Implications of Changi Airport Group vs Comptroller of Income Tax
On 25 September 2025, the Appellate Division of the High Court of Singapore ruled on whether Changi Airport Group (CAG) could claim capital allowances under Section 19A of the Income Tax Act (ITA) for expenditures on runways, taxiways, and aprons (collectively referred to as "RTA").
The Court upheld the classification of the RTA as "structures" rather than "plant," resulting in less favourable tax treatment under the Industrial Building Allowances (IBA) scheme.
Key Legal Issues
- Divisibility Issue: Should the RTA be assessed independently or as part of an integrated unit with aerodrome equipment (e.g., airfield lighting systems)?
- Plant Issue: Are the RTA "plant" or "structures" under the ITA?
Court's Findings
Divisibility of Assets
The Court rejected CAG's argument that the RTA and aerodrome equipment should be treated as a single integrated asset ("Integrated RTA"). The RTA can function independently of the aerodrome equipment, serving distinct purposes (e.g., physical surfaces for aircraft movement vs. navigation and safety systems). Common functionality does not automatically render assets indivisible.
Classification of RTA
Applying the ZF test, the Court considered:
- Operational Role: The RTA primarily serves as a surface for aircraft movement, akin to a premises rather than an apparatus.
- Physical Characteristics: The RTA resemble conventional structures like roads and pavements, which are typically classified as "structures."
- Permanence: The RTA is durable and designed for long-term use, further supporting its classification as a "structure."
- Analogous cases (e.g., car wash sites, racetracks, golf greens) reinforce the conclusion that surface structures are premises rather than "plant.”
Policy Considerations
CAG argued that classifying the RTA as "structures" creates a competitive disadvantage, as similar assets in other countries receive favourable tax treatment. The Court held that tax laws must be interpreted objectively, and it is Parliament, not the judiciary, that should initiate any changes to the tax regime.
Implications for Tax Professionals
- Clarification of "Plant" vs. "Structure": The ruling reinforces the mutual exclusivity between "plant" and "structures" under Singapore tax law. The ZF test remains the primary framework for determining whether an asset qualifies as "plant."
- Impact on Infrastructure Investments: Surface structures, such as runways, taxiways, and aprons, are likely to be classified as "structures" rather than "plant," which limits their eligibility for accelerated capital allowances under Section 19A of the ITA.
- Legislative Intent and Competitive Neutrality: The LIA scheme does not cover airport facilities, such as those of the RTA, underscoring Parliament's targeted approach to tax relief.
Get In Touch
For more information please contact Michael Velten.
michael@veltenadvisors.com
+6590687547
37 Ann Siang Rd, Singapore 069715
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