TaxTMI 
TaxTMI 
How the income is recognised in Time Sharing in Holiday Resorts.
The Income part consists of
1. One time Membership admission fee collected.
2. Annual Renewal fee collected
3. Usage charges collected when the room is occupied
Taxation of Time Sharing in Holiday Resorts
28 Jun 2011 
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Accrual of income: upfront timeshare fees may be recognised over the membership term when obligations persist and liabilities aren't reliably estimable.
Upfront timeshare membership fees give rise to a present debt on contract execution but do not fully accrue as income in the initial year where a continuing contractual obligation exists to provide holiday accommodation and ancillary services over the membership term. Because future outflows are probable yet cannot be reliably estimated due to contingencies (peak demand, renovations, alternate accommodation, consumer forum awards and growing membership), the third condition for recognising a provision is unmet. Consequently, systematic recognition of part of the fee over the term, rather than immediate taxation of the whole receipt, is appropriate to avoid distortion of taxable net income. (AI Summary)
Upfront timeshare membership fees give rise to a present debt on contract execution but do not fully accrue as income in the initial year where a continuing contractual obligation exists to provide holiday accommodation and ancillary services over the membership term. Because future outflows are probable yet cannot be reliably estimated due to contingencies (peak demand, renovations, alternate accommodation, consumer forum awards and growing membership), the third condition for recognising a provision is unmet. Consequently, systematic recognition of part of the fee over the term, rather than immediate taxation of the whole receipt, is appropriate to avoid distortion of taxable net income. (AI Summary)