Loyalty programme retention treated as taxable service consideration after points lapse, not an excluded actionable claim.

A loyalty scheme operator's retained amount on expiry of unredeemed payback points was treated as taxable consideration for services, not as an excluded actionable claim under GST. During the validity period, the points were actionable claims, but once they expired and could no longer be redeemed, that character ceased. The retained sum was not paid by end customers for any independent supply to them; it formed part of the contractual consideration from partner entities for managing the loyalty programme, including fixed and variable components linked to unredeemed points. GST applied to that service consideration, and the advance ruling was upheld.

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Issues: Whether the amount retained on expiry of payback points remained an actionable claim outside GST, and whether such amount was liable to be treated as consideration for taxable supply of services.

Analysis: The appeal arose from a loyalty programme in which the appellant managed issuance and redemption of payback points for partner entities. The Authority held that while the points were actionable claims during their validity period, they ceased to be actionable claims after expiry because the end customers could no longer redeem them. The retained amount was not received from end customers for any independent supply to them, but formed part of the contractual consideration flowing from the partner entities for management of the loyalty scheme. The amount comprised a fixed management fee and a variable component linked to unredeemed points, and the lapse of the points did not change the character of the consideration already received for the appellant's services.

Conclusion: The amount retained on expiry of the payback points was correctly treated as consideration for supply of services and was liable to GST; the appeal was dismissed and the advance ruling was upheld.

Final Conclusion: The taxability of the retained amount was affirmed on the footing that it arose from the service arrangement with the partner entities rather than from an actionable claim surviving after expiry of the points.

Ratio Decidendi: Where a loyalty scheme operator receives contractual consideration from partner entities for managing the scheme, the amount retained on expiry of unredeemed points forms part of the taxable consideration for services and does not remain excluded as an actionable claim after the points lapse.

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