early 2012 Mine2374 (Law No. 12, 2012)

Where money is donated, the provision on exemption from gift tax shall not apply to farming children.

Even if a farmland sales fund is donated and engages in farming, where a donee has donated money, the donee shall not be entitled to exemption from the gift tax, but the provisions that are exempt from the gift tax on farming children shall not be applied.

2012Guhap3603 Revocation of Disposition of Imposition of Gift Tax

KimAAA

Head of Namwon Tax Office

March 20, 2013

April 10, 2013

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 on the gift tax of March 6, 2006 against the Plaintiff on February 13, 2012 is revoked.

1. Details of the disposition;

A. On March 2, 2006, KimB (hereinafter referred to as "the deceased"), the plaintiff's attached KimB (hereinafter referred to as "the plaintiff's attached") sold OO Ri 000 and eight parcels of this document to 000 won, and the plaintiff was donated from the deceased on March 6, 2006 to 00 won (hereinafter referred to as "the gift of this case") but did not declare the taxable value and tax base for the payment of gift tax as stipulated in Article 68 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8139 of Dec. 30, 2006, hereinafter referred to as "former Inheritance Tax Act").

B. After that, the Deceased died on March 1, 2008, and the head of the Si/Eup/Myeon office found the gift of this case in the course of the inheritance tax investigation against the Deceased and notified the Defendant thereof.

C. On February 13, 2012, the Defendant decided and notified the Plaintiff of the gift tax of KRW 000 on the gift of this case (= gift tax of KRW 000 + penalty tax of KRW 000 + penalty tax of KRW 000 on the gift of this case (i.e., penalty tax of KRW 000 + penalty tax of KRW 000 on the non-payment + penalty tax of KRW 000 on the non-payment) (hereinafter “instant disposition”). On November 16, 2012, the Defendant revoked ex officio the imposition of each additional tax, and re-determined and notified the same amount as the grounds for the calculation thereof.

D. The Plaintiff, who was dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on May 9, 2012, but was dismissed on July 12, 2012.

[Ground of Recognition] The facts without dispute, Gap evidence 1 to 4, and Eul evidence 1 to 3 (including the number in each case), and the whole purport of the pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff, and the defendant's disposition of this case should be revoked for the following reasons.

The argument is asserted.

First, while the plaintiff cultivated orchard from September 1987 to March 2006, the plaintiff, along with the deceased, from around September 1987 to around March 2006, the deceased sold the above orchard, and then donated KRW 000 of the sales price to the plaintiff, and the plaintiff thereafter was engaged in farming while cultivating orchard on a lease of other farmland up to now, and the plaintiff's donation of the above money from the deceased was the same as the donation of farmland in substance. Thus, the gift of this case should be exempted from gift tax because it constitutes farmland donation to the children of the self-employed farmer, but the disposition of this case imposing gift tax is unlawful.

Second, the Defendant’s disposition was unlawful due to the negligence of duties by the taxation authorities, since the instant disposition was taken on February 13, 2012 after three years have elapsed since the time when the inheritance tax reporting deadline had elapsed since the deceased’s death.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the Plaintiff’s first argument

Article 2 (1) 1 of the former Inheritance Tax and Gift Tax Act provides that, where a donee has donated property as of the date of donation by another person, gift tax shall be imposed on all the donated property as prescribed by this Act. The plaintiff does not conflict between the parties, and the plaintiff shall be liable to pay gift tax on the donation pursuant to the former Inheritance Tax and Gift Tax Act. Meanwhile, Article 58 (1) of the former Regulation on Tax Reduction and Exemption (wholly amended by Act No. 5584, Dec. 28, 1998; hereinafter referred to as the "former Restriction on Tax Reduction and Exemption Act") provides that the provisions on the tax reduction and exemption of gift tax shall be imposed on the farmland, grassland and forest land (hereinafter referred to as "farmland, etc."), and that the provisions on the tax reduction and exemption under Article 2 of the former Restriction on Tax Reduction and Exemption Act shall be applied to non-taxable farmers who are prescribed by the Presidential Decree, and that the provisions on the tax reduction and exemption of gift tax shall be applied to those who are newly engaged in farming business (hereinafter referred to as "farmland") and other than those prescribed by the above provision on the tax reduction and exemption of farmland:

2) Judgment on the second argument by the Plaintiff

The Defendant’s disposition of this case on February 13, 2012, after the lapse of six months from the date of commencement of inheritance, which was determined by Article 67(1) of the former Inheritance Tax and Gift Tax Act after the deceased’s death, was recognized as having been based on the above facts. However, the above facts alone are insufficient to deem the disposition of this case to be due to the Defendant’s negligence of duties, and there is no other evidence to acknowledge this otherwise. Rather, the following circumstances, i.e., ① Disposition 4(b) of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006), which is applicable at the time of the donation, can not be imposed after the expiration of the exclusion period of 10 years from the date on which the gift tax can be imposed, and the Plaintiff’s disposition of this case was not deemed to be contrary to the Plaintiff’s duty of imposition of gift tax under Article 68 of the former Inheritance Tax and Gift Tax Act for 15 years from the date on which it could be imposed, and the Plaintiff’s tax base of this case’s gift tax.

3. Conclusion

Therefore, the plaintiff's claim of this case seeking revocation on the premise that the disposition of this case is unlawful is dismissed as it is without merit. It is so decided as per Disposition.