at least three years, if the farmland is expropriated under the Land Expropriation Act, etc., it shall be deemed to have cultivated the farmland for at least three years (it shall be deemed to have been considered to have been cultivated under the Land Expropriation Act). The interpretation of the tax law under the principle of no taxation without the law of no taxation without the law shall be strictly construed as not only the taxation requirements, but also the non-taxation requirements or reduction requirements that give taxpayers benefits, and it shall not be accepted without reasonable grounds for the Plaintiff’s assertion that it should not be applied to the previous interpretation or expansion of the Income Tax Act.

3. Conclusion

Thus, the disposition of this case is legitimate on the ground that the plaintiff had not cultivated the land of this case for not less than three years. Thus, the plaintiff's claim seeking cancellation of the disposition of this case is dismissed as it is without merit, and the judgment of the court of first instance is just in conclusion, and therefore, the plaintiff's appeal is dismissed as it is without merit.

Related Acts and subordinate statutes

/ Income Tax Act

Article 89 (Non-Taxable Transfer Income Tax) No income tax (hereinafter referred to as "transfer income tax") shall be levied on the following incomes:

4. Income accruing from substituted land for farmland falling under such cases as prescribed by the Presidential Decree.

【The Income Tax Act

Article 153 (Non-taxation for Farmland) (2) The term "cases as prescribed by the Presidential Decree" in subparagraph 4 of Article 89 of the Act means the farmland which is substituted for cultivation (excluding the farmland falling under any subparagraph of paragraph (4)) and meets the requirements falling under any of the following subparagraphs:

1. Where a person, who resided in a location of previous farmland for not less than three years and has cultivated another farmland within one year from the date of transfer of previous farmland, while residing in a location of new farmland for not less than three years, or has cultivated the newly acquired farmland while residing in a location of new farmland for not less than three years, or residing in a location of new farmland for not less than three years;

2. Where the area of new farmland to be acquired is not less than the area of farmland to be transferred or the value thereof is not less than a half of the value of farmland transferred.

(3) The term "location of a farmland" in the proviso to paragraph (1) 3 and paragraph (2) 1 means an area falling under any of the following subparagraphs (including an area corresponding to the relevant area at the time of commencing cultivation, but does not correspond thereto due to a reorganization, etc. of administrative districts):

1. An area in a Si/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this paragraph) where farmland is located;

2. An area within a Si/Gun/Gu adjacent to an area referred to in subparagraph 1.

(5) In applying the provisions of paragraphs (1) 3 and (2) 1, where the public project operator transfers the new farmland to the public project operator or is expropriated under the Land Expropriation Act or other Acts within three years from its acquisition, it shall be deemed that the public project operator has cultivated while residing in the location of the new farmland for three or more years.