Child tax credit system to be introduced from 2015

The Child Tax Credit system, one of President Park Geun-hye’s campaign pledges, will be introduced from 2015. Under the system, low-income families can receive up to the 500,000 won (450 U.S. dollars) subsidy per child under the age of 18, regardless of the number of children.

According to the 2013 amendment to tax law, child subsidy will be paid from Jan. 1, 2015. Based on earned income tax credit, the child subsidy will be given to families with parents’ combined annual income less than 40 million won (36,000 dollars). To benefit from earned income tax credit, the family’s total asset should worth less than 140 million won (126,000 dollars), and all members of the family should own one or none house.

To be able to receive 500,000 won (450 dollars) per child, annual family income should be less than 21 million won (19,000 dollars) for single-income family and up to 25 million won (22,000 dollars) for dual-income household. The subsidy reduces as income increases. For example, households with annual income of 40 million won (36,000 dollars) will receive 300,000 won (270 dollars) per child. The Strategy and Finance Ministry will distribute a table of child tax credit, which is different depending on income and the number of children.

Families benefit from Child Tax Credit system will be excluded from Child Tax Deduction system considering benefits from the former are more than those of the latter. The ministry expects that the child tax credit system will lower annual income tax by 20,000 won (18 dollars) to 180,000 won (162 dollars) for households with annual income less than 40 million won.