Examination-transfer-2016-0092 ( October 28, 2016)

It shall not be recognized that farmland has been changed directly for 8 years or longer.

In light of the fact that the applicant fails to submit evidentiary data on the place of using crops, that is not registered as farmland in the Plaintiff’s farmland ledger, and that the community residents consistently stated that farmland has been cultivated by proxy for at least eight years, etc., it is difficult to recognize that the farmland was cultivated directly

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

2016Guhap53294 Revocation of Disposition of Imposing capital gains tax

west ○

○ Head of tax office

2017.09.05

2017.26

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 158,059,310 for the Plaintiff on May 9, 2016 is revoked.

1. Details of the disposition;

A. On April 24, 2002, the Plaintiff acquired KRW 326,958,997 in total, each of the 1/2 equity (hereinafter referred to as “each of the instant farmland”) out of the previous 93 square meters, and transferred KRW 95,00,000 in total to △ Construction Co.,, Ltd. on May 19, 2015 and May 27, 2015.

B. On July 31, 2015, the Plaintiff applied for reduction or exemption of capital gains tax on each of the instant farmland 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) on each of the instant farmland.

C. As a result of the investigation of capital gains tax against the Plaintiff, the Defendant determined that the Plaintiff failed to meet the requirements for reduction of self-farmland for eight years, and imposed capital gains tax of KRW 158,059,310 on the Plaintiff on May 9, 2016 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service on August 17, 2016, but was dismissed on October 28, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 8, Eul evidence Nos. 1 and 2 (including branch numbers; hereinafter the same shall apply), the purport of whole pleadings

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. The issues of the instant case

The key issue of the instant case is whether the Plaintiff met the requirements for reduction or exemption of capital gains tax on self-arable farmland under Article 69 of the former Restriction of Special Taxation Act with respect to each of the instant farmland for at least eight years.

B. The plaintiff's assertion

According to the farmland ledger, the purchase receipt of agricultural materials, etc., satellite photographs, and the letter of friendship of neighboring residents, etc. as to each farmland of this case, 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, since the Plaintiff was self-employed for not less than eight years in each farmland of this case. Therefore, the Defendant’

C. Determination

1) The burden of proving the fact of direct cultivation of the transferred land for at least eight years is imposed on the person liable to pay capital gains tax pursuant to the relevant provision (see, e.g., Supreme Court Decision 94Nu996, Oct. 21, 1994); Article 69(1) of the former Restriction of Special Taxation Act and Article 66(1) and (13) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 26922, Jan. 22, 2016). In order to obtain capital gains tax reduction or exemption, a Si/Gun/Gu where the relevant farmland is located; a Si/Gun/Gu where the relevant farmland is located; or a Si/Gun/Gu where the relevant farmland is located; or a Si/Gun/Gu where the relevant farmland is located within 20km in a straight line from the relevant farmland; and in this case, “direct cultivation” refers to a resident engaging in the cultivation of crops or the growing of perennial plants on his/her own farmland at least 1/200.

2) In light of the following circumstances acknowledged by comprehensively taking account of the respective descriptions of evidence Nos. 3 through 6 and the overall purport of arguments No. 15, it is not sufficient to recognize that the Plaintiff cultivated directly from each farmland of this case only with the descriptions and images of evidence Nos. 3 through 7, 9 through 11, 13, and 14, and there is no other evidence to acknowledge otherwise.

A) Article 69 of the former Restriction of Special Taxation Act is reasonable in that Article 69 of the same Act intends to protect and promote the development and encouragement of agriculture by reducing the tax burden with respect to land directly cultivated by a resident of the farmland for at least eight years, but on the other hand, the relevant provision may be abused as a means of tax evasion.

B) The Plaintiff submitted an objective evidentiary document on the source of the use of crops, which is alleged to have cultivated directly in each of the instant farmland, and submitted a statement of agricultural product shipment in 2014 and 2015, and did not submit objective data for the remainder of the period. The Plaintiff asserted that prior to 2013, he/she consumed the harvested crops or provided them free of charge to their relatives and neighbors. However, in light of the total area of each of the instant farmland owned by the Plaintiff, it is difficult to readily understand the above assertion in light of the following: (a) the Plaintiff’s total area of each of the instant farmland is 1,236.5 square meters

C) Each farmland of this case is not registered as farmland in the farmland ledger against the Plaintiff.

D) At the time of the Defendant’s on-site investigation, the village residents consistently stated to the effect that, at the time of the Defendant’s on-site investigation, MaCC actually cultivated each of the instant farmland.

4. Conclusion

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