Last Year Minor Gifts Totaled 2.3 Trillion Won, Mostly Real Estate... Rapid Increase in 'Grandparents to Grandchildren' Generation Skipping

Democratic Party Rep. Goh Yong-jin: "Wealthy Class's 'Inheritance of Wealth' Has Become a Means... Need to Investigate Whether Minors Evade Gift Tax"

[Asia Economy Sejong=Reporter Son Seonhee] Last year, the amount of gifts given to minors reached a total of over 2 trillion won, more than doubling compared to the previous year. In particular, about half of the gifts given to minors over the past five years were made by grandparents, skipping a generation.

According to data on the 'Status of Gifts to Minors in the Last 5 Years' submitted by the National Tax Service to Go Yongjin, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, the amount of gifts to minors last year was recorded at 2.3504 trillion won. This is more than double (120%) compared to one year earlier (1.0617 trillion won).

The number of minors who filed gift tax returns last year also more than doubled to 20,706 from 10,056 the previous year. The average gift property per person was 1.1351 billion won. It is analyzed that the increase in cases of gifts to young children or grandchildren is due to the surge in asset values such as skyrocketing housing prices last year and the strengthening of related real estate tax policies.

Looking at the types of gifted assets, real estate such as land and buildings accounted for the largest share at 885.1 billion won (37.7%). Financial assets such as deposits followed with 808.6 billion won (34.4%), and stocks with 502.8 billion won (21.4%). The scale of gifts in real estate, financial assets, and stocks all roughly doubled compared to one year earlier.

Among minors who received gifts last year, about 42% (7,251 people) inherited assets from their grandparents. When grandparents skip a generation and directly gift to grandchildren, it can avoid the tax burden incurred when the parent generation gifts to the grandchild generation.

The tax authorities impose a surcharge of 30% on gift tax (40% for minors) on such generation-skipping gifts to alleviate the phenomenon of 'wealth inheritance.'

Nevertheless, since the effective tax rate difference from general gifts is not significant, generation-skipping gifts have steadily increased every year as a 'legal tax-saving method' for the wealthy. Last year, the amount of generation-skipping gifts surged by 82% to 1.0117 trillion won from 554.6 billion won the previous year, surpassing the 1 trillion won mark for the first time.

Assemblyman Go said, "Gifts to minors and generation-skipping gifts are rapidly increasing every year," and pointed out, "The current generation-skipping surcharge tax is not functioning properly and has become a means for the wealthy to pass on their wealth." He added, "It is necessary to carefully examine whether minors without economic activity ability have properly paid gift tax with their own money, and to investigate the source of funds and any gift tax evasion."

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