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Members Club

Is Income taxable

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I act for a car club which is a Members Club.  The club does not trade.  All the subscriptions are used to fund events for their own recreational purposes.  No tax liability so far.

My concern is that the club has received donations from Insurance companies.  These are related to members of the club who apply for insurance and show the insurance company their club membership.  The Insurance Company then pays the Members Club a small referral amount.

Should this be classed as investment income of the club and declared on a corporation tax return? 

Or is it just the discount on the normal insurance charge given as a discount, but paid to the club instead of the member, and therefore additional funds for the benefit of all the members?

Or is it classed as a donation of money and non-taxable?

Replies (2)

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paddle steamer
03rd Apr 2019 15:33

Sounds like a commission and given it relates to insurance I would be getting a little worried re regulation, financial services, IBRC etc (long time since I did a FS audit etc) or whatever these days in needed to broker insurance products.

I think, unless it comes direct from the members, or is a reduction re insurance the club itself buys, it is not mutual trading so accordingly is taxable income for the club.

Thanks (1)
By Qododog
05th Apr 2019 14:45

Apparently all the insurance companies are also members of the club. Would that make a difference?

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