If you want to use 그 as a stand alone subject, you have to use 그섯은 for instance.
Here 그 modifies 해.
From hinative (copy-paste):
if you count years, you use "년" (example: 1994년, 3년 전). if you call years for certain purpose, you use "해". (example: 올해(this year), 새해(new year), 양띠 해(year of the lamb))
년 is chinese-based korean(年), and 해 is pure korean. so, 작(昨) and 내(來) is also chinese-based korean, we use 년.
to answer the "How about when we say 작년, 내년?" question.