HSBC Trust v Chief Assessor: Property Tax Assessment & Annual Value of Shopping Center Units
In HSBC Institutional Trust Services (Singapore) Ltd v Chief Assessor, the Court of Appeal of Singapore, on 17 January 2013, addressed whether the depreciation of asset items in a shopping center's common area should be included in the gross rent when computing the annual value of units for property tax assessment. HSBC Institutional Trust Services (Singapore) Ltd, as the trustee of CapitaMall Trust, appealed against the High Court's decision, which favored the Chief Assessor's ruling to include the depreciation component. The Court of Appeal dismissed the appeal, holding that the depreciation component should be included in the annual value of each unit.
1. Case Overview
1.1 Court
Court of Appeal1.2 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 court determined whether depreciation of common area assets should be included in gross rent when computing the annual value for property tax.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| HSBC Institutional Trust Services (Singapore) Ltd | Appellant | Corporation | Appeal Dismissed | Lost | Tan Kay Kheng, Tan Shao Tong, Novella Chan |
| Chief Assessor | Respondent | Government Agency | Judgment for Respondent | Won | Foo Hui Min, Joanna Yap, Alvin Chia |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Chao Hick Tin | Justice of the Court of Appeal | Yes |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Tan Kay Kheng | WongPartnership LLP |
| Tan Shao Tong | WongPartnership LLP |
| Novella Chan | WongPartnership LLP |
| Foo Hui Min | Inland Revenue Authority of Singapore |
| Joanna Yap | Inland Revenue Authority of Singapore |
| Alvin Chia | Inland Revenue Authority of Singapore |
4. Facts
- HSBC Institutional Trust Services is the trustee of CapitaMall Trust, which owns Bugis Junction.
- Bugis Junction is a shopping center with 180 units leased to various businesses.
- Asset Items include escalators, lifts, air-conditioning, and fire safety systems.
- Tenants paid $0.20 per square foot per month, included in gross rent, for asset depreciation.
- The Chief Assessor ruled that the depreciation component should not be excluded from annual value.
- The Valuation Review Board initially found for the Appellant, excluding the depreciation component.
- The High Court reversed the Board's decision, including the depreciation component in annual value.
5. Formal Citations
- HSBC Institutional Trust Services (Singapore) Ltd v Chief Assessor, Civil Appeal No 80 of 2012, [2013] SGCA 4
- Chief Assessor v HSBC Institutional Trust Services (Singapore) Ltd, , [2012] 3 SLR 933
- BCH Retail Investment Pte Ltd v Chief Assessor, , [2007] 2 SLR(R) 580
- Tan Hee Liang v Chief Assessor and another, , [2009] 1 SLR(R) 335
- Bell Property Trust Limited v Assessment Committee for the Borough of Hampstead, , [1940] 2 KB 543
- BCH Retail Investment Pte Ltd v Chief Assessor, , [2002] 2 SLR(R) 973
- First DCS Pte Ltd v Chief Assessor and another, , [2007] 3 SLR(R) 326
- Chief Assessor and another v First DCS Pte Ltd, , [2008] 2 SLR(R) 724
- Pullen v St Saviour’s Union, , [1900] 1 QB 138
- Chartered Bank v The City Council of Singapore, , [1959–1986] SPTC 1
- Hamilton v National Coal Board, , [1960] AC 633
6. Timeline
| Date | Event |
|---|---|
| Valuation Review Board found for the Appellant. | |
| Decision from which this appeal arose is reported. | |
| Judgment reserved. | |
| Valuation year. | |
| Valuation year. |
7. Legal Issues
- Annual Value Computation
- Outcome: The court held that the depreciation component of asset items should be included in the annual value computation.
- Category: Substantive
- Sub-Issues:
- Inclusion of depreciation component in gross rent
- Exclusion of cost of services from gross rent
- Related Cases:
- [2012] 3 SLR 933
- [2007] 2 SLR(R) 580
- [2009] 1 SLR(R) 335
- Interpretation of 'Annual Value' under Property Tax Act
- Outcome: The court clarified the test for determining whether an expense should be excluded from the annual value, focusing on whether it relates to the use or occupation of the heritable subject.
- Category: Substantive
- Sub-Issues:
- Meaning of 'rent or letting'
- Application of fixture and enhancement tests
- Related Cases:
- [2007] 2 SLR(R) 580
- [2009] 1 SLR(R) 335
- [1940] 2 KB 543
8. Remedies Sought
- Exclusion of depreciation component from annual value computation
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Tax Assessment
- Property Valuation
11. Industries
- Real Estate
- Retail
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Chief Assessor v HSBC Institutional Trust Services (Singapore) Ltd | High Court | Yes | [2012] 3 SLR 933 | Singapore | The High Court decision which is being appealed against in the current judgment. |
| BCH Retail Investment Pte Ltd v Chief Assessor | Court of Appeal | Yes | [2007] 2 SLR(R) 580 | Singapore | Cited for the principle that the annual value of a property must include only elements of rent or letting. |
| Tan Hee Liang v Chief Assessor and another | High Court | Yes | [2009] 1 SLR(R) 335 | Singapore | Cited for affirming the principle that the annual value of a property must include only elements of rent or letting. |
| Bell Property Trust Limited v Assessment Committee for the Borough of Hampstead | KB | Yes | [1940] 2 KB 543 | England and Wales | Cited for the principle that the cost of services could be deducted from the gross rent for the purposes of calculating the gross value. |
| Chartered Bank v The City Council of Singapore | Singapore High Court | Yes | [1959–1986] SPTC 1 | Singapore | Cited for the principle that the cost of services and depreciation of equipment could be excluded from a computation of annual value. |
| Pullen v St Saviour’s Union | QB | Yes | [1900] 1 QB 138 | England and Wales | Cited as an example of a case that was incorrectly decided regarding the inclusion of costs for services in the gross value of tenements. |
| BCH Retail Investment Pte Ltd v Chief Assessor | High Court | Yes | [2002] 2 SLR(R) 973 | Singapore | Cited for the proposition that the cost of services are deductible from the gross rent when computing the annual value under the Property Tax Act. |
| First DCS Pte Ltd v Chief Assessor and another | High Court | Yes | [2007] 3 SLR(R) 326 | Singapore | Cited for holding that escalators, lifts and air-conditioning units were not excluded from assessment under s 2(2) of the Property Tax Act. |
| Chief Assessor and another v First DCS Pte Ltd | High Court | Yes | [2008] 2 SLR(R) 724 | Singapore | Cited for the principle that expenses related to fixtures which are components of the heritable subject are related to rent or letting. |
| Hamilton v National Coal Board | House of Lords | Yes | [1960] AC 633 | United Kingdom | Cited for defining 'maintain' in the context of the Mines and Quarries Act 1954 (c 70) (UK). |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Property Tax Act (Cap 254, 2005 Rev Ed) | Singapore |
| Property Tax Act (Cap 254, 2005 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Annual Value
- Depreciation Component
- Gross Rent
- Asset Items
- Property Tax
- Rent or Letting
- Fixture Test
- Enhancement Test
- Qualifying Words
- Heritable Subject
15.2 Keywords
- property tax
- annual value
- depreciation
- assessment
- shopping center
- Singapore
- CapitaMall Trust
- HSBC
- Chief Assessor
16. Subjects
- Property Tax
- Valuation
- Depreciation
- Real Estate
17. Areas of Law
- Property Tax Law
- Tax Law
- Real Estate Law