Court rules assets are structures, not tools of trade, denying tax break for Changi Airport assets.
Changi Airport Group (CAG) has lost its appeal for a tax break on $273 million spent on assets over three years, including two runways and various taxiways and aprons at Terminals 1, 2, 3, and 4 of Changi Airport. The assets were deemed to be structures, not tools of trade, by the court.
Justice Choo Han Teck dismissed CAG’s appeal, agreeing with the Income Tax Board of Review that the assets were structures essential for the safe landing, taxiing, and taking off of aircraft, rather than tools used directly in the trade. While CAG argued the assets should be classified as “plants”—defined as apparatus for carrying on a trade—the judge ruled that they function primarily as physical infrastructure.
The appeal focused on whether these assets could qualify for capital allowances, deductions for wear and tear on assets used in business operations. The Inland Revenue Authority of Singapore (IRAS) had previously denied CAG’s claim for these allowances, classifying the assets as structures. CAG had argued that the assets played an integral role in its operations and should therefore qualify for the same treatment as plant machinery.
Despite the legal battle, CAG was granted capital allowances for aerodrome equipment like airfield lighting, which serves navigational purposes. However, Justice Choo clarified that the primary function of the assets in question was as structures for aircraft movement, not for the core trade of CAG.
