Western 46014-10068 (201.03)
Certificates of merit
Where persons with disabilities have entrusted property donated to their lineal ascendants and descendants and relatives within the period of the gift tax base return, and have joined the same kind of trust within one month after being entrusted to the trust company, gift tax shall be levied by deeming the donated
If the disabled persons have entrusted the property donated to their lineal ascendants and descendants and relatives within the time limit for reporting the gift tax base, and have subscribed to the same kind of trust within one month from the date of termination of the trust, they shall be deemed to have donated the relevant property value on the date of termination of the trust in accordance with Article 52-2 (2) 1 of the Inheritance Tax and Gift Tax
【Non-Inclusion of the taxable value of the property donated to the disabled】
1. A summary of the contents of inquiry;
○ In a case where a person with a disability entrusted a property donated to a trust company, but purchased a trust of the same kind for 20 days after early termination, whether it constitutes grounds for additional collection of gift tax
2. Materials on the contents of questioning;
(a) relevant tax laws and regulations (law, enforcement decree, enforcement rule, basic rules);
【Non-Inclusion of the taxable value of the property donated to the disabled person】
(1) Where a disabled person as prescribed by the Presidential Decree receives a donation of property (referring to the property which can be trusted to a trust company under the Trust Business Act, and is prescribed by the Presidential Decree; hereafter in this Article the same shall apply) from his lineal ascendants and descendants or other relatives as prescribed by the Presidential Decree, and the following requirements are all satisfied within the time limit of report under the provisions of Article 68, the donated property value (referring to the total amount of property value donated to the disabled during his lifetime, and the limit of 500 million won) shall not
1. All of the donated property shall be entrusted to a trust company under the Trust Business Act;
2. The disabled persons shall be beneficiaries who receive the whole of trust profits;
3. The period of trust shall be until the time of the disabled person’s death: Provided, That where the period of trust expires before the disabled person dies, the period shall be extended to the time of his death.
(2) Where the disabled persons donated property pursuant to paragraph (1) fall under any of the following subparagraphs, the head of a tax office, etc. shall immediately levy gift tax by deeming that their property value was donated on such date as prescribed by the Presidential Decree:
1. Where the trust is terminated, or the period of trust expires, but is not extended;
2. When the beneficiary is changed during the trust period, or the value of donated property under the provisions of paragraph (1) 1 is decreased;
3. Where all or part of trust profits is confirmed to be reverted to a person other than the disabled.
(3) Any person who desires to be subjected to paragraph (1) shall apply to the chief of the tax office having jurisdiction over the place of tax payment within the report period under Article 68 as prescribed by
(4) Matters necessary for calculating the amount of gift tax under paragraph (2) shall be prescribed by Presidential Decree.
Article 45-2 of the Inheritance Tax and Gift Tax Act (Non-Inclusion of Property donated by Persons with Disabilities in Taxable Value)
(5) The term "where any inevitable reason prescribed by Presidential Decree exists" in the proviso to Article 52-2 (2) of the Act means cases falling under any of the following subparagraphs:
1. Where a trust company early terminations a trust due to the suspension of its business, closure of its business, revocation of permission, or other causes prescribed by the Ordinance of the Ministry of Finance and Economy (limited to cases where it has subscribed to the same kind of trust within two months from the date of termination of
2. When the value of a trust company decreased while it manages a donated property in trust;
(6) In applying Article 52-2 (1) 1 of the Act, when a person joins the same kind of trust within one month from the expiration of the trust period, the period shall be deemed extended.
Article 14-2 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act (Change of Trust Property)
The term “other reasons prescribed by the Ordinance of the Ministry of Finance and Economy” in Article 45-2 (5) 1 of the Decree means the case where the property trusted to a trust company is disposed of for the reason of expropriation, etc. (No. 7 May 199).