TaxTMI 
TaxTMI 
It is a common feature for social clubs to pay compensation to members on voluntary surrender of their membership. I would like to know experts’ view whether such compensation received is subject to income tax
Surrender of Club Membership
01 Sep 2023 
4 Replies 
1973 Views Asked by
GST on membership surrender treated as supply of service, attracting tax and input tax credit implications.
Payments to a member for surrendering club membership are characterised as consideration constituting a supply of service liable to GST; if the member is a taxable person he must collect and remit GST and the club may be able to claim input tax credit. For income tax purposes the surrender payment is treated as consideration giving rise to capital gains rather than non taxable compensation. (AI Summary)
Payments to a member for surrendering club membership are characterised as consideration constituting a supply of service liable to GST; if the member is a taxable person he must collect and remit GST and the club may be able to claim input tax credit. For income tax purposes the surrender payment is treated as consideration giving rise to capital gains rather than non taxable compensation. (AI Summary)