Whether reduction of and exemption from self-sufficiency and special deduction for long-term possession are applied

Since it is confirmed that the farmland was leased, a disposition to exclude the denial of self-reliance reduction and exemption and the special long-term holding deduction is legitimate, and cannot be viewed as contrary to the principle of tax equality or equity.

Article 95 of the Income Tax Act

2018Guhap24 Revocation of Disposition rejecting capital gains tax rectification

aa

○ Head of tax office

June 28, 2018

August 10, 2017

1. The plaintiff's claim is dismissed.

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

On February 2, 2017, the rejection disposition against the plaintiff by the defendant of the Gu office against the plaintiff shall be revoked.

1. Details of the disposition;

A. On July 8, 1975, the Plaintiff acquired the said land after completing the registration of ownership transfer on the ground of sale on December 10, 1968, with respect to 18 m2,863 m2,83 m2,863 m2,000 square meters prior to subdivision ○○○○○○○ ○○○○ ○○ ○○ Gun (hereinafter “○○ m2”).

B. On May 15, 2014, the land of ○○○○○ 18 before the said subdivision was registered by dividing the instant land into 00 square meters and 2,778 square meters (hereinafter “instant land”) and 18-3 square meters at ○○ 18-3 square meters. The Plaintiff transferred the instant land to cC on June 28, 2016 by completing the registration of ownership transfer on the ground of sale as of June 21, 2016.

C. On August 31, 2016, the Plaintiff deemed that the instant land constitutes non-business land under the Income Tax Act and subordinate statutes, and reported KRW 19,585,000, which was calculated without applying the special deduction for long-term holding, as capital gains tax on the said land.

D. After that, on January 3, 2017, the Plaintiff filed a request for the correction of capital gains tax under the Restriction of Special Taxation Act, stating that “The land in this case was self-culed by the Plaintiff, so capital gains tax shall be reduced or exempted pursuant to the Ordinance on the Restriction of Special Taxation, and so long as the land in this case is self-culatory farmland, the tax rate on the land for non-business use shall not be applied, and the special deduction for long-term holding shall not be applied.”

E. On February 2, 2017, the Defendant rendered a disposition of refusal of correction (hereinafter “instant disposition”) on the ground that the Plaintiff’s initial report on the Plaintiff’s request for correction was appropriate on August 31, 2016 for non-business land.

F. On April 24, 2017, the Plaintiff dissatisfied with the instant disposition and filed a request for a trial with the Tax Tribunal on April 24, 2017. On August 24, 2017, the Tax Tribunal rendered a decision to re-examine whether the Plaintiff cultivated 1/2 or more of the farming work in the instant land with its own labor force, and to rectify the tax base and tax amount of the transfer income tax according to the results of re-audit.

G. Accordingly, after re-investigation, the Defendant determined that the report of the first report on September 29, 2017 is appropriate, and thus, the Defendant did not correct the transfer income tax stated in the above paragraph (c) and notified the Plaintiff of it after concluding the investigation.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 5, 6, 13, 16, Eul evidence Nos. 1 and 2 (including provisional numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Under the Restriction of Special Taxation Act, the Plaintiff, from August 5, 1947 to 1947, had 600 meters away from the land of this case and resided in ○○○○○○○○○○○○○○○○○○○○○○○, a location of the above land, ○○○○○○○○○○ 249. On December 10, 1968, the Plaintiff purchased the land of this case and purchased it on December 10, 1968 to ○○○○○○○○○○○○○○○○○○○○○○○○○, and thus, the Plaintiff was on the part of the land of this case until ○○○○○○○○○○○○○○○, and thus, was on the part of the Plaintiff, and the Plaintiff was on the part of the Plaintiff, from around 201 to 201.

C) Therefore, the transfer income tax on the instant land should be reduced or exempted in accordance with the Restriction of Special Taxation Act that reduces the transfer income tax in the case of self-defense.

2) The assertion that it does not constitute a non-business land because it is a self-farmland (hereinafter referred to as "second argument").

A) According to the Income Tax Act and subordinate statutes, land excluding the farmland re-established and self-developed for a period exceeding one year from the three years immediately preceding the date of transfer shall be deemed land for non-business use.

B) In accordance with the foregoing criteria, the Plaintiff’s land in this case, located in ○○ City adjacent to the instant land, the seat of which was located, for about 1 year and 11 months from July 1, 2014, which was integrated into ○○ Si and ○Gun, to June 21, 2016, was self-majored. Thus, the instant land does not constitute non-business land stipulated in the Income Tax Act.

3) Even if the claim that the special deduction for long-term holding should be applied (hereinafter referred to as “third claim”), even if the instant land is non-business land, the special deduction for long-term holding should be applied for the following reasons.

A) Pursuant to the latter part of Article 95(4) of the Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter referred to as “applicable Income Tax Act”), the Defendant deemed the period of possession of the Plaintiff’s land from January 1, 2016 to be less than three years, counting from January 1, 2016, and did not apply the special deduction for long-term possession under Article 95(2) of the same Act.

B) Meanwhile, the Income Tax Act (amended by Act No. 14569, Feb. 8, 2017; hereinafter “Amended Income Tax Act”) amended by Act No. 14389, Dec. 20, 2016; and enforced January 1, 2017, deleted the latter part of Article 95(4) proviso, which is the same as the latter part of Article 95(4). Accordingly, if the land for non-business acquired before January 1, 2016 is transferred after January 1, 2017, it would be eligible for special deduction for long-term holding, counting the period of possession from the date of acquisition pursuant to the main sentence of Article 95(4) of the Income Tax Act. Article 14 of the Addenda of the amended Income Tax Act provides that “Where the land for non-business was transferred before the enforcement of the Act, notwithstanding the amended provisions of Article 95(4) of the same Act, the former provisions shall apply.”

C) However, if the Plaintiff transferred the instant land after January 1, 2017, which was about six months after the Plaintiff took place, it was subject to the special deduction for long-term possession. Thus, the Plaintiff is not against the equity in applying the special deduction for long-term possession by treating the Plaintiff as equally as the transferor of the non-business land after January 1, 2017.

B. Relevant statutes

It is as shown in the attached Form.

C. Lawful of the instant disposition

1) Determination on the first argument

A) Relevant legal principles

(1) According to Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 14390, Dec. 20, 2016; hereinafter referred to as the “former Restriction of Special Taxation Act”), Article 66(1), (4), (5), and (13) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 27848, Feb. 7, 2017; hereinafter referred to as the “former Enforcement Decree of the Restriction of Special Taxation Act”), the land at the time of transfer is farmland to be exempted from capital gains tax, and the land is directly cultivated for at least eight years by the transferor while residing in the location of the land prescribed by Presidential Decree. The direct cultivation refers to the cultivation or cultivation by a resident who engages in farming work on his/her own land, or cultivating or cultivating at least half of farming work with his/her own labor for at least eight years. The burden of proving that the farmland meets the requirements for exemption from capital gains tax (see, e.g., Supreme Court Decision 2009Du4794.

(2) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring any special circumstance, barring any special circumstance. It is not allowed to expand or analogically interpret them without any reasonable reason. In particular, it accords with the principle of fair taxation to strictly interpret the provisions that clearly consider them as preferential provisions among the provisions that need to be reduced or exempted (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

(1) As alleged in the Plaintiff, the Plaintiff resided in ○○○○○○○○○○○○○○○○, ○○○○○○○○ 249, and moved his residence to ○○○○○○ on June 2, 1978. From that point, the change of the Plaintiff’s residence on the Plaintiff’s resident registration card is as follows (hereinafter “the Plaintiff’s residence”). (2) The ○○○ Gun and ○ Gun, the land of this case, have the same boundary line. On the other hand, between ○○ Gun and ○○ Gun, the same boundary line was not contacted. After the ○○ Gun was integrated into ○○○○○ on July 1, 2014, the boundary between ○○ Gun and ○○ Gun on the same boundary line.

(3) The straight line between the instant land and the Plaintiff’s residence exceeds 40 km.

[Ground of recognition] Facts without dispute, entry of evidence Nos. 3 and 6 and the purport of the whole pleadings

C) Determination

In light of the above legal principles, it is insufficient to recognize that the Plaintiff had resided in the farmland location and cultivated the instant land directly for not less than eight years solely on the basis of the descriptions of evidence Nos. 4, 5, 9, and 12 as follows. There is no evidence to acknowledge otherwise. Rather, in full view of the above acknowledged facts and the purport of the entries and arguments in the evidence Nos. 8 and 9 as well as the whole, there is only the circumstances contrary to the Plaintiff’s assertion as follows.

(1) 원고는 적어도 이 사건 토지 매수일인 1968. 12. 10.부터 1978. 6. 2. ○○시로 거주지를 이전할 때까지는 이 사건 토지를 직접 경작하였다고 주장하나, 원고의 ○○인 eee은 양도소득세 재조사 시 '원고가 이 사건 토지를 취득한 이후 본 인(eee)이 관리를 하면서 도지(賭只)를 받으면 원고에게 부쳐주었고, 본인(eee)은 1970년대부터 이 사건 토지에서 참외를 심었으며, 경지정리 후에는 fff이 벼를 심었다. 이 사건 토지에 대한 경작상황은 본인(eee)과 fff밖에 모른다'는 취지로 진술하였고, 원고와 ○촌 관계인 fff도 'eee이 경작한 이후 이 사건 토지에서 벼 농사를 하였다'는 취지로 진술하였다.

(2) The Plaintiff asserted that the Plaintiff frequently visited the instant land even after having moved his residence to ○○ City, thereby helping the farmer work and directly managing the farmland. However, the Plaintiff’s ○○ ggg was indirectly engaged in agricultural activities at the time of re-investigation of the capital gains tax, but not directly cultivated. He stated to the effect that the ○○○ gg was “The franchis almost all the franchis.” (No. 7 No. 3 pages).

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(3) In view that the Plaintiff, a 1900-year life, ordinarily engaged in the farming work or puts his own labor more than half of the farming work, the area of the instant land is considerably larger than 2,778 square meters, and the Plaintiff actually employs a full-time manager, such as e and f, and the Plaintiff appears to have been responsible for the cultivation and management of the instant land, and most of the farming works were carried out by them.

2) Determination on the second argument

Article 104-3 (1) 1 (a) of the applicable Income Tax Act provides that "farmland owner does not reside in the seat of farmland prescribed by Presidential Decree or does not grow for himself/herself for the period prescribed by Presidential Decree during which he/she owns land" shall be "land for non-business use" and the tax rate under Article 104 (1) 8 of the same Act is imposed when transferring such farmland.

In addition, the issue of whether the above non-business land falls under the above non-business land is determined depending on whether the requirements of ‘re- village' and ‘self-defense' under Article 168-8 of the Enforcement Decree of the Income Tax Act for a certain period under Article 168-6 of the Enforcement Decree of the Income Tax Act do not meet the requirements, and the ‘self-defense' requirement here is determined according to Article 66 (13) of the former Enforcement Decree of the Restriction of Special Taxation Act - whether the ‘self-defense' is ‘one-half or

However, as seen in the above paragraph 1, the Plaintiff cannot be deemed to have continuously engaged in the farming work from the purchase date of the instant land to the date of the transfer date of the instant land, or cultivated or cultivated 1/2 or more of the farming work with his own labor. Thus, the instant land cannot be deemed to fall under the “non-business land” under Article 104-3 (1) 1 (a) of the Income Tax Act because it did not meet the self-defense requirement itself, without any need to further examine the period of the Plaintiff’s allegation in this part or the legitimacy of the assertion itself.

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3) Judgment on the third argument

A) Relevant legal principles

Pursuant to the principle of equality under Article 11(1) of the Constitution, the principle of tax equality is equally treated as the same in the legislative process or enforcement process of the tax law in accordance with the same principle, and different ones are treated differently, thereby realizing the tax justice. However, today, tax sources are extremely diverse and there are many differences in the ability of the people who are liable for tax payment, as well as taxes are imposed for various policy purposes other than securing the national financial resources. Accordingly, in the area of the tax law, a wide range of formation right is granted to the legislators in the area of the tax law. Accordingly, even in relation to the legislation of the income tax on capital gains, the legislators have broad freedom of legislative formation as to whether to treat all taxable objects equally or to apply a relatively high or lower tax rate to specific objects, and what is the subject to the high or lower tax rate (Supreme Court Order 2010Hun-Ba448 Decided April 24, 2012).

B) Determination

In full view of the aforementioned legal principles and the purport of the amendment, and the nature of the pertinent provision, etc., the amended Income Tax Act, which was enforced after the application of the Income Tax Act, amended Article 14 of the Addenda, which included the date of commencing the period from the date of actual acquisition, and applied the Income Tax Act to the transfer of non-business land before the enforcement of the amended Income Tax Act, even if the transfer of land was made within the scope of the aforementioned broad legislative freedom, and thus, it cannot be deemed as going against the principle of tax equality or equity, even if the Defendant did not apply the special deduction for long

3. Conclusion

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