Whether the farmland of this case constitutes an exemption from capital gains tax on substitute farmland

Although the plaintiff is the representative of real estate leasing juristic person, it is judged that time and effort had not been made much in terms of its work character, and the spouse has engaged in various kinds of projects and has been reduced or exempted from capital gains tax on farmland substitute farmland in this case, the time to be engaged in the spouse mixed farming is insufficient, and rather, the plaintiff is judged to have cultivated his spouse together with the farmland in this case.

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

Changwon District Court-2016-Gu Partnership-595 (Law No. 18, 2017.07.18)

It is seven parcels including farmland. Among them, ○○○-ri ○, ○-○, ○○-si, ○○○-si, ○○-si.

In the case of ○○○○ land, the land was transferred due to expropriation, and the farmland of this case also Kimhae Industrial Complex

In light of the fact that the creation appears to result in transfer as farmland by being disqualified, the source

It is readily concluded that the Plaintiff purchased and transferred the farmland of this case for the purpose of market gains.

It is difficult to do so.

3) Therefore, the farmland in this case is substituted with substitute land as provided by Article 70(1) of the former Restriction of Special Taxation Act.

Defendant on a different premise, as such, should be deemed to constitute reduction and exemption of capital gains tax.

The instant disposition is unlawful.

4. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.

(c)

A A

○ Head of tax office

oly 16, 2017

oly 2017.18

1. The Defendant’s disposition of imposition of capital gains tax of KRW 89,260,940 against the Plaintiff on August 5, 2015 is revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order of the Gu office.

1. Details of the disposition;

A. On September 27, 2005, the Plaintiff’s spouse BB (hereinafter referred to as “Plaintiff’s husband and wife”) acquired 320 million square meters of 00,000,000 square meters of ○○○○-○○-○○ 1756 square meters (hereinafter referred to as “instant farmland”) from September 27, 2005, and sold 1/2 shares each of the instant farmland at KRW 320,000,000,000,000 in Dae-do Co.,, Ltd. on April 30, 2014.

B. On March 27, 2014, the Plaintiff couple acquired 1/2 shares of each of the KRW 940,000,000,000,000,0000,0000,0000,0000,0000 (hereinafter “the instant large-scale farming land”). On June 26, 2014, the Plaintiff couple filed an application for reduction or exemption of capital gains tax under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter “former Restriction of Special Taxation Act”) on the ground that “the Plaintiff’s husband and wife’s “as to the transfer of the instant farmland was farmland for at least eight years.”

D. The Defendant: (a) reduced or exempted capital gains tax on BB on the ground that it is the reduction or exemption of capital gains tax on farmland substitute land; (b) denied the tax amount reduced or exempted by deeming that the Plaintiff could not be deemed to have directly performed at least 1/2 of farming work while cultivating the instant farmland for at least eight years; and (c) on August 5, 2015, the Defendant corrected and notified the Plaintiff of the amount of capital gains tax of KRW 89,260,940 (=calculated tax amount of KRW 79,739,93 + penalty tax of KRW 9,520,955) for the Plaintiff (hereinafter “instant disposition”).

E. The Plaintiff filed a request for a trial with the Tax Tribunal on December 16, 2015, but was dismissed on March 21, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence No. 1 (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 plaintiff's assertion

1) On December 2005, the Plaintiff, along with BB, recovered the instant farmland and made it a dry field. On March 2006, the Plaintiff planted 450 seedlings, 450, tin trees, 50, tin trees, 50, 50, and 20, and 20 in each room. The Plaintiff cultivated the farmland in this case by using scroma, bean, and scoo for a period of not less than 8 years. Accordingly, the Plaintiff fulfilled the requirements for capital gains tax reduction under Article 69(1) of the former Restriction of Special Taxation Act. Nevertheless, the instant disposition imposing capital gains tax on the Plaintiff is unlawful.

2) The Plaintiff, along with his spouse BB, transferred the farmland of this case for more than three years, and around that time, acquired the land of this case Kimhae-si as substitute farmland, satisfying the requirements for capital gains tax reduction and exemption under Article 70(1) of the former Restriction of Special Taxation Act. Nevertheless, the instant disposition imposing capital gains tax on the Plaintiff is unlawful.

B. Determination

1) According to Article 70(1) of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 26070, Feb. 3, 2015) Article 67(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26070, Feb. 3, 2015) provides that, since the Plaintiff purchased the instant shares, there is no dispute between the parties concerned that he/she resided in the area of Si/Gun/Gu where the instant land is located or in the area of Si/Gun/Gu adjacent to the said area. As for the income accruing from the substitute land as farmland as prescribed by Presidential Decree, the amount of tax equivalent to 10/100 of the capital gains tax on the income accruing from the substitute land is reduced or exempted. "Direct cultivation" means that a resident is constantly engaged in the cultivation of the agricultural products or the growing of perennial plants in his/her own farmland or cultivates or cultivates at least 1/2 of the farming work with his/her own labor.

2) Comprehensively taking account of the following circumstances acknowledged by the purport of evidence Nos. 4, 5, 11, 12, 15, Eul’s evidence Nos. 7 through 9, and Eul’s testimony and pleading, it is reasonable to deem that the Plaintiff, at least for at least three years after directly cultivating the farmland of this case and substituteed the farmland of this case as the substitute farmland for cultivation necessity.

A) According to the on-site confirmation report of the transfer income tax on BB, the Plaintiff’s spouse, stated, “The details of the return of pine trees planted in the farmland in this case are confirmed, and the receipts of pesticides and farming materials, etc. were examined, and it is judged that the return of pine trees is related to the return of pine trees, and that the return of pine trees, etc. planted in the farmland in this case is confirmed that the return of pine trees, etc. planted in the farmland in this case was moved to the substitute farmland in large land,” and accordingly, BB was exempted from the transfer income tax on the substitute farmland in this case.

B) However, in the farmland in this case, BB operated a mutual vessel parts manufacturing business of ○○ Construction at the time of '○○ Construction', '○○○', '○○○○○ Reading room', and obtained business income and wage and salary income (in particular, in ○○○ Reading room, the building was managed from 8:0 p.m. on a P.m. to 1:0 p.m.). As such, as BB has been engaged in various kinds of projects, it seems that BB has considerably insufficient time to engage in farming. Therefore, it is difficult to view that BB cultivated the farmland in this case, and rather, the Plaintiff appears to have cultivated BB and the farmland in this case together with the instant farmland.

C) From June 15, 2007 to June 15, 2007, the Plaintiff is recognized to have been engaged in the real estate rental and sale business in ○○○ (○○○○○-dong, ○○○○) Co., Ltd., and received benefits.

However, the business performed by the Plaintiff seems not to have much time and effort due to its nature, such as issuance of tax invoices, collection of rents, delivery of notice of management expenses, etc., and the distance between the Plaintiff’s address and workplace and the farmland of this case is close.

D) The Defendant asserts that the Plaintiff’s husband and wife would have transacted for the purpose of market price profit rather than the purpose of farming as it appears that the Plaintiff’s husband and wife acquired or transferred the farmland of this case before acquiring the farmland of this case, and there is no room to see it. However, the land transferred by the