Whether the requirements for reduction or exemption of capital gains tax by substitute land are satisfied;

Since it is difficult to deem that the Plaintiff directly cultivated the farmland of this case for three or more years after the Plaintiff acquired the farmland of this case, the disposition of this case denying the reduction or exemption of capital gains tax is legitimate.

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

2015Gudan3626 Disposition of revocation of imposition of capital gains tax

Park ○

○ Head of tax office

September 30, 2016

November 4, 2016

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 capital gains tax of KRW 74,092,302 (including additional tax) for the Plaintiff on December 3, 2014 shall be revoked.

1. Details of the disposition;

A. On June 11, 2009, the Plaintiff transferred ○○○○○○-dong ○○○○○○○○○○○-dong, which was acquired on May 17, 2004 (hereinafter referred to as the “instant land”) to the expropriation procedure, and filed an application for capital gains tax reduction or exemption on August 13, 2009 by filing a report on capital gains tax on this. On April 15, 2010, the Plaintiff acquired ○○○-do ○○○-dong ○○○○○○○○○-si, ○○○○○○-si, ○○○○○○-si, ○○○○○○-si

B. On December 9, 2014, the Defendant denied the reduction or exemption of capital gains tax on the instant land, on the ground that the Plaintiff did not directly cultivate after the acquisition of the instant substitute farmland after conducting an on-site investigation on the said substitute farmland, and decided and notified the Plaintiff of capital gains tax of KRW 74,092,302 (including additional tax) for the transfer income tax of 2009.

C. The Plaintiff filed a request for a trial with the Tax Tribunal, but was dismissed on September 11, 2015.

[Grounds for recognition] The descriptions of evidence Nos. 1 and 26, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The plaintiff was registered as a farmer in the farmland ledger on May 25, 2004, and the neighboring residents were confirmed each year since 2006 that agricultural cooperatives received subsidies for change of rice, and neighboring residents were cultivated by the plaintiff. The plaintiff is confirmed to have cultivated the farmland of this case in light of the sales revenue by each trader, the certificate of use fee for agricultural machinery, the certificate of Domination, and the certificate of purchase of rice, etc., and most farmers now are working only for the farming industry and the non-use of the agricultural machinery by using the company holding the agricultural machinery. The act of being in charge of work by the agricultural machinery itself constitutes the cultivation by self-labor power, and it cannot be readily concluded that the plaintiff did not cultivate the farmland of this case solely on the ground that the plaintiff simply obtained other income. Thus, the land of this case constitutes the farmland of this case for three years or more under Article 70 (1) of the Restriction of Special Taxation Act.

B. Determination

Article 70 (1) of the Restriction of Special Taxation Act provides that the tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted on income accruing from the substitute land for farmland cultivated by a resident prescribed by Presidential Decree in such a manner as prescribed by Presidential Decree due to the necessity for cultivation, and Article 67 (2) of the Enforcement Decree of the Restriction of Special Taxation Act provides that "direct cultivation" means that "a resident is engaged in the cultivation of crops or the growing of perennial plants on his/her own land at all times or who cultivates or cultivates with his/her own labor not less than 1/2 of the farming works with his/her own labor." In this context, "a farmer who cultivates or cultivates not less than 1/2 of his/her own labor with his/her own labor" shall be interpreted strictly as a means of tax evasion. In addition, the burden of proof on "direct cultivation as a requirement for reduction or exemption of capital gains tax" is against a taxpayer who claims reduction or exemption of capital gains tax (see, e.g., Supreme Court Decision 94Nu96, Oct. 21, 21994).

On the other hand, even if a direct farming concurrently engages in another occupation, it is deemed a self-employed farmer as mentioned above, but if it is only an indirect operation of agriculture while concentrate on other occupation, it cannot be deemed that it constitutes a self-employed farmer as mentioned above (see Supreme Court Decision 98Du9271, Sept. 22, 1998). The statement of evidence No. 5 through No. 24, and witness Park ○’s testimony alone is insufficient to recognize the fact that the Plaintiff acquired the substitute farmland in this case and cultivated his own labor force in more than half of the farming work after acquiring it, and there is no other evidence to acknowledge it. Rather, taking into account the overall purport of the entries and arguments in No. 2 and No. 3, the Plaintiff received 620 million won from AA to 13, and the Plaintiff’s spouse received 100 million won from 6,000,000 won from 10,0000 won from 30,000 won from her husband’s testimony or farmland in this case.

3. Conclusion

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