Skipping Children and Giving to Grandchildren... 'Generation-Skipping' Gifts Total 5.6 Trillion Won Over 5 Years

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hye-min] It has been revealed that so-called 'generation-skipping' gifts, where parents skip their children and give gifts directly to their grandchildren, have exceeded 5 trillion won over five years. Nearly 2 trillion won was recorded in the three Gangnam districts alone, and it is pointed out that this is being used as a form of 'tax saving' by paying gift tax only once.

On the 5th, Kim Ju-young, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, announced that according to data received from the Seoul Regional Tax Office and Seoul City, an analysis of the 'generation-skipping gift status from 2014 to 2018' showed that a total of 5.6651 trillion won in generation-skipping gifts occurred over the past five years.

In Seoul alone, the amount reached 3.3042 trillion won, of which 1.9432 trillion won in generation-skipping gifts took place in the three Gangnam districts. This accounts for 20% of the total and 59% of the Seoul area.

By type of gift, land was the largest at 1.9327 trillion won, followed by financial assets at 1.4897 trillion won, and buildings at 1.2091 trillion won. In the three Gangnam districts, generation-skipping gifts were highest in financial assets at 605.3 billion won, followed by land at 524.5 billion won, securities at 368.2 billion won, and buildings at 356.2 billion won.

The National Tax Service collected 1.1663 trillion won through generation-skipping gifts during the same period. The three Gangnam districts accounted for 44%, or 508.9 billion won, of the collections.

The three Gangnam districts also had the highest proportion of tax delinquencies. According to Representative Kim, from 2014 to 2019, the amount of national tax arrears in the three Gangnam districts accounted for 1.1277 trillion won, half of the total for Seoul (2.5898 trillion won). The proportion of high-value and habitual delinquents was also 33% in the three Gangnam districts, with 439 out of 1,330 people in Seoul.

Meanwhile, dividend income earned by minors through gifts or inheritance was found to be close to 1 trillion won over five years from 2014. According to data analyzed by Representative Kim from the National Tax Service, dividend income for minors under 18 was confirmed to be 902.148 billion won. Dividend income increased significantly from 123.361 billion won in 2014 to 264.726 billion won in 2018.

As of 2018, there were 373 infants aged 0 who earned dividend income right after birth. They earned 1.098 billion won in income before they even started walking.

Financial income for minors during the same period amounted to 1.891173 trillion won, and income earned from real estate rentals was 217.184 billion won. As of 2018, 2,684 minors earned 54.886 billion won in rental income, with an average income per person of 2.045 billion won.

On the other hand, according to the Ministry of Health and Welfare, the number of basic livelihood security recipients, which was 1,881,357 at the end of December last year, is approaching 2 million as of the end of May this year.

Representative Kim said, "While the inheritance of wealth is accelerating on one hand, it is also confirmed that disaster poverty caused by COVID-19 is worsening," adding, "Our society needs to make efforts to resolve such income inequality and polarization."

This content was produced with the assistance of AI translation services.