Comptroller of Income Tax v Forsyth: Tax Appeal on Severance Payment
In Comptroller of Income Tax v Forsyth, the High Court of Singapore heard an appeal by the Comptroller against the Income Tax Board of Review's decision. The Board ruled in favor of John Russell Forsyth, the respondent, regarding a notice of assessment on a portion of his severance payment. Choo Han Teck J dismissed the appeal, holding that the severance payment was compensation for loss of employment and not taxable income.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Appeal dismissed
1.3 Case Type
Tax
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court dismissed the Comptroller's appeal, ruling that a severance payment to Forsyth was compensation for loss of employment and not taxable income.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Comptroller of Income Tax | Appellant | Government Agency | Appeal dismissed | Lost | Lee Wei Liang Emmanuel Benedict of Inland Revenue Authority of Singapore Lau Sze Leng Serene of Inland Revenue Authority of Singapore |
| Forsyth, John Russell | Respondent | Individual | Won | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Choo Han Teck | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lee Wei Liang Emmanuel Benedict | Inland Revenue Authority of Singapore |
| Lau Sze Leng Serene | Inland Revenue Authority of Singapore |
| Low Zhe Ning | Bird & Bird ATMD LLP |
| Lee Wei Han Shaun | Bird & Bird ATMD LLP |
4. Facts
- The respondent was the managing director of Rising Tide Asia Pte Ltd.
- The respondent was sacked from his post without warning on 24 August 2016.
- The respondent and the company signed a Separation Agreement on 1 September 2016.
- The respondent was paid a Severance Payment of $2,475,000.
- The Comptroller served a notice of assessment on $1,350,000 of the Severance Payment.
- The Income Tax Board of Review ruled in the respondent’s favour.
5. Formal Citations
- Comptroller of Income Tax v Forsyth, John Russell, Tax Appeal No 12 of 2020, [2020] SGHC 258
6. Timeline
| Date | Event |
|---|---|
| Employment contract signed | |
| Respondent co-founded Rising Tide Asia Pte Ltd | |
| Respondent sacked from post | |
| Separation Agreement signed | |
| First installment of Severance Payment payable | |
| Second installment of Severance Payment payable | |
| Company wound up by voluntary liquidation | |
| Income Tax Board of Review ruled in respondent’s favour | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Taxability of Severance Payment
- Outcome: The court held that the severance payment was compensation for loss of employment and not taxable income.
- Category: Substantive
8. Remedies Sought
- No remedies sought
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Tax Litigation
11. Industries
- Management Consultancy
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| No cited cases | |||||
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Income Tax Act (Cap 134, 2014 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Severance Payment
- Ex-gratia payment
- Loss of employment
- Taxable income
- Separation Agreement
- Employment Agreement
15.2 Keywords
- income tax
- severance payment
- employment income
- tax appeal
- singapore
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Income taxation | 95 |
| Severance Payment | 70 |
| Appeals | 60 |
| Employment Law | 50 |
16. Subjects
- Income Tax
- Tax Appeals
- Employment Law