Retirees who Retired On or After 1998 to Receive Refunds

The government has decided to return the income tax for retirement allowance to those who retired on and after January 1, 1998 among the retirees that received a part of retirement allowance before their early retirement. Accordingly, approximately 300,000 retirees are expected to get back a part of their income tax for retirement allowance.

The National Tax Service (NTS), which recently established a regulation concerning early retirees who received a part of their retirement allowance while being employed, announced on April 30 that it will apply the established regulation, which was originally applied to those who retire on and after 2003, to those who retired on and after 1998 as well.

It will return the income tax of retirement allowance to those who received a part of their retirement allowance prior to retirement and received legal retirement allowance and reward when they retired.

However, those who did not receive their retirement allowance prior to retirement; those who received only legal allowance when they retired, and those who retired on or before December 31, 1997 cannot be benefited.

Retirees who want the refund of tax income need to apply for it through the company they were employed by or tax offices with necessary forms.

Particularly, those who retired in 1998 should visit their tax office by May 21 because the company cannot apply for the return of tax income as the period of prescription of five years has already expired.

Necessary forms include a receipt for the withholding of retirement allowance and a written application.

According to the NTS, an employee who joined a company on January of 1985 and received retirement allowance for last 13 years on December 31, 1998 prior to retirement can get back 4,965,437 won when he retired in December last year, assuming that the legal retirement allowance and reward for early retirement are 100 and 200 million won, respectively. The refund amounts to 2,790,000 won if legal retirement allowances and rewards for early retirement are 60 and 100 million won.

The NTS made public its automatic calculation program for tax refunds on its homepage (www.nts.go.kr) so that retirees can compute their own refunds by themselves.

Ji-Wan Cha cha@donga.com