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[Related laws] Article 86-3 of the Restriction of Special Taxation Act, Article 80-3 of the Enforcement Decree of the Restriction of Special Taxation Act, and 31) In order for workers to receive yellow umbrella deductions, deductions are possible only if the total wages for the year concerned are less than 70 million won as the representative of a corporation that runs a small business* Individual In case of operating a business: Deducted from business income as a business operator2) Deduction limits vary depending on the amount of business (labor) income : 2 million won
What is Yellow Umbrella Mutual Aid?
The Korea Federation of Small and Medium Business is operating a deduction system for raising lump sum (severance pay) supported by the government so that small businesses can accumulate a certain installment every month to stabilize their lives and recover in business in case of business closure, death, or old age.
As a representative of a small business or small business owner, an individual business owner, a representative of a corporation, or a joint business operator can sign up. If the positions overlap, select one of them and sign up. (Representatives with multiple businesses should choose one business site)
If a person receiving pension savings and deduction pays yellow umbrella deduction (deduction for small businesses and small business owners), can both deductions be applied at the same time?
yes. it’s possible.
The income deduction for personal pension savings income deduction or pension account tax deduction and yellow umbrella deduction can be deducted repeatedly.
Can workers also receive income deduction for the amount of yellow umbrella deduction (aid for small businesses and small business owners)?
Only the representative of a corporation whose total wages during the taxable period is less than KRW 70 million is eligible.
Article 86-3 of the Restriction of Special Taxation Act
How is the income deduction for the yellow umbrella deduction (aid for small businesses and small business owners) calculated?
After January 1, 2017, yellow umbrella deduction amount: Min (①,②)
If I am the representative of a corporation that also operates an individual business place, can I receive a deduction from my earned income for the deductions I subscribed to as a sole proprietor?
It’s not possible.
It is deducted from the amount of income subscribed to in the relevant position (individual business owner → business income).
However, 2015.12.31. If you are a former subscriber and have not applied for the application of the revised regulations to the Korea Federation of Small and Medium Business, you will be deducted from your global income.
If the representative of a corporation loses his/her position and receives deductions from the small business/small business owner deduction, is he/she still subject to taxation?
yes.
If a deduction is received from the small business or small business deduction for reasons such as business closure, dissolution, death, loss of the status of the representative of the corporation, or claim for payment by a person aged 60 or older (paid for 120 months or more), it is regarded as retirement income and is subject to income tax. .(For those who signed up after ‘16.1.1.)
Retirement Income = Deductions – Cumulative amount paid in excess of the actual income deductions
Article 86-3 (3) of the Restriction of Special Taxation Act
Is tax levied even if the contract for mutual aid for small businesses or small business owners is terminated prior to the occurrence of reasons such as business closure?
yes.
If the contract for mutual aid for small businesses or small business owners is terminated prior to the occurrence of reasons such as business closure, income tax is imposed as it is regarded as other income.
Other income = Refund received due to termination – Accumulated amount paid in excess of the amount actually deducted from income
Article 86-3 (4) of the Restriction of Special Taxation Act
