Whether income tax may be imposed on the difference between the income amount for the business year of the corporation and the net profit and loss on the balance sheet under the current Corporate Tax Act as a bonus for the representative of the corporation.

According to Article 33 (5) of the Corporate Tax Act, a disposition on the difference between the income amount of each business year of a corporation and the net profit and loss on the balance sheet shall be made as prescribed by the Presidential Decree. According to Article 94 (2) 2 (c) of the Enforcement Decree of the Corporate Tax Act, which is the Presidential Decree by delegation, provides that the above difference shall be a bonus for the representative if it is unclear to whom it belongs. Accordingly, it is natural that the income tax for Class A or B shall be imposed on the income recognized as bonus for the representative.

Article 2 of the former Income Tax Act, Article 33 of the Corporate Tax Act, Article 94 of the Enforcement Decree of the Corporate Tax Act

National Agricultural Cooperative Federation (Attorney Lee Jae-hoon, Counsel for defendant-appellee)

Head of the tax office

Gwangju High Court Decision 73Gu6 delivered on June 12, 1973

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The grounds of appeal by the Plaintiff’s attorney are examined comprehensively.

According to Article 33 (5) of the Corporate Tax Act, where a tax base is determined pursuant to Article 33 (1) through (3) and Article 35, the disposition of the amount included in the calculation of earnings and the disposition of the difference between net profits and losses on the balance sheet of the corporation's business year when the tax base is determined pursuant to paragraph (4) of the same Article shall be prescribed by the Presidential Decree. This is delegated to the Presidential Decree. According to Article 94 (2) 2 (c) of the Enforcement Decree of the Corporate Tax Act, which is the Presidential Decree by delegation of the same Article, the above difference is not clear as to the representative's bonus. Accordingly, the judgment of the court below that the imposition of class A or Class B income tax on the representative's bonus cannot be deemed as a violation of the principle of substantial taxation under Article 2 of the Income Tax Act, and therefore, it cannot be said that there is no error in the imposition of income tax on the non-party's bonus and the non-party's imposition of corporate tax under the above Article 45 (2) of the Income Tax Act.

Therefore, it is so decided as per Disposition by the assent of all participating Justices.

Justices Red Man-Man (Presiding Justice)