Tax Exemption for Giving ₩100 Million to Grandchild’s Education

Video from SBS:

Strange Tax Exemption Bill for ₩100 Million Transfer Towards Grandchild’s Education

korea korean tax exemption education transfer 2

Anchor: A bill has been proposed exempting from inheritance tax those who give up to ₩100 million in education to their grandchildren.

The bill is aimed at reducing the burden of education expenses for the middle class, and stimulating the stagnant economy.

But critics counter that the only beneficiary of the bill will be the well-off, sparking controversy.

Reporter Lim Chan-jong has more.

Reporter: Rep. Ryu Seong-geol of the ruling Saenuri Party initiated the bill to amend a tax break restriction law.

Under the bill, grandparents who give a maximum of ₩100 million for their grandchildren’s education will be exempted from paying inheritance tax. Lawmaker Lim claims that the bill will help revitalize the economy because the financial burden of education will decrease, and the consumption will increase.

Currently, giving up to ₩20 million to minor grandchildren is not subject to inheritance tax.

Mr. Ryu says that the bill requires all inherited money to be spent within four years of the transfer, but the money is banned from being used for private education. The prohibition will made under a presidential ordinance, the parliamentarian added.

But opponents say that only a fraction of people can afford to transfer ₩100 million in education to a grandchild, so the bill will likely give preferential treatment to the wealthy.

If a grandparent has ten grandchildren, he or she can transfer a total of ₩1 billion maximum to them under the bill.

Director of Participation Alliance Shin Won-gi: The bill permitting the transfer of wealth from grandparents to grandchildren without taxation will bring about adverse effects, including disrupting the tax code for inheritance.

Reporter: Also contentious is where the transferred money goes.

If a tax break granted for an amount of ₩100 million is to be used for education with a time restriction of four years, which is ₩25 million per year, the money will likely be used to send children overseas to study.

Saenuri Party Rep. Kim Kwan-young: The annual cap of ₩25 million was determined by looking at prices of overseas private schools, meaning inherited money from grandparents will flow into foreign countries, a far cry from boosting the economy as the bill’s initiator claims.

Reporter: The bill comes amidst the controversy over the government’s back-to-back announcements to increase taxes, (including those for cigarettes, cars, and residents), intensifying the controversy over tax policy.

Comments from Naver:


What is the Saenuri Party doing?

ryu6****[Responding to cswo****]:

Didn’t you know [the Saenuri Party] was made up of these kinds of people? I guess you didn’t. So you took a shot? keke Now you feel the result of your precious vote.


If not in private education, how else you can spend ₩100 million in four years? Private kindergarten, private elementary school, private high school, medical school, graduate school, law school? Studying abroad? You can probably spend that much.


Wow…they’re not doing what they should be. They are wasting time on something irrelevant.


Is this the kind of public polices they said they couldn’t pass because they were busy dealing with the Sewol ferry incident?


Can grandparents in the middle class afford to give ₩100 million in education expenses? What country are we talking about here?


Are the politicians going crazy to give money to their grandkids?


Korean laws seem to be very convenient for rich people.


The damn Saenuri Party is in its own class haha


Cigarette prices are increasing and gift taxes are decreasing…it’s paradise for rich people! Then, are those who voted for the Saenuri rich people who can readily give ₩100 million won to their grandkids?!


I’m at a loss for words. It’s a crazy policy. What a crazy Saenuri Party.


They keep on doing it, and it’s going too far.


keke Aigoo what percent of elderly people can afford to give their grandkids ₩100 million?


They wrote a freaking novel, keke


Haha what a cheerful barking noise in a while.

Minjun Chen contributed to this article.

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  • Kelly

    The number of elderly who are suffering from poverty is skyrocketing in Korea. They spend every single penny raising their children, and when their ‘children’ get married, they pay for their wedding ceremonies and apartments. How the hell can they have anything left for themselves, let alone their grandchildren?

    • Small twon

      Whenever I read comments like this , I wonder how much I misunderstand about other country. I mean if waygookin who care enough about Korea(or hate) to write comments on the small site doesn’t get what this article is about ……sigh…

      • Kelly

        The bill is supposed to reduce the burden of education expenses for the ‘middle class’. Realistically in Korea, not many ‘middle class’ grandparents have that sort of inheritance money for their grandchildren, as basically nothing is left over from the hefty costs of raising their own children far into adulthood. Not so hard to grasp…

        • Small twon

          You got C+. It is not about education or middle class. It is all about Saenuri paying back their backers. Like you wrote many Korean can not afford to give ton of cash to their grandchildren but for those who can and want but don’t wanna pay tax (which happen to be mostly rich Saenuri backers in Gangnam ) ..well this bill is god send.

          • 금정산

            To be fair, “the article” doesn’t mention that “Saenuri backers” theory.

  • FYIADragoon

    Still really disappointed by the fact that they voted in Saenuri again. Says a lot about the general populace.

    • left_nut

      Unfortunately the vast majority are indifferent on politics, leaving it to the aging conservative populations for voting in crap. If the population between 20-45 really came out to vote… we would be living in a different world.

      • Guest

        No, we wouldn’t. Certain number of youngsters are ..ok I know I will get a lot of down vote but I am gonna say it… they are spoiled brat with short sight…for example consider ILBE. ps. I don’t mean older generations are better.

  • Chucky3176

    “Cigarette prices are increasing and gift taxes are decreasing…it’s paradise for rich people! Then, are those who voted for the Saenuri rich people who can readily give ₩100 million won to their grandkids?!”

    Then quit smoking, and you don’t have to pay.

    • 금정산

      By chance, would you be interested in finding-out whether these gifts can be used to pay for university fees and overseas schools. And whether the same conditions of the bill apply to the current 20 million won exemption.

  • A Gawd Dang Mongolian

    So from someone who has a short attention span, the article can be summarized as “Shit sucks. Here’s how it can suck less maybe.”

  • CCCP

    What surprises me the most is that the money grandparents give their grandchildren gets taxed to begin with, I mean WTF?! Shouldn’t money passing among family members be none of the government’s business? It’s not like they’re talking about inheritance after the death of a grandparent (where their assets would go to the children and not grandchildren anyway), while they’re alive how can there be any “inheritance tax” on whatever money they give their descendants ?

    • 금정산

      The problem is people transfer money between family members as tax evasion or to hide income (for welfare).

    • Guest

      Generally the argument against this is that it promotes inequality. Gains from capital (money you have and can invest) is always greater than gains from labour. Kids than inherit thus have a huge advantage over kids that don’t, and eventually this inequality can hurt the economy and society. Inheritance taxes aim to even this out.

  • elizabeth

    Let me get this right – they donate a maximum of 100 miilion won and this amount is tax-exempt but the rest of their wealth is still taxed upon death before inheritance.

    If this is the case, it’s a fair deal. The amount is peanuts to billionaires but pretty huge for the poorer ones. So, yes, it helps the ‘poorer’ middle class people through tax exemption and encourages them to spend on something good – education – instead of wasting money on expensive gadgets, designer bags, etc.

    As for the political argument, it does not really hold water because not all the rich are backers of only one party. Even if it is so, like I said, the amount is peanuts to them. Furthermore, the tax policy benefits a good cause – education of the population.

    I am not a supporter of any party. Just trying to understand why it is such an unpopular policy.

    • 금정산

      There is a lack of trust and confidence in the current government. The unpopularity of this bill is somewhat an extension of this.

      I agree that it encourages people to spend on education – something good for their grandchildren. But there is a problem in freeing the parents from education expenses. They can then use the money which would have gone to education into whatever they like. Let’s hope most parents would put the money to buy something like a new car or a piano or something. But parents are then also free to buy things like gadgets and designer bags.

      I’m not sure what to make of this bill. It’s tricky and needs to be considered in context of the wider economic policy. The government wants people to consume for economic boost. I’m not sure whether this is more beneficial than the taxes it could get from inheritance – especially for successive governments.


      • elizabeth

        Thanks for the background reading. This is a perplexing situation. On one hand, I read of families struggling with expensive weddings and spending on education, on the other, parents do not seem to need the tax incentive if they are able to buy expensive items. I assume there is already a tax rebate/exemption on the amount parents spend on their children’s education.

        Next, if the proposed 100 million won is tagged to overseas education fees, then it implies that the government is trying to help parents including those who send their kids overseas. However, they also do not want funds to flow out of the country but to encourage domestic spending.

        And the funds can only be used for (local?) public schools. It’s baffling, unless local public schools are just as expensive, which could be the case if there is not already some form of subsidy in place.

        Therefore to help those who really need assistance, the figure should be based on affordability and/or household disposable income and/or tagged to local public school fees.

        So, if the government’s aim is to encourage consumption and at the same time relieve the burden of education, then subsidies for education and certain staples/utilities (like what the Singapore government is doing) plus raising taxes on luxury goods and inheritance will be more effective in guiding consumption in the right direction.

        But this tweaking of inheritance tax is not totally effective in achieving those aims. Now I see why there is distrust.

  • redgirls

    God, Ireland and Korea are so alike.

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