A. Executive summary

In this client alert, we examine the recent High Court decision of Changi Airport Group (Singapore) Pte Ltd v Comptroller of Income Tax [2024] SGHC 281 which ruled that certain airport assets were structures and not plant and therefore not eligible for capital allowances under section 19A of the Income Tax Act 1967 (the Act) – affirming the decision of the Income Tax Board of Review (Board).

B. Background

The appellant is Changi Airport Group (Appellant), the operator of Changi Airport. The Appellant had claimed capital allowances for capital expenditure in respect of runways, taxiways and aprons (collectively referred to as RTA) under section 19A of the Act. The Comptroller disallowed the capital allowance claims on the RTA on the basis that the RTA were structures and not plant, and took the view that the RTA were only eligible for industrial building allowances under section 16 of the Act. However, the Comptroller granted the Appellant capital allowances in respect of aerodrome equipment comprising specialised systems such as airfield lighting system, aircraft docking guidance systems, and airport radar systems (Aerodrome Equipment).

The Board found in favour of the Comptroller on the basis that the operational role of the RTA was to allow aircraft to traverse and rest. As such, they were “structures” as opposed to apparatus used for trade.

On appeal, it was undisputed between the parties that the RTA were “designed to facilitate and ensure the safe landing, taxiing and take-off of aircraft”. The primary issue before the Court was whether the RTA were “plant” as opposed to a “structure”.

The Appellant argued, among other things, that: 1) the RTA and Aerodrome Equipment were indivisible and should be treated as a single asset for tax purposes, and 2) the RTA was critical to the appellant’s business as it facilitated the movement of aircraft and served additional functions as opposed to being mere setting or premises.

Legal framework

To recap, the legal framework for determining whether an asset is a “plant” or “building” is set out in the leading decision of ZF v Comptroller of Income Tax [2011] 1 SLR 1044 (ZF). There, the Court of Appeal held that any tangible asset (other than a building or structure, or an asset forming part of a building or structure) used permanently for the purposes of a taxpayer’s trade or business can be considered “apparatus” and would thus qualify as “plant”. On the other hand, a building consists of a permanent structure (or part thereof) that houses the trade or business (i.e., the place in which (or the asset with which) a trade or business is carried on). The categories of “plant” and “building” are mutually exclusive. The Court of Appeal laid down factors to assess whether a particular asset was “plant” or “building”, such as its exact operational role and physical characteristics.

C. The decision of the Court

The Court upheld the Board’s decision that the RTA were structures and not plant. The Court reasoned as follows:

1. Firstly, the Court affirmed ZF that the correct distinction is between “plant and machinery” and “buildings and structures”. The High Court further clarified that “structure” and “building” are distinct.


2. The Court affirmed the holding in Singapore Cement Manufacturing Co (Pte) Ltd v Comptroller of Income Tax [2023] 5 SLR 1099 (Singapore Cement) that an asset is capable of being differentiated / divisible into its constituent parts as structural assets (i.e., building) and functional assets (i.e., plant or machinery) for tax purposes. This was to be determined based on their operational functions. The Singapore Cement decision involved a cement silo that was constructed to receive cement shipments before they were dispensed into cement trucks. The High Court in that case upheld the Board’s finding that the cement silo was a building (i.e., structural asset) on the basis that it served the primary operational function of storage and did not perform any treatment of the cement. On the other hand, the functions of preservation and protection were performed by the machinery installed within the silo (i.e., functional assets) for which the Comptroller had granted capital allowances.


3. Following from the above, the Court upheld the Board’s finding that the RTA and Aerodrome Equipment were divisible assets, and the RTA was a “structure” serving as the premises of the trade:


1. The Board found that the exact operational role of the RTA was to be the space on which take-off, landing, travelling and resting of aircraft occurs.


2. The RTA continues to function in the absence of the Aerodrome Equipment.


3. In relation to the Appellant’s argument that the RTA performed navigation functions, the Court noted that this was primarily performed by the Aerodrome Equipment.


4. In relation to the Appellant’s argument that the RTA served the functions of preventing skidding and electric shocks, and bearing heavy aircraft load, the Court held that these functions augment the primary function of being a structure on which the aircraft may traverse and rest – citing Singapore Cement which held that the cement silo served the main function of storing cement.


5. The Court further distinguished the RTA from a dry dock that raises ships and holds ships in place, as the RTA was instead a structure on which aircraft move.


6. The Court also noted that not all the Aerodrome Equipment were physically located on the RTA.


4. The Court emphasised that the inquiry is not whether the asset is functional or integral to the taxpayer’s business, but whether it functions as a plant or building. The Court also highlighted the rule of mutual exclusivity between plant/machinery and building/structure under Singapore law. Hence, even though an asset may have plant features, the inquiry is whether the asset is more appropriately described as a “plant” or a “building or structure”.

D. Conclusion

This decision is consistent with established Singapore case law on capital allowances. In particular, it reinforces the position in Singapore Cement on the divisibility of assets for tax purposes, i.e., the principle that an integrated asset can be differentiated into its constituent components and the function of each component would have to be analysed to determine whether it qualifies as plant/machinery as opposed to a building/structure.

We would also observe that assets such as cement silos and airport runways would previously have qualified for industrial building allowances (IBA), the capital allowance scheme for industrial buildings. After the phasing out of IBA, some taxpayers have sought to characterise such assets as plant, in order to enjoy capital allowances under section 19A of the Act. However, this has proven to be difficult. If the asset previously qualified for IBA, it would have been a building. However, a building cannot be a plant since the two categories are mutually exclusive under Singapore law, thus it would be incongruent for the same type of asset to qualify for different tax allowances, one for buildings (IBA) and the other for plant (section 19A). Hence, any finding by the Board or the High Court that the asset would previously have qualified for IBA would preclude a claim for capital allowances under section 19A. Both the Singapore Cement and Changi Airport Group decisions illustrate this principle of mutual exclusivity.

Further, as the line of cases have demonstrated, courts generally defer to the Board’s findings of fact, recognising that the Board is a specialist tribunal and the primary trier of fact. As such, courts will be slow to intervene unless there is a lack of reasonable basis for the Board’s conclusion. Ultimately, the question of whether an asset is “plant” is a highly fact-dependent exercise, with the asset’s characteristics and exact functions to be examined closely in each case.

In a previous client alert, we analysed the ITBR decision of GEY v Comptroller of Income Tax [2022] SGITBR 1,¹ a ruling which was subsequently upheld by the High Court in Singapore Cement.

Senior Partner Edmund Leow SC was on the Board which decided GEY as well as the present case involving Changi Airport Group.

Please feel free to reach out to any of our key contacts should you have any questions or concerns.

1. https://dentons.rodyk.com/en/insights/alerts/2022/september/12/gey-v-cit-2022-sgitbr-definition-of-plant-under-the-income-tax-act-1947↩