Examination-transfer-2015-0109 ( November 9, 2015)

Considering that the excessive working hours are high, it does not constitute farmland reduction or exemption for eight years;

It is insufficient to recognize that the plaintiff has cultivated or cultivated not less than 1/2 of the farming work with the plaintiff's labor, considering that the plaintiff has worked as a public official in Ulsan AA and has worked not less than 2 hours every day as well as 1/2 hours every day.

Article 69 of the Restriction of Special Taxation Act

2015Guhap6884 Revocation of Disposition of Imposing capital gains tax

○ ○

Head of Ulsan District Office

June 23, 2016

July 7, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The disposition of imposition of capital gains tax of KRW 55,69,074, which the Defendant rendered to the Plaintiff on June 1, 2015, shall be revoked.

1. Details of the disposition;

A. On June 27, 2005, the Plaintiff purchased 160,000,000 square meters of 617 and 3,197 square meters of △△-dong, Ulsan-gu (hereinafter “instant land”). On June 27, 2005, the Plaintiff purchased 160,000 square meters of △△-dong (hereinafter “instant land”). On June 2014, the Plaintiff purchased the said land.

On June 23, 2014, when the general project complex development project was subject to consultation and expropriation, the land was transferred to the Ulsan Metropolitan City Urban Corporation and the Korea Industrial Complex Corporation (hereinafter referred to as the "transfer of this case") at KRW 424,133,200.

B. As to the transfer of the instant case, the Plaintiff scheduled the transfer income tax on the full tax reduction or exemption by applying the "Regulations on Reduction or Exemption of Transfer Income Tax for Self-employed Entrepreneurs under Article 69 (1) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter the same shall apply)" to the transfer of the instant case.

C. On June 1, 2015, the Defendant rendered a disposition imposing capital gains tax of KRW 55,69,074 on the Plaintiff for the year 2014 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an administrative appeal on July 21, 2015, but the Commissioner of the National Tax Service dismissed the Plaintiff’s claim on November 9, 2015.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 19, 20, 25, 26, Eul evidence Nos. 1 and 2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff’s right to work directly on Saturdays, Sundays, holidays and attendance after acquiring the instant land in 2005.

From the land of this case, trees were cultivated for not less than 8 years by using time prior to that time.

The plaintiff's direct cultivation is recognized according to the following circumstances:

- The plaintiff himself/herself from 205 to 2010 to 2010 to sculpate, fertilizer, and agrochemical;

In March 25, 2013, 5 million won was invested in agricultural cooperatives and registered as agricultural members and purchased pesticides, composts, fertilizers, etc. from the Central Agricultural Support Center of the Agricultural Cooperatives.

- With testimony and confirmation of facts by those persons who wish to carry out, alone, the off-line work, the eradication work, the beginning work, the compost work, etc., and with respect to the work or harvester (6, 10 months) whose labor is concentrated, there are data that the farming field experience program is proceeding or hires the human body.

- Although the Plaintiff’s yield is omitted, there are data on the Plaintiff’s distribution or distribution of harvested vessels or coagus to their family members or branch members, the Plaintiff’s yield was limited to the Plaintiff’s yield or the value of the goods was reduced because it was not a professional farmer but a pesticide.

- The farming days produced by the Plaintiff from around 2005 to 2014 constitute evidentiary materials under Article 16(1) of the Framework Act on National Taxes, which should not be rejected without permission.

- From 2006 to 2014, the head of the Ulsan Metropolitan City Urban Corporation and the head of the Ulsan District Environmental Preservation Council, which verified the Plaintiff’s self-defense, was paid compensation for environmental damage to agricultural crops in the Corporation.

B. Relevant statutes

▣ 구 조세특례제한법

Article 69 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(1) With respect to income accruing from the transfer of land prescribed by Presidential Decree, among land cultivated directly by a resident prescribed by Presidential Decree who resides in the seat of farmland for not less than eight years (not less than eight years omitted) by the method prescribed by Presidential Decree, the amount of tax equivalent to 100/100 of capital gains tax shall

(3) Any person who intends to have paragraph (1) applied shall file an application for reduction, as prescribed by Presidential Decree.

▣ 구 조세특례제한법 시행령(2015. 2. 3. 대통령령 제26070호로 개정되기 전의 것, 이하 '구 조세특례제한법 시행령'이라고 한다)

Article 66 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(13) For direct cultivation by the method prescribed by Presidential Decree in the main sentence of Article 69 (1) of the Act, a resident is constantly engaged in cultivating crops or growing perennial plants on his/her own farmland or at least half of farming works for cultivating them.

The term “a cultivation or cultivation by power” means a cultivation or cultivation by power.

C. Facts of recognition

1) From 1985, the Plaintiff registered himself as the owner of the farmland ledger on November 8, 2005 after acquiring the instant land as a public official working in the Ulsan Metropolitan City AAA.

2) The instant land is a 8km away from the Plaintiff’s house or workplace, and is a distance required for about 20 minutes when driving a vehicle at the AA office of Ulsan Metropolitan City, Ulsan Metropolitan City.

3) The Plaintiff or the Plaintiff’s husband (“CCC”) entered agrochemicals, fertilizers, composts, and booms as follows, and the Plaintiff’s management form of the instant land and the instant trees directly by the neighboring people was observed by the Plaintiff.

- The fertilizer amount of KRW 264,00 on November 20, 2006, KRW 160,00 on December 17, 2007, KRW 448,00 on December 1, 2008, and KRW 480,00 on November 4, 201.

- At the Dol Dol Dol Dol Dol Dol 2010 to 2013 Dol Dol Dol Dol Dol Dol.

4) From the end of 2009 to the end of 2009, the Plaintiff sold sap and sap extracted harvested from the instant land to the branch. According to the Plaintiff’s account book, the sales profit accrued from 2006 to 3,015,000 won per annum from 580,000 to 2010.

5) The Plaintiff worked for more than two hours a day from July 201 to June 2014 (2.0 hours in excess of two hours). Of 112 days a year, 89 days a year in 2012 and 2013

The year was at work for more than 66 days for more than 66 days, and 10 days for 201 out of the statutory 22 days.

5 hours, 5 hours in 2012, 5 hours in 2012, 8 days in 2013, 2 days in 2014.

[Reasons for Recognition] Evidence Nos. 3, 5, 6, 8, 9, 10, 13 through 17, and Eul Nos. 5 through 7

(numbered) Each description or image, including but not limited to; hereinafter the same shall apply), A, 4, 7, 11, 12;

18 Each part of the evidence, the witness AA's testimony, and the purport of the whole pleadings

D. Determination

1) Article 69(1) of the former Restriction of Special Taxation Act provides that “The tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted with respect to income accruing from the transfer of land cultivated directly by a resident living in the farmland for at least eight years by the method prescribed by Presidential Decree.” Article 66(13) of the former Enforcement Decree of the Restriction of Special Taxation Act clearly states that “Direct cultivation means that “the direct cultivation means that a resident engages in cultivating crops or growing perennial plants on his/her own land at all times or by cultivating or growing them with his/her own labor for at least eight years.” Thus, whether a resident directly cultivated land for at least eight years shall be determined by interpreting the meaning of “self-work” as a literature (see, e.g., Supreme Court Decision 2010Du8423, Sept. 30, 2010). In addition, it is strictly interpreted that the provision clearly considered preferential provisions among the requirements for reduction or exemption should conform to the principle of no taxation and fair taxation (see, 2013Du11613).

The burden of proof on the direct cultivation of the transferred land as a requirement for reduction or exemption of capital gains tax on the farmland is against a taxpayer who asserts reduction or exemption of capital gains tax (see Supreme Court Decision 94Nu996, Oct. 21, 1994).

2) In light of the following circumstances that can be seen by comprehensively taking account of the purport of the entire arguments and health team in this case, the evidence alone presented by the Plaintiff is insufficient to recognize that the Plaintiff was engaged in cultivation or cultivation in the instant land for not less than eight years, or cultivation or cultivation with the Plaintiff’s labor force of not less than 1/2 of farming work after the acquisition of the instant land, and there is no other evidence to acknowledge otherwise, the instant disposition by the Defendant based on this premise is lawful.

① Even according to the Plaintiff’s assertion, the Plaintiff recruited workers who need the greatest number of labor force during the one-year cultivation process, and workers at harvest season, and cultivated vessels using their labor force.

② The confirmation document on the facts of cultivation or fertilizer purchase, etc. among the data submitted by the Plaintiff, is merely a confirmation document issued by the person around which it is difficult to accurately know about the extent of the Plaintiff’s provision of labor in the instant land for the past eight years, and it is therefore difficult to believe its content as it is. Even if the Plaintiff has already borne expenses such as agrochemical, fertilizer, compost, etc., it is reasonable to assume that the Plaintiff, the owner of pine trees, bears purchase expenses, such as pesticide, fertilizer, compost, etc. for growing pine trees. Thus, it is not clear how much the Plaintiff’s labor force was input through the purchase.

③ Compensation for environmental damage to crops is a nature of compensating for damage to the owner or cultivator of crops (a concept different from a person who has cultivated crops directly under the above Act). As long as the Plaintiff is the owner of pine trees, it is natural to become the recipient of compensation for pine trees. Therefore, it is not to support how the Plaintiff’s labor has been invested in the cultivation.

④ The Plaintiff has worked as a public official at the Ulsan AA agency (9:00 p.m. to 6:0 p.m.) and has worked for nearly two hours each day, and the Plaintiff has not used annual leave except for the summer leave, the summer leave, and the end of annual leave.

However, it is difficult to believe that the Plaintiff directly provided at least 1/2 of labor necessary for cultivating farms within the past 8 years, beyond a total of about 551 hours of labor per year (around 551 hours of major farming, as of the year 2008), and that there is little need to work for a considerable amount of time every day, excluding winter. Moreover, in light of the Plaintiff’s above working hours, the instant land is of a large amount of orchard up to approximately 1,00 square meters. In light of the Plaintiff’s above working hours, it is difficult to believe that the Plaintiff directly provided at least 1/2 of labor necessary for cultivating farms within the past 8 years.

⑤ The number of farming days submitted by the Plaintiff as evidence is merely an individual book in the form of simple shape, and the content of each year is recorded, and the Plaintiff’s spouse is merely a document prepared by the Plaintiff’s spouse. As such, it cannot be deemed that the said farming days cannot be seen as a “book recorded in accordance with the tax law” under Article 16(1) of the Framework Act on National Taxes, and it cannot be deemed as a document about how the Plaintiff’s labor force was invested in the cultivation of a ship.

3. Conclusion

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

shall be ruled.