early 2015 Heavy0928 ( May 13, 2015)

Whether it constitutes a direct self-sufficiency requirement among the non-taxation requirements for farmland substitute land.

It is insufficient to recognize that the plaintiff was engaged in cultivating crops on the land of this case for not less than 3 years or engaged in cultivating not less than 1/2 of farming work with the plaintiff's labor force.

Article 70 of the Restriction of Special Taxation Act: Reduction or exemption of transfer income tax on farmland substitute land

Incheon District Court 2015Gudan50686 Revocation of Disposition of Imposing capital gains tax

MaO

OO Head of the tax office

2017.02.07

oly 16, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of KRW 105,722,520 on April 10, 2014 against the Plaintiff was revoked.

1. Details of the disposition;

A. On October 23, 2003, the Plaintiff acquired and owned 2,339 square meters of crusium crusium 2,39 square meters (hereinafter “the previous farmland of this case”) in the Gyeyang-gu, Incheon Metropolitan City (hereinafter “O○-si”), and transferred the land for public use to the Republic of Korea on April 20, 2010, and acquired 3,970 square meters of crusium crusium crusium crusium crusium crusium crusium crusium crusium crusium crusium crusium

B. On July 31, 2010, the Plaintiff filed a preliminary return on capital gains tax by applying the provision on reduction or exemption of capital gains tax on farmland substitute land under Article 70(1) of the former Act on Special Cases concerning Tax Restriction (amended by Act No. 10406, Dec. 27, 2010; hereinafter the same) to the Defendant regarding the transfer of the previous farmland of this case.

C. On April 10, 2014, the Defendant: (a) conducted an on-site investigation of reduction of and exemption from the capital gains tax; (b) determined and notified the Plaintiff of KRW 105,722,520 of the capital gains tax for the year 2010 (hereinafter “instant disposition”).

D. On January 23, 2015, the Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal. However, the Tax Tribunal dismissed the said appeal on May 13, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence No. 1 (including branch numbers, if any) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff acquired substitute farmland in this case and even though the transfer income tax following the transfer of the previous farmland in this case should be reduced or exempted pursuant to Article 70(1) of the former Restriction of Special Taxation Act, it was unlawful to make the instant disposition based on a different premise.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Article 70(1) of the former Restriction of Special Taxation Act provides that "The amount of tax equivalent to 100/100 of capital gains tax shall be reduced or exempted on any income accruing from the substitute farmland prescribed by Presidential Decree as farmland which is subject to agricultural income tax, as the land cultivated by a resident prescribed by Presidential Decree residing in the seat of farmland due to the necessity for farming." Article 67(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23590, Feb. 2, 2012; hereinafter the same shall apply) provides that "direct farming" means that "the farmer engages in the cultivation of crops or perennial plants in his/her own farmland, or cultivates or cultivates 1/2 or more of the farmland with his/her own labor, while residing in Article 70(1)1 of the Act as the farmland for at least three years and residing in the new area of the farmland for at least three years and the new area of the farmland to be acquired by a person who acquired at least 1/1/2 of the value of the farmland under the previous Act.

As above, the purport of the provision that imposes capital gains tax on the substitute land of farmland is to protect farmers through free substitution of farmland or to promote the development and encouragement of agriculture through permission and guarantee of free substitution, and thus, it is limited to the case where the farmland acquired and sold by the self-employed farmer is to substitute land for the purpose of cultivating the farmland owned by the self-employed farmer (see, e.g., Supreme Court Decision 2002Du5924, Sept. 5, 2003).

On the other hand, the burden of proving the fact, etc. of directly cultivating the transferred land as the requirement for reduction and exemption of capital gains tax on self-arable land is against a taxpayer who asserts reduction and exemption of capital gains tax (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002). As long as a person directly engaged in farming in relation to the requirements for self-arable of farmland is concurrently engaged in other occupation, it cannot be deemed that it constitutes a self-cultivation even if he/she concurrently engages in other occupation. However, if he/she indirectly engages in farming in other occupation, it cannot be deemed that the meaning of "self-help" meets the requirements (see, e.g., Supreme Court Decision 2002Du8444, Oct. 11, 2002).

2) In light of the above legal principles, with regard to whether the Plaintiff cultivated 1/2 or more of the farming work on the land of this case with his own labor for not less than 3 years, in light of the following circumstances, the evidence submitted by the Plaintiff alone is insufficient to recognize that the Plaintiff was engaged in the cultivation of agricultural products on the land of this case or with the cultivation of 1/2 or more of the farming work with the Plaintiff’s labor force for not less than 3 years, and there is no other evidence to prove otherwise. Accordingly, since the instant disposition is lawful, the Plaintiff’s assertion seeking revocation of the instant disposition on a different premise is without merit.

○ The Plaintiff entered into a farming-related contract with an OOOOO farming association (hereinafter referred to as “agricultural corporation”) and entrusted farming-related corporations with rice farming-related rice farming-related rice farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related farming-related either in cash or rice, or in direct acquisition or disposal of the remaining harvests, as alleged by the Plaintiff.

○ The Plaintiff asserted to the effect that only a farming corporation that requires agricultural machinery was entrusted to a farming corporation, and that the farming corporation directly instructed and supervised the contents of the work and directly entrusted the agricultural work other than the use of agricultural machinery in the instant substitute farmland. However, the Plaintiff was an elderly female as 64 years of age 2010, while the Plaintiff was a large-scale farmland exceeding 1,200 square meters, the Plaintiff’s substitute farmland in the instant substitute farmland in 2009, when the Plaintiff acquired a caregiver’s license in 209 and registered as nursing caregiver with a related institution, and when the Plaintiff was a spouse with poor body shortage of body, it was difficult for the Plaintiff to be in charge of the agricultural management of the farmland in the instant substitute farmland in 201, with wage and daily labor income in 4,825,00 won, 4,839,000 won in 20, 3,967,000 won in 20 years in 2012 and 25 hours in the event that the Plaintiff used public transportation, etc.

○ The Plaintiff’s purchase of agrochemicals, fertilizers, etc. submitted a purchase receipt (No. 10-1 through 12 of the evidence A), but the amount is small, and there are no details of purchase related to farming materials. Moreover, there is no specific statement of fact, such as farming method, content and subject of work, frequency of work, etc., which the Plaintiff submitted, and it is difficult to view the remaining evidence as an independent evidence supporting the Plaintiff’s racing track. Moreover, it is difficult to deem that the Plaintiff proved that he/she was in charge of farming work on the land of this case by proving that he/she was in charge of the Plaintiff’s own possession of more than half of farming work on the land of this case.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed, and it is so decided as per Disposition.