It was confirmed on the 14th that the Ministry of Economy and Finance is reviewing the introduction of a "junior individual savings account (ISA)" that would provide tax benefits for stock investments by minors under age 19. The move follows President Lee Jae-myung's order to review incentives for retail investors who hold stocks for a long time.
Currently, if you invest in stocks through an ISA and hold them for at least three years, investment revenue is tax-free up to 2 million won (4 million won for the low-income type), and any excess is subject to separate taxation at a 9.9% rate. However, only those age 15 or older can open an ISA. In addition, those age 15 to 19 must have earned income. A Ministry of Economy and Finance (MOEF) official said, "Since saving allowance from a young age to buy stocks is a good experience, introducing a junior ISA could be a constructive discussion."
The Ministry of Economy and Finance (MOEF) is reviewing a plan to cap junior ISA contributions at around 40 million won, lower than the existing ISA limit of 100 million won. For minors without earned income, ISA investment funds are likely to come mostly from parents. Under current law, the maximum amount that can be given to a minor child without gift tax is 20 million won over 10 years. If a child has just been born, up to 40 million won over 20 years would be tax-exempt.
In contrast, the securities industry argues that the contribution limit should remain at 100 million won. The securities industry also argues that inheritance and gift tax should be waived for junior ISA investment funds. In response, a Ministry of Economy and Finance (MOEF) official expressed concern, saying, "If we make exceptions for inheritance and gift tax, there will be cases of gifts worth hundreds of millions of won."