National Tax Service Review and Transfer 2011-0075 (Law No. 18, 2011)

The disposition of exclusion from reduction or exemption is legitimate because the period of holding the previous farmland falls under less than three years.

Where land is expropriated for public works, the date of settlement, the date of commencement of expropriation, or the date of prompt receipt of ownership transfer registration, whichever is earlier, shall not be deemed to fall under the reduction or exemption of capital gains tax under substitute land for farmland unless it is evident that the period from the time of acquisition of previous farmland to the date of receipt

Article 70 of the Restriction of Special Taxation Act

Article 98 of the Income Tax Act

2011Gudan2413 Revocation of Disposition of Imposing Capital Gains Tax

private XX

Head of the Office of Government

July 2, 2012

August 6, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of KRW 000 and special rural development tax for the year 2009 against the Plaintiff on December 1, 2010 shall be revoked in entirety.

1. Details of the disposition;

A. On February 15, 2007, the Plaintiff acquired 3,577m2 (hereinafter “the instant land”) from the Chang-si, Mancheon-si, Mancheon-si, 00 Doz. The Plaintiff transferred the ownership to the State Management Office (Ministry of Land, Transport and Maritime Affairs) on July 6, 2009 on the ground that the said land was incorporated into the Han River Flood Flood Control Dam Construction Project (hereinafter “instant public works”).

B. On November 18, 2008, the Plaintiff acquired 2,049 square meters of Chang-si Chang-si, Y 00-1, prior to 00-1, 2049 square meters (hereinafter “the substitute farmland of this case”).

C. On May 28, 2010, the Plaintiff filed an application for reduction of or exemption from capital gains tax pursuant to Article 70(1) and (3) of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010) and Article 67 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22516, Dec. 7, 2010) on the ground that the Plaintiff acquired and neglected the instant substitute farmland.

D. On December 1, 2010, the Defendant rejected the Plaintiff’s application for reduction or exemption of capital gains tax, but applied the provision on reduction or exemption of capital gains tax on land for public services, on December 1, 2010, determined and notified the Plaintiff of KRW 000 and KRW 000 for special rural development tax for the year 2009 (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an objection on December 27, 2010, and filed a request for review on March 3, 201, but was dismissed on April 18, 201.

[Ground of recognition] Facts without dispute, Gap's statements in Gap's 1 to 3, 6 and 7, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the acquisition of the instant land, the Plaintiff continued to cultivate crops in the instant land. As the said land was incorporated into the site for the instant public works project, registration for transfer of ownership to the State (Ministry of Land, Transport and Maritime Affairs) against the Plaintiff’s will was made, and is cultivated by occupying the instant land up to the date, and as a lawsuit related to compensation for the instant land was pending, the Plaintiff’s disposition rejecting the Plaintiff’s application for reduction or exemption of capital gains tax is unlawful on the grounds that the period of holding the instant land and the period of self-sufficiency falls short of 3 years under a different premise.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Since the disposition of this case is taken on the ground that the holding period of the Plaintiff’s land in this case falls short of three years, the issue of this case is whether the holding period of the Plaintiff’s land in this case constitutes more than three years or more, the issue of this case is whether the holding period of the Plaintiff’s land in this case constitutes more than three years.

(2) Article 98 of the former Income Tax Act (amended by Act No. 10408, Dec. 27, 2010) provides that "the time of acquisition and time of transfer of assets shall be prescribed by Presidential Decree in calculating gains from transfer of assets, and Article 162 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22516, Dec. 7, 2010) provides that "the time of acquisition and time of transfer under Article 98 of the Act shall be the date the price of the assets is settled except for the following cases, and it shall not be deemed the date the price of the assets is settled under each subparagraph. The above provision separately provides that "the time of acquisition and time of transfer of assets, which are various standards within the system of income tax law, shall be grasped uniformly and the time of transfer and acquisition of assets shall be determined by the former Enforcement Decree of the Income Tax Act for the purpose of fair taxation (see, e.g., Supreme Court Decision 2000Du1686, Jun. 29, 296).

(3) On February 15, 2007, the Plaintiff acquired and owned the instant land and transferred ownership to the State on July 6, 2009 (Ministry of Land, Transport and Maritime Affairs). Although it has not been verified as there is no evidence on the date of commencement of expropriation or the date of settlement of the price, Article 162(1)7 of the former Enforcement Decree of the Income Tax Act regards the date of transfer as the date of settlement of the price, the date of commencement of expropriation, and the earlier of the date of receipt of ownership transfer registration, so long as it is evident that the Plaintiff’s period from February 15, 2007 to July 6, 2009, which is the date of receipt of ownership transfer registration of the instant land, falls under less than three years, the instant disposition is legitimate, provided that it does not fall under capital gains tax reduction or exemption under the substitute land. The Plaintiff’s assertion that the time of transfer of the instant land should vary is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.