ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

Improvement Scheme on the Tax Prescript about Deemed Rent

  • Gyuyung Hwang Kookmin University
  • Seung-Yeon Lim Kookmin University

Asian Tax Journal Vol. 12 No. 4 (2011), pp. 461-487

Abstract

This study reviews the meaning of the tax prescript about deemed rent. It analyzes the shortcoming and the way to improve of the tax provision about deemed rent which was revised on Jan. 1. 2011. The results of analysis show that the new prescription has inaccuracy problem in calculating a deemed rent of house. The new provision tells that the '300 million won deduction' must be applied according to size of security deposit. But this deduction order gives rise to shortcoming of calculation. Therefore it is necessary that '300 million won deduction' has to be applied on the whole, not by deposit size. Besides the new prescript induces excessive tax burden when taxpayers are changed from twohouse－holders to three－house－holders. As a mater of fact, '300 million won deduction' was enacted as a consideration for tax exemption of two－house－hold status. Therefore it is necessary to define that two－house－holders, not three－house－holders, are in duty to pay tax about deemed rent. Moreover, the new prescription has mismatching problem when it is applied to the case of income determining by estimation. In order to improve this weakness, it is required to delete the clause that states 'multiply accumulated amount of security deposit by 60%'. Considering the purpose of deemed rent provision which restrains estate speculation, the revision that changeovers multiple－homeowner from exempt to tax－payer is worth to be welcomed. Moreover, the effort to find shortcoming of provision and to improve it would be of help in enhancing the sharpness of prescription.

Keywords

  • deemed rent
  • security deposit
  • income determining by estimation
  • restraining estate speculation

Related Articles

ATJ
E-SubmissionSitemapContact Us RSS

Asian Tax Journal

Address : 3F, KICPA Bldg., 12 Chungjeongro 7-gil, Seodaemun-gu, Seoul 03736, Republic of Korea

Editor-in-Chief : Prof. Wanyong Kim Editorial Office : Dept. of Finance, Accounting & Taxation, Hanyang Cyber University, 220 Wangsimni-ro, Seongdong-gu, Seoul, Republic of Korea Tel : +82-2-2290-0418 / +82-10-8664-1117 E-mail : taxresearch2@hanmail.net