Reduction of or exemption from capital gains tax for farmland substitute land

In order to obtain a reduction or exemption of capital gains tax on farmland substitute land, it is reasonable to interpret that the person directly cultivated while residing in the previous location at the time of transfer of the previous land should be the person, and it shall not be deemed that the total transfer for not less than three years should not be deemed to have been done by the Plaintiff, as alleged by the Plaintiff.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 93,800,800 against the Plaintiff on August 4, 2008 is revoked.

1. Details of the disposition;

The following facts are not disputed between the parties, or recognized by comprehensively taking account of the respective descriptions and the whole purport of the arguments and arguments in Gap 1, 2, Eul 1, 2, Eul 4-1, 2, Eul 7-1, 2, 3, and 6:

A. On December 9, 1993, the Plaintiff acquired the AAriri 869-7 tower 395 square meters and the answer 869-8 square meters of each of the instant lands (hereinafter “each of the instant lands”) in the Jeju-si, Kimhae-si.

B. On May 16, 2007, the Plaintiff acquired BB Ri 1324, and 1 parcel 2,044m2,00m2,00,000 m2. On October 31, 2007, the Plaintiff transferred each of the instant land to HuCC (hereinafter “instant transfer”).

C. On November 30, 2007, the Plaintiff reported and paid the capital gains tax by deducting the calculated capital gains tax amount of each of the instant land completely abated or exempted from the capital gains tax, on November 30, 2007, on the ground that the transfer of each of the instant land by acquiring the land indicated in the foregoing Paragraph b., and

D. As a result of the on-site verification, the Defendant, on the ground that the Plaintiff could not be deemed to have met the requirements for reduction and exemption of income tax on the transfer of farmland, which the Plaintiff made to self-defluence the previous land for three years prior to the transfer of the instant land by suspending the land at the time of the transfer of the instant case, on the ground that the Plaintiff cannot be deemed to have met the requirements for reduction and exemption of income tax on the transfer of farmland pursuant to Article 70 of the Restriction of Special Taxation Act. However, on August 4, 2008, the Defendant deemed that the transfer of self-defluence land for at least eight years under Article 69-8 of the Restriction of Special Taxation Act constituted the transfer of land

E. Accordingly, the Plaintiff was dissatisfied with the appeal on October 7, 2008, and the Plaintiff filed an appeal with the Tax Tribunal on January 2, 2009, but was dismissed on May 13, 2009.

2. Judgment on the plaintiff's assertion

A. The plaintiff's assertion

For the following reasons, the Plaintiff constitutes a person with a limited price of each of the instant land for at least three years, and thus meeting the self-sufficiency requirements for reduction and exemption of farmland under Article 70(1) of the Restriction of Special Taxation Act and Article 67(3)2 of the Enforcement Decree of the same Act, but the instant disposition ought to be revoked as unlawful.

(1) The Plaintiff’s full-time farmer, who was engaged in agriculture, was selected as a de facto temporary farmland pursuant to the implementation rule of the direct payment system for the producers of agricultural products established by the Special Act on the Implementation of the World Trade Organization Agreement from Kimhae-si, and was paid subsidies for rice production adjustment from January 2007 to the transfer of the instant land, and thus, the land of this case was closed for the period of self-defluence. Accordingly, each of the instant land cannot be deemed as a farmland that was closed at the time of the instant transfer.

(2) Even if each land of this case constitutes farmland closed at the time of the transfer of this case, Article 67(3)2 of the Enforcement Decree of the Restriction of Special Taxation Act does not stipulate the requirements for reduction of and exemption from the land at the time of the transfer as the requirements for self-defensing at the time of the transfer, and therefore, Article 67(3)2 of the Enforcement Decree of the Restriction of Special Taxation Act does not stipulate the requirements for self-defensing at the time of the transfer. Thus, the Plaintiff has self-defens each land of this case for several years prior to the closure of each land of this case and the transfer of this case. Thus, the Plaintiff constitutes “a person who cultivated while residing in the previous location of farmland for not less

B. Relevant statutes

as shown in the Annex,

(c) Fact of recognition;

The following facts are acknowledged as a dispute between the parties, taking into account the respective descriptions of the evidence of Nos. 3-1, 4, 5, 5-5-1, 4, 5, 6-1, 6-1, 8-2, and 8-2.

(1) The confirmation of January 24, 2008 by the plaintiff's husband or higher family head's husband stated that even if the plaintiff planted seedlings on each of the land of this case in 2006 and did not harvest due to the lack of sunshine, any agricultural act in 2007 was not cultivated due to the shortage of sunshine and the decrease of labor force in 2006 and the written confirmation of April 7, 2008 stated that it was not cultivated due to the shortage of sunshine in 2006 and 2007, and the written statement dated April 30, 2008 was stated to the purport that the plaintiff planted the mam nursery in early spring in 2006, but did not harvest due to the lack of sunshine.

(2) In addition, according to the Defendant’s protocol of review of non-taxation, reduction and exemption (No. 6-1) against the Plaintiff, the Defendant stated that the land in this case was low as a result of on-site verification, and that there was no trace of the recent farmland.

(3) On January 4, 2007, the Plaintiff filed an application for registration of direct payments compensating for rice income with the mayor of Kimhae-si on the application, stating that the current status of use of each land of this case is 's suspension of business', and on May 27, 2008, the registration certificate for direct payments compensating for rice income issued by the Kimhae-si market is 'suspension of business'.

(4) According to the data on direct payments compensating for rice income, the Plaintiff was receiving variable direct payments and fixed direct payments pursuant to the Act on Compensation for Rice Income, Etc. from the State for the 2005 Before the aforementioned closure, but it stated that the Plaintiff was paid only fixed direct payments without receiving any variable direct payments due to the suspension in 2006 and 2007.

(5) Meanwhile, from 2003 to 2005, pursuant to Article 39 of the Framework Act on Agriculture and Rural Community and Article 11 of the Special Act on the Implementation of the WTO Agreement, rice production coordination projects were implemented with a view to maintaining balance in the supply and demand of rice through effective reduction in the production of rice, and if rice or other commercial crops were not cultivated for the next three years upon a farmer’s voluntary application, KRW 3 million per year was paid.

D. Determination

(1) The part concerning the claim in paragraph (1) above

(A) We examine the following circumstances: ① the Plaintiff appears to be in a state of suspension without actually cultivating each of the instant land since around 2006, the Plaintiff’s transfer of this case’s land does not constitute a case where the Plaintiff re-determineds each of the instant land at the time of the transfer; ② the Plaintiff’s payment of fixed direct payments under the Act on the Preservation of Rice Income, Etc., rather than receiving subsidies following rice production adjustment, as alleged in its assertion; ③ However, unlike the fixed direct payments that the Plaintiff received during the period of suspension of business, the fixed direct payments that the Plaintiff received during the period of suspension of business were paid for the farmland meeting specific criteria under Article 5 of the Enforcement Rule of the Act on the Compensation of Rice Income, Etc., regardless of whether farmland is suspended or not (see, e.g., Articles 5, 6, 9, and 10 of the Rice Income Preservation Act, Article 5, and Article 6 of the Enforcement Rule of the Enforcement Rule of the Act), and each of the instant land cannot be deemed to have been directly transferred as farmland at the time of transfer of each of this case’s land.

(B) Accordingly, the Plaintiff’s assertion on this part is rejected.

(2) The part concerning the claim of the above A. (2)

(A) The provisions of Article 70(1) of the Restriction of Special Taxation Act and Article 67 of the Enforcement Decree of the same Act provide that capital gains tax shall not be imposed on farmland which is substituted for the necessity of cultivation in certain cases. In light of the purport of protecting farmers by allowing and guaranteeing free substitution of farmland and promoting the development and encouragement of agriculture by protecting farmers, and the need for cultivation by farmland substitute land should be done pursuant to the necessity of cultivation, etc., it is reasonable to interpret that in order to obtain capital gains tax exemption on farmland substitute land, it shall be the person who resides in the previous location of land at the time of transfer and directly cultivates. As alleged by the Plaintiff, it shall not be deemed that the transfer without the necessity of self-defense at the time of transfer should be limited to only three years in total.

(B) Accordingly, we cannot accept the Plaintiff’s assertion on this part.

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.