NE v Comptroller of Income Tax: Income Tax Deduction for Bodyguard Expenses
NE appealed to the High Court against the Comptroller of Income Tax's decision to disallow deductions for bodyguard expenses for its director, C. The Income Tax Board of Review had dismissed NE's initial appeal. The High Court, presided over by Woo Bih Li J, dismissed NE's appeal, finding that the Board's decision was based on findings of fact and that there was insufficient evidence to establish that the purpose of employing the bodyguard was wholly and exclusively for the production of income.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed with costs.
1.3 Case Type
Tax
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court dismissed NE's appeal, affirming the Income Tax Board of Review's decision that bodyguard expenses for its director were not deductible.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Comptroller of Income Tax | Respondent | Government Agency | Judgment for Respondent | Won | Ong Ken Loon of Inland Revenue Authority of Singapore Tang Siau Yan of Inland Revenue Authority of Singapore |
| NE | Appellant | Corporation | Appeal dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Ong Ken Loon | Inland Revenue Authority of Singapore |
| Tang Siau Yan | Inland Revenue Authority of Singapore |
| Leon Kwong Wing | KhattarWong |
4. Facts
- The Comptroller of Income Tax disallowed the appellant from deducting the costs of employing a security guard to protect its director.
- The appellant appealed to the Income Tax Board of Review, but the Board dismissed its appeal.
- The appellant is in the business of exhibiting motion pictures.
- C serves as one of the appellant’s directors.
- C was the subject of a violent kidnapping attempt in 1971.
- The bodyguard in question joined the appellant in 1989.
- The subject matter of this appeal involved sums paid to the bodyguard as his salary, employer’s Central Provident Fund contribution and bonus.
5. Formal Citations
- NE v Comptroller of Income Tax, DA 24/2005, [2006] SGHC 199
6. Timeline
| Date | Event |
|---|---|
| Violent kidnapping attempt on C | |
| Bodyguard joined the appellant | |
| Relevant calendar year for Year of Assessment 1996 | |
| Relevant calendar year for Year of Assessment 1997 | |
| Relevant calendar year for Year of Assessment 2000 | |
| Judgment reserved |
7. Legal Issues
- Deductibility of Expenses
- Outcome: The court held that the expenses incurred in employing the bodyguard were not wholly and exclusively incurred in the production of income and were therefore not deductible.
- Category: Substantive
- Sub-Issues:
- Private purpose of expenditure
- Business purpose of expenditure
8. Remedies Sought
- Tax Deduction
9. Cause of Actions
- Disallowance of Deduction
10. Practice Areas
- Taxation
11. Industries
- Motion Picture Exhibition
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Mallalieu v Drummond | N/A | Yes | [1983] STC 665 | United Kingdom | Cited for the principle that expenditure does not qualify for deduction if it serves a private purpose in addition to a business purpose. |
| MacKinlay v Arthur Young McClelland Moores & Co | N/A | Yes | [1989] STC 898 | United Kingdom | Cited for the principle that expenditure does not qualify for deduction if it serves a private purpose in addition to a business purpose. |
| Vodafone Cellular Ltd v Shaw | N/A | Yes | [1997] STC 734 | United Kingdom | Cited for the principle of ascertaining the object of the taxpayer in making a payment to determine if it was for trade or private purpose. |
| Mallalieu v Drummond | N/A | Yes | [1983] 2 AC 861 | United Kingdom | Cited to ascertain whether money was expended to serve the purposes of the taxpayer’s business, it is necessary to discover the taxpayer’s “object” in making the expenditure |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Income Tax Act (Cap 134, 1994 Rev Ed) | Singapore |
| Income Tax Act (Cap 134, 1999 Rev Ed) | Singapore |
| Sections 14(1), 15(1)(a) and 15(1)(b) Income Tax Act (Cap 134) | Singapore |
| Section 81(1) Income Tax Act (Cap 134) | Singapore |
| Section 81(2) Income Tax Act (Cap 134) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Income Tax
- Deduction
- Bodyguard
- Expenses
- Wholly and exclusively
- Production of income
- Private expenses
- Director
- Year of Assessment
15.2 Keywords
- Income Tax
- Deduction
- Bodyguard Expenses
- Singapore
- Tax Appeal
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Income taxation | 90 |
| Taxation | 70 |
| Company Law | 30 |
| Bodyguard | 20 |
16. Subjects
- Taxation
- Income Tax
- Deductions