Aggregation of income and loss on the transfer of golf membership

1. Overview

Based on the current rule, the loss on transfer of golf membership can be offset against other incomes. However, the tax reform of 2014 doesn’t allow such aggregation of loss and income because golf membership is “the asset held for hobbies, amusement, relaxation or watching enjoyment purpose” and thus should be treated as “the asset not necessary for daily life”,.

2. Content

According to the aggregate concept (aka conduit concept) with respect to the calculation of individual income tax, loss occurred from (A) business can be offset against income generated from (B) business or others. Yet, according to the exceptional rule drafted in the tax reform of 2014, certain losses are prohibited from offsetting other incomes generated from other activities. Loss on transfer of golf membership falls in the category guided by such exception rule. Current rule doesn’t interpret loss on golf membership transfer as “the asset not necessary for daily life”, therefore, it is allowed to deduct other incomes (ex: salary income). However, it is very likely that the tax reform of 2014 will categorize the golf membership as “the asset not necessary for daily life”. As a result, loss on transfer of golf membership can no longer be deductable.