Cho High Court Decision 2009J3851 ( December 15, 2009)

Reduction or exemption of capital gains tax due to substitute land for self-arable farmland;

It is unclear whether the cultivation of substitute farmland has commenced within one year from the date of transfer of farmland, and thus it is not possible to apply the reduction or exemption of transfer tax due to substitute land.

The contents of the decision shall be the same as attached.

west ○

Head of the Office of Government

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant imposes upon the Plaintiff KRW 250,845,920 on the Plaintiff of the transfer income tax belonging to the year 2008, August 18, 2009

disposition shall be revoked.

1. Circumstances of dispositions;

A. On June 24, 2004, the Plaintiff purchased from Nonparty KimA and one other, ○○○○, 00-27, 564-27, and 2,479 square meters (in case of the above two parcels of land on September 17, 2007, it shall be divided into 2,275 square meters and 564-43, and 204 square meters; hereinafter referred to as “the above two parcels of land”) before completing the registration of ownership transfer on March 5, 2008, and transferred them to Nonparty NewB on March 5, 2008, and completed the registration of ownership transfer on the 17th of the same month.

B. On April 30, 2008, the Plaintiff filed a preliminary return on the tax base of capital gains tax on the transfer margin of the farmland of this case with the Defendant on April 30, 2008, declared the tax amount to be paid as transfer income tax on the ground that the said farmland is a farmland with a minor farmland and is subject to reduction and exemption from large land.

C. Meanwhile, on September 10, 2008, the Plaintiff purchased from △△△-dong 416-2, 1,285 square meters (hereinafter “alternative farmland”) from △△-dong, △△-dong, and completed the registration of ownership transfer on September 24, 2008.

D. However, on August 18, 2009, the Defendant notified the Plaintiff of KRW 250,845,920 of transfer income tax belonging to the year 2008 on the ground that the Plaintiff had not cultivated or cultivated not less than 1/2 of the farming work with his own labor, and on the ground that the Plaintiff did not own the substitute farmland due to the operation of restaurant (○○○○ Party) before acquiring the substitute farmland, etc., the Defendant notified the Plaintiff of KRW 250,845,920 (hereinafter “instant disposition”).

E. On October 14, 2009, the Plaintiff filed an appeal with the Tax Tribunal on October 14, 2009, but was dismissed on December 15, 2009.

[Reasons for Recognition] Facts without dispute, Gap 1, 2, Eul 1, 7, 8, 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 at around 2004 and resided in the seat of the farmland of this case for not less than 3 years, and acquired and cultivated substitute farmland within 1 year from the date of transfer of the farmland of this case. Thus, the income from the transfer of the previous farmland is subject to reduction of capital gains tax due to the substitute farmland of the farmland of this case under Article 70 of the Restriction of Special Taxation Act, notwithstanding the reduction of capital gains tax due

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

According to Article 70(1) of the former Restriction of Special Taxation Act (amended by Act No. 921 of Jan. 1, 2010) and Article 67(1), (2), and (3)1 of the Enforcement Decree of the same Act, in order to be subject to reduction or exemption from the transfer income tax on farmland substitute land, ① previous land and new land shall be farmland. ② direct cultivation shall be conducted while residing in the previous location for not less than two years and living in the new location for not less than three years and living in the new location for not less than three years in addition, and ③ its residence and cultivation shall begin within one year from the date of transfer of the previous land. ③ ④ The period between the transfer date of the previous land and the acquisition date of the newly acquired land shall be within one year. ⑤ The newly acquired area of farmland shall be not less than one half of the area of the farmland to be transferred, or one-third or more of the value of the farmland to be transferred. Here, the term “direct cultivation” means that a resident is engaging in permanent cultivation of the farmland or growing work for three years or more, or one-half labor force.

In addition, in order for the plaintiff to be exempted from the transfer income tax on income accruing from substituted land of farmland due to the necessity of cultivation, the above 2 and 3 requirements should be attested.

First, examining whether the Plaintiff started the cultivation of substitute farmland within 1 year from March 17, 2008, which was the date of the transfer of the farmland in this case, the Plaintiff’s assertion is insufficient to acknowledge it only with the descriptions of evidence Nos. 5-2, A16, and 20, and there is no other evidence to acknowledge it. Ultimately, the Plaintiff’s assertion is without merit without need to further examine it.

3. Conclusion

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