Article 22 (Retirement Income), Income Tax Act, as last amended by Act No. 14474, Dec. 27, 2016

A lump-sum allowance received pursuant to the pension-related Acts at the end of the employment will be considered as retirement income and the amount is subject to the income tax under the category of retirement income.


*Income Tax Act

Article 22 (Retirement Income)

(1) Retirement income shall be the following income, generated in the relevant taxable period:

1. A lump sum allowance received pursuant to the public pension-related Acts;

2. A lump sum allowance received upon retirement based of the amount to be borne by users;

3. Other incomes prescribed by Presidential Decree, which are similar to those under subparagraphs 1 and 2.

(2) The retirement income under paragraph (1) 1 shall be the lump sum payment received based on either contributions to pension or employer contributions made on or after January 1, 2002, or on the labor offered on or after January 1, 2002.

(3) The amount of retirement income shall be the sum of the income specified in each subparagraph of paragraph (1) (excluding the amount of non-taxable income): Provided, That, if the amount of retirement income of any of the executives specified by Presidential Decree (excluding the amount under paragraph (1) 1; referring to the amount after deducting the amount of retirement income specified by Presidential Decree, if the executive is entitled to receiving the retirement income, supposing that the executive retired on December 31, 2011) exceeds the amount calculated in accordance with the following formula, such excess shall be deemed wage and salary income, notwithstanding paragraph (1):

Annual average amount of the gross pay earned during the previous three years prior to the date of retirement (where the period of an employment concerned is less than three years, it shall be the period of such employment) x 1/10 x The period of employment after January 1, 2012/12 x 3

(4) For the purpose of applying the proviso to paragraph (3) and the formula in paragraph (3), the employment period and gross pay shall be calculated as follows:

1. Employment period: It shall be calculated by the number of months. In such cases, a period of less than one month shall be deemed one month;

2. Gross pay: Wage and salary incomes under Article 20 (1) 1 and 2, including salary and bonus, (excluding non-taxable income under Article 12) shall be aggregated.

(5) Deleted.

(6) The scope and method of calculation of retirement income, and other necessary matters, shall be prescribed by Presidential Decree.

[This Article Wholly Amended by Act No. 9897, Dec. 31, 2009]