Timeshare ownership has been tied to a number of financial obligations that many owners cannot cope up with. Along with the increasing maintenance fee, there are also some taxes that timeshare owners must pay. These fees may trigger many owners to decide to get out of their timeshares. Here is a legal case about tax imposition on a certain timeshare company.
Recently, the Western Cape High Court gave judgment with regards of an appeal from the Cape Town Tax Court. The taxpayer is the Vacation Exchanges International (Pty) Ltd trading as RCI which carried a timeshare exchange business. Its members were able to bank timeshare rights in exchange for points that they can use to obtain timeshare rights at other resorts. RCI granted a number of these points to its employees.
Meanwhile, the South African Revenue Service (Sars) raised an estimated employees' tax assessment against RCI contending that the provision of points constituted a taxable benefit for the employees.
RCI firstly stressed out that the points had no cash equivalent value and thus, were not subject to employees' tax. Also, it contended that Sars had utilized the wrong remedy in assessing it. The Tax Court then found in favour of Sars resulting to the RCI’s appeal to the Western Cape High Court. The high court first considered the second of RCI's contentions and if it were successful, it would determine the case in favour of RCI.
Taxes are just some of the financial aspects that the timeshare owners are facing with. For some who can’t manage such charges, they try to get rid of their timeshares while others hire a timeshare transfer company such as the Transfer Smart. However, the aforementioned legal battle is just an example of taxes imposed on a certain timeshare company or to its members.