Board of Audit and Inspection ( October 31, 2013)

The reduction or exemption of substitute farmland which is not directly cultivated shall be justified.

The burden of proof for direct cultivation is against the Plaintiff, and it cannot be deemed that the direct cultivation under Article 67(2) of the Restriction of Special Taxation Act, i.e., cultivation with one-half or more own labor force, in full view of other business income, weekend excess work ability, rice income preservation direct payments, disguised transfer flexibility, etc.

Article 70 of the Restriction of Special Taxation Act for Substitute Land for Farmland

2013Guhap4133 Revocation of Disposition of Imposing capital gains tax

AA

O Head of tax office

May 22, 2014

July 10, 2014

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 (including additional tax) in total on October 5, 2012 against the Plaintiff on the imposition of capital gains tax and special rural development tax for the year 2011 shall be revoked.

1. Details of the disposition;

A. On February 14, 2007, the Plaintiff completed the registration of ownership transfer on the ground of donation with respect to OO-Myeon O-si O-si 265-1 1,655 square meters (hereinafter “the farmland in this case”). On June 29, 201, the Plaintiff completed the registration of ownership transfer on the farmland in this case on the ground of land expropriation in the Republic of Korea.

B. On May 25, 2012, the Plaintiff purchased 1/2 of the 000 square meters of OO-ri O-ri 75-8 square meters (hereinafter “the instant substitute farmland”) as substitute farmland of the instant farmland, and completed the registration of ownership transfer on June 12, 2012.

C. On August 31, 2011, the Plaintiff: (a) on the premise that the transfer of the farmland in this case constitutes the subject of the special deduction for long-term possession under Article 95(2) of the former Income Tax Act (amended by Act No. 10580, Apr. 12, 2011; hereinafter the same) and the subject of the special deduction for long-term possession under Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 10789, Jun. 7, 2011; hereinafter the same), the Plaintiff: (b) on the premise that the transfer of the farmland in this case constitutes the subject of the special deduction for special deduction for long-term possession from the gains on transfer ; (c) on the premise that the transfer of the farmland in this case constitutes the tax amount calculated by applying the special deduction for acquisition - OOOO directors as the transfer income tax for the farmland substitute.

D. However, the Defendant, on the ground that “the Plaintiff cannot be deemed to have cultivated the instant farmland directly,” excluded the application of the provisions on capital gains tax reduction and exemption on farmland substitute land under the former Restriction of Special Taxation Act, and on October 5, 2012, notified the Plaintiff on October 5, 201, of the correction and notification of OOOOOO(including additional tax, excluding OOOOOOOO(s) paid, and OOOOOO(s) of special rural development tax (including additional tax).

E. On January 15, 2013, the Plaintiff filed a request for review with the Board of Audit and Inspection on January 15, 2013, but was dismissed on October 31, 2013.

Facts that there is no dispute with recognition, Gap evidence 1 through 4 (including branch numbers; hereinafter the same shall apply), Eul evidence 1 through 4, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff directly cultivated the farmland of this case while residing in the vicinity of the farmland of this case after acquiring the farmland of this case on January 23, 2007 (the time of acquiring the farmland of this case claimed by the plaintiff on January 23, 2007). Thus, the plaintiff is deemed to have directly cultivated the farmland of this case for not less than three years from January 2007 to June 29, 201 that transferred the farmland of this case to the Republic of Korea. This constitutes "reasons for capital gains tax reduction or exemption for substitute farmland of this case" under Article 70 of the former Restriction of Special Taxation Act, but the disposition of this case where the plaintiff imposed capital gains tax and special tax for rural development against the plaintiff is unlawful.

B. Relevant statutes

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

C. Determination

1) The issues of the case

According to Article 70 (1) of the former Restriction of Special Taxation Act, the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted for the income accruing in the event that a person who resides in a farmland occupies the farmland as another farmland due to the necessity for cultivation. However, according to Article 67 (2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23039, Jul. 25, 201; hereinafter referred to as the "former Enforcement Decree of the Restriction of Special Taxation Act"), the term "direct farming" refers to the case where a resident engages in cultivating crops or growing perennial plants on his own farmland at all times or cultivates or cultivates or cultivates them with his own labor.

Ultimately, in order for the Plaintiff to be subject to the reduction and exemption of capital gains tax on the farmland substitute land, the Plaintiff should be deemed to have been engaged in the cultivation of the farmland in this case or cultivated not less than 1/2 of the farming work with his own labor. Furthermore, the burden of proof is that the Plaintiff is a person liable to pay capital gains tax on the farmland substitute land (see, e.g., Supreme Court Decision 92Nu1893, Jul. 13, 1993).

2) Specific determination

In light of the above evidence and evidence, Gap 5 through 9, Eul 1, and Eul 2's 11, each of the above 2-year agricultural land transfer report, and the fact-finding results and the whole purport of arguments, the following circumstances should be strictly interpreted that the plaintiff's 2-year agricultural land transfer income tax reduction or exemption should be granted to the person who actually engaged in farming. The plaintiff's 1/2 or more of the 2-year agricultural land transfer income tax for 0-year agricultural land transfer report, and it cannot be deemed that the plaintiff's 1-2 or more of the 2-year agricultural land transfer report is applicable to the plaintiff's 1-6-year agricultural land transfer business for 0-year agricultural land transfer. The plaintiff's 2-year agricultural land transfer from the 1-6-year agricultural land transfer to the 2-year agricultural land transfer business for 0-year agricultural land transfer, and the plaintiff's 2-year agricultural land transfer to the 1-year agricultural land transfer business for 0-year agricultural land transfer business.

Therefore, the disposition of this case on which the Plaintiff imposed capital gains tax and special rural development tax (including additional tax) by excluding the application of capital gains tax reduction and exemption provisions on farmland substitute land under Article 70 (1) of the former Restriction of Special Taxation Act on the transfer of the farmland of this case is justifiable, and the plaintiff's assertion against

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.