Cases continue in which jeonse deposits provided by parents for a newlywed home are treated as gifts and taxed, often surfacing during checks on the source of funds.

Under tax law, property received from a direct ascendant above a set threshold is subject to gift tax. To argue that the money was borrowed, evidence of a genuine loan is required.

What to keep

In practice, a written loan agreement, a stated interest rate and repayment schedule, records of interest actually paid and bank transfer records together make recognition as a loan more likely.

Where the paperwork exists but no repayment occurs, the arrangement may not be accepted as a loan. What matters is not the existence of records but their agreement with the actual flow of money.

When remittances cross borders

Where funds come from parents or relatives living abroad, foreign-exchange reporting procedures apply as well — a situation that arises often in Chinese households in Korea.

This paper notes that tax outcomes vary considerably with individual circumstances, and that specific cases are best taken to a tax professional.