Singapore High Court clarifies applicability of ZF factors to structures

02 Jan 2025    2 minute read

In brief

In the recent decision of Changi Airport Group (Singapore) Pte Ltd v. Comptroller of Income Tax [2024] SGHC 281 ("CAG"), the Singapore High Court clarified that the factors laid down by the Singapore Court of Appeal in the seminal decision of ZF v. Comptroller of Income Tax [2010] SGCA 48 ("ZF") apply to determine if an asset is "plant or machinery" or "building or structure" for the purposes of claiming capital allowance under Section 19A of the Income Tax Act 1947.   

Contents

Key takeaways

  • Under Singapore's capital allowance regime, a legislative distinction is drawn between "building or structures" and "plant or machinery". A "structure" may be distinct from a "building" and an asset may be classified as a "structure" even if it does not fall within the conventional understanding of a building that provides shelter.
  • The inquiry into the divisibility of a complex asset is an anterior inquiry that takes place prior to the application of the ZF Factors (defined below), in order to identify the exact apparatus in question.
  • Caution must be had to applying the decisions of foreign cases directly by analogy for Singapore capital allowance purposes. What constitutes a "plant" is a matter of fact and dependent on the precise context of the case.
  • For assessments under Section 19A of the ITA, the facts as well as the precise context are of primary importance. Given that the Income Tax Board of Review ("Board") is the primary trier of fact and a specialist tribunal constituted by legislature with the subject-matter expertise to adjudicate tax disputes, an appellate court should be slow to intervene with the Board's findings, provided there is reasonable ground for the findings.

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Shawn Joo, Senior Associate, has contributed to this legal update.

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