National Tax Service Review and Transfer 2011-0306 ( October 13, 2012)

It is difficult to recognize 1/2 or more of farming work as having cultivated with his own labor;

In light of the fact that agricultural chemicals, etc. were purchased without knowing the variety of rice cultivated in farmland, it is difficult to recognize that it is ordinarily engaged in cultivating crops in farmland or has cultivated not less than half of farming work with its own labor in light of the fact that a person received wage and salary income, etc.

Article 69 of the Restriction of Special Taxation Act

Article 70 of the Restriction of Special Taxation Act

2011Guhap6579 Revocation of Disposition of Imposing capital gains tax

XX Kim

Head of Seogsan Tax Office

June 21, 2012

July 12, 2012

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 July 1, 201 against the Plaintiff on July 1, 201 shall be revoked.

1. Details of the disposition;

A. On April 23, 2010, Busan Gangseo-gu, Busan, which was owned by the Plaintiff, obtained an agreement on a total of KRW 000 on April 23, 2010 with the same 00-60 square meters, 417 square meters (hereinafter “the farmland in this case”), such as 00-54 square meters, and 00-60 square meters, such as 00-54 square meters and 496 square meters, which were owned by the Plaintiff. On June 25, 2010, the Plaintiff: (a) deemed the farmland in this case as eligible for reduction or exemption of capital gains tax under Article 69(1) of the Restriction of Special Taxation Act; and (b) filed a preliminary return on capital gains tax for the year 2010

B. The Defendant cannot be deemed to have done self-reliance on the farmland of this case for more than eight years, and on July 1, 201, the Defendant deemed that the farmland of this case constitutes non-business land, and notified the Plaintiff of KRW 000 of the capital gains tax belonging to the year 2010 (hereinafter “instant disposition”).

C. The Plaintiff filed an objection, but dismissed on October 19, 201, and again, the Commissioner of the National Tax Service dismissed the Plaintiff’s claim on February 13, 2012.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 3-1, 2, 3-3, Eul evidence Nos. 1, 2, 3, 4, 5, 10, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff acquired the farmland of this case on February 14, 1990, and directly cultivated the farmland of this case for not less than eight (8) years before transferring the farmland of this case to Busan Urban Corporation. Even if the Plaintiff failed to meet the requirements for self-sufficiency for eight (8) years, the Plaintiff directly cultivated the farmland of this case since 2002, and after transferring the farmland of this case, the Plaintiff directly cultivated the farmland of this case by acquiring the 2166mm2 in Gangseo-gu, Busan Metropolitan City, which is the adjoining area, from then transferring the farmland of this case, and thus, the transfer income tax shall be reduced or exempted pursuant to the provisions for reduction and exemption of the transfer

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Determination as to the assertion of reduction or exemption of capital gains tax on the grounds of self-defense for eight years

According to Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010); Article 66(13) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22151, May 5, 2010); in order to reduce capital gains tax arising from the transfer of farmland, a resident who resides in the farmland must directly cultivate the relevant land for at least eight years; and “direct cultivation” means that a resident engages in cultivating or growing agricultural products or perennial plants on his/her own farmland at all times or by using his/her own labor. In addition, even if the fact that the land has been cultivated as farmland is recognized, it is not presumed that such owner has been replaced, and the fact that the land has been cultivated as farmland should be attested by the transferor who asserts such fact (see, e.g., Supreme Court Decision 92Nu1893, Jul. 13, 1993).

The following facts may be acknowledged in full view of Gap evidence 2, Eul evidence 3-1, 2, 3, Eul evidence 6, Eul evidence 7-1 through 6, Eul evidence 9, 11-1, Eul evidence 8, part of Eul evidence 8, witness clinicalA, HaB, HaB, ECC, and DoD's testimony (not all the statements in Gap evidence 10, Eul evidence 8 against the facts found below, and Eul evidence 8 are not believed).

① On February 14, 1990, the Plaintiff purchased the farmland in this case, and on May 7, 1996, the Plaintiff completed the registration of ownership transfer with respect to the farmland in this case. After selling the farmland in this case to the Plaintiff, the Plaintiff cultivated the farmland in this case together with HaE until it completed the registration of ownership transfer under the name of the Plaintiff.

② The Plaintiff served as the captain of deep-sea fishing vessel from around 1981 to 2002. The work experience from 1986 is as follows.

③ From 2003 to 2006, the Plaintiff received respective salaries from AAC and Y in 2008 to 2009.

④ The Plaintiff did not know of the plant variety cultivated in the farmland of this case and purchased an agrochemical or a sweak.

⑤ The Plaintiff received money from the Plaintiff, HaB in return for a pesticide fluor, fluor, fluor, fluor, and so on.

In light of the above facts, the entries in Gap evidence 5, Gap evidence 6-3, 4, 5, and Gap evidence 7-1, 7-2 are not sufficient to view that the plaintiff was engaged in the cultivation of crops or the growing of perennial plants in the farmland in this case for not less than 8 years, or that the plaintiff was engaged in the cultivation of crops or the growing of perennial plants with his own labor for not less than 1/2 of the farming work, and that the plaintiff's assertion is not acceptable.

2) Determination on the assertion of reduction or exemption of capital gains tax following farmland substitute land

According to Article 1170(1) of the Restriction of Special Taxation Act and Article 67(2) and (3) of the Enforcement Decree of the same Act, the transfer income tax on any income accruing from the substitute farmland which is farmland cultivated by a resident residing in the location of a farmland and which is subject to agricultural income tax and is prescribed by the Presidential Decree due to the necessity for farming. The term "direct farming" means that a resident engages in the cultivation of crops or the growing of perennial plants on his own farmland at all times or who cultivates or cultivates with his own labor for not less than 1/2 of farming work; the term "cases prescribed by the Presidential Decree" means cases where a person who resided in the former location of farmland for not less than 3 years as a substitute farmland due to the necessity for farming and cultivates other farmland within 1 year from the date of transfer of the previous farmland while residing in the new location of farmland for not less than 3 years, which fall under any of the items of Article 67(3)1 of the Enforcement Decree of the same Act.

First, in full view of the purport of the entire pleadings as to whether the Plaintiff acquired a new farmland and cultivated it while residing in a new location for not less than three years, the Plaintiff transferred the farmland of this case on April 23, 2010, and on December 27, 2010, it can be acknowledged that the Plaintiff acquired the ownership of 216m2 in Gangseo-gu, Busan, Gangseo-gu, Busan, on December 27, 2010. However, since three years have not elapsed since the Plaintiff acquired the ownership of new farmland, it cannot be deemed that the Plaintiff satisfied the above requirements.

In addition, with respect to whether the Plaintiff directly cultivated the farmland of this case, which is the previous farmland, for three or more years, the following circumstances are considered as comprehensive consideration of health stand, Eul evidence Nos. 7-1 through 6, Eul evidence Nos. 9 and 11, Eul evidence Nos. 8, Eul evidence Nos. 8, witness HaBB, ECC, and testimony No. DoD from 2003 to 2006. In other words, the Plaintiff was paid each of the salaries in AAmera from 2006 to 2008 and 2009. ② The Plaintiff did not know of the variety of cultivated rice, and the Plaintiff purchased agricultural chemicals or grass products without knowing the variety of cultivated rice, ③ it is difficult to view that the Plaintiff had been engaged in growing or growing agricultural crops, for three or more years, and there is no other evidence to acknowledge that the Plaintiff had been engaged in growing or growing crops in the farmland of this case.

Therefore, we cannot accept the argument that the plaintiff should be exempted from capital gains tax because the plaintiff has substituted farmland.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.