Capital Allowance: Is Ceilings a Plant?

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Normally suspended ceilings and acoustic tiles are not plant.

In Hampton v Fortes Autogrill Ltd, the company claimed capital allowances on false ceilings in a restaurant.

The claim was rejected.

The ceilings’ only function was to conceal service pipes, wiring etc.

They were not apparatus with which the company carried on its trade of running a restaurant.

A suspended ceiling is a plant if it forms an integral part of a heating and ventilation system. For example, it may form the fourth side of a duct or channel through which stale air is extracted for treatment or treated air is discharged.

ICI of Australia v CIR

Another case that involved a ceiling was an Australian case – ICI of Australia v CIR 1ATR450.

Federal Commissioner of Taxation


ICI Australia Ltd.

127 CLR 529

16 December 1971

The company installed special sound-absorbing ceilings in its office buildings in Sydney and Melbourne.

The electrical wiring in question forms part of the reticulation system for conveying electric current throughout the buildings.

The wires are carried loose in trays fitted below the ceilings. ICI relies on the fact that the wiring was designed in elaborate detail to provide the necessary amount of power for the equipment intended to be used on each floor: the nature of the office machines intended to be used control the nature and the extent of the wiring.

Counsel for ICI challenged the statement made by Kitto J. (1970) 120 CLR, that the wiring and associated electrical installations had “no relevance to the activities of the appellant beyond the relevance they would have to any occupier’s activities“.

It was submitted that they had a special relevance, being designed and installed in such a way as to meet ICI’s particular requirements, having regard to the income-earning activities proposed to be carried on within the various parts of the buildings.

The acoustic ceiling panels were metal panels fitted into a framework fixed below the structural ceiling.

The main purpose of the panels was to absorb sound and reduce the level of noise in the offices, although no doubt they served an aesthetic purpose as well.

The ceilings were removable. The Courts found that they were not plant.

Gibbs J.: delivered the following written judgment:-

Although fixtures may be “plant or articles”, in my opinion, they will not fall within that expression if their only function is to form part of the general setting in which the taxpayer produces assessable income.

In the present case, the installations were no more than parts of the buildings where ICI carried on some of its activities.

The buildings of which they formed a part were office buildings which could not in themselves be regarded as “in the nature of a tool of the taxpayer company’s trade” and were in no way comparable to the Dyehouse, the subject of the decision in Wangaratta Woollen Mills Ltd. v. Federal Commissioner of Taxation (1969) or the dry dock considered in Inland Revenue Commissioners v. Barclay, Curle &Co. Ltd. (1969).

In my opinion, the decision of Kitto J. in Imperial Chemical Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation (1970) was correct. In conformity with that decision, my brother Walsh was right in holding that ICI’s installations were not “plant or articles” used to generate assessable income.

I would dismiss the appeal.

What this Means

Suspended Ceilings and Acoustic Tiles were part of the premises in which the company carried on its trade.

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