In cases where a person employs another person under his/her responsibility or account, or intends to cultivate by making a family member living together with another person, he/she shall not be subject to direct cultivation.

A person who is engaged in part for reasons, such as not engaging in agriculture at all times but having other jobs shall be deemed to have cultivated directly only when the ratio of labor's input to his/her family or the third party is not less than 1/2 of the total farming work.

Article 69 of the Restriction of Special Taxation Act (Abatement or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

2018Nu3569 Revocation of Disposition of Imposing capital gains tax

GaO

O Head of tax office

Suwon District Court Decision 2017Gudan5117 Decided January 17, 2018

May 9, 2018

June 20, 2018

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The imposition of capital gains tax of KRW 86,895,910 (including additional tax) on the Plaintiff on December 10, 2015 by the Defendant shall be revoked.

1. Quotation, etc. of judgment in the first instance;

The reasoning for the court's explanation concerning this case is as stated in the reasoning of the judgment of the court of first instance (excluding the part concerning the judgment of the court of first instance) except for the modification of the pertinent part of the judgment of the court of first instance as stated in the following 2. Thus, it is citing this as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article

2. Parts to be corrected;

○ 2 7 to 12 parts of “B” are as follows.

B. Around August 30, 2013, the Plaintiff reported the transfer income tax of this case to the Defendant with the acquisition value of KRW 363,00,000,000, the transfer value of KRW 290,000. The Defendant: (a) determined that the Plaintiff’s acquisition of high-priced farmland from his specially related party to the instant farmland at the time of acquiring the farmland of this case including KRW 46,551,120, and KRW 363,00,00, the acquisition value of the instant farmland at the time of acquiring the farmland of this case, at least KRW 36,50,000, and at least 5/100 of the market price; (b) determined that the Plaintiff’s acquisition value of the instant farmland of this case was 30,000,000,000; and (c) did not meet the requirements for the acquisition value of the farmland of this case at the time of acquisition of the farmland of this case at the time of acquisition of the farmland of this case; (hereinafter “the acquisition value”).

○ 3 pages 10 of the former Restriction of Special Taxation Act is the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter referred to as the "former Restriction of Special Taxation Act").

○ The meaning of “direct cultivation” from 5th to 6th parallel 8th parallel 5th parallel 8th parallel 6th parallel 8th parallel 6th parallel 6th parallel is as follows:

(B) The meaning of "direct cultivation"

Article 69 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 25211, Feb. 21, 2014; hereinafter "former Enforcement Decree of the Restriction of Special Taxation Act") provides that "a resident who resides in a location of farmland" in the main sentence of Article 69 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 25211, Feb. 21, 2014; hereinafter "the former Enforcement Decree of the Restriction of Special Taxation Act") means a person who resides in a Si/Gun/Gu in which farmland is located or a Si/Gun/Gu, or an area, etc. adjacent thereto for at least eight years, and Article 69 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that "a resident who directly cultivates any farmland in the manner prescribed by Presidential Decree" in the main sentence of Article 69 (1) of the former Act means that he/she engages in cultivating agricultural products or growing perennial plants in his/her own farmland or has labor force.

In light of the language and text of each provision, and the meaning of "direct farming" or "self-help", which is one of the requirements for reduction or exemption from capital gains tax, before the Enforcement Decree of the Restriction of Special Taxation Act was amended by Presidential Decree No. 19329 on February 9, 2006, and its Enforcement Decree, the Supreme Court, at that time, interpreted that the meaning of "direct farming" or "self-help" includes not only cases where the transferor cultivates her hand, but also cases where the transferor employs another person under his responsibility and accounting or causes a family member living together with the same household to cultivate her (see, e.g., Supreme Court Decisions 90Nu6064, Sept. 28, 1990; 94Nu11859, Feb. 3, 1995; 203Du2465, May 30, 2003; 206Da26166, etc., newly established by the former Enforcement Decree of the Restriction of Special Taxation Act.

Therefore, as to whether "direct farming of farmland eligible for reduction or exemption from capital gains tax" is "direct farming of farmland," a person engaged in agriculture is deemed to have cultivated directly regardless of his/her own labor ratio, and a person engaged in part for reasons such as having other occupation, not engaging in agriculture at all times, shall be deemed to have cultivated directly only when the labor ratio of "self" excluding his/her family members or third parties during the entire farming work is not less than 1/2 (see, e.g., Supreme Court Decisions 2010Du8423, Sept. 30, 201; 2012Du19700, Dec. 27, 2012).

3. Conclusion

Thus, the plaintiff's claim shall be dismissed as it is without merit. The judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed as it is without merit.