Statute Details
- Title: Income Tax (Deduction under Section 14ZH) (Prescribed Percentages) Rules 2023
- Act Code: ITA1947-S885-2023
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act 1947
- Authorising Provision: Section 7(1) of the Income Tax Act 1947
- Citation: No. S 885
- Enactment date: Made on 15 December 2023
- Commencement date: 26 December 2023
- Status: Current version as at 27 March 2026
- Key operative provision: Section 2 (Prescribed percentages for the purpose of section 14ZH)
What Is This Legislation About?
The Income Tax (Deduction under Section 14ZH) (Prescribed Percentages) Rules 2023 (“the Rules”) is subsidiary legislation made under the Income Tax Act 1947 (“ITA”). Its function is narrow but important: it specifies the prescribed percentages that apply when claiming a tax deduction under section 14ZH of the ITA.
In plain terms, section 14ZH provides a framework for a deduction linked to certain delivery services. However, the ITA framework does not itself set the exact percentages. Instead, it delegates to the Minister the power to prescribe the percentages by rules. This ensures that the deduction can vary depending on the mode of delivery used by the person performing the delivery services.
The Rules therefore operate as a “calibration” mechanism: they translate the policy intent of section 14ZH into concrete, percentage-based deduction rates. For practitioners, the key legal work is to determine which delivery mode applies to the relevant activities and then apply the correct percentage to the qualifying base under section 14ZH.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It identifies the Rules and provides that they come into operation on 26 December 2023. For tax practitioners, the commencement date matters because it determines the period to which the prescribed percentages apply. Claims for periods before commencement may be governed by earlier rules or different rates, depending on the legislative history and any transitional provisions (if any) in the parent ITA or related instruments.
Section 2 (Prescribed percentages) is the core provision. It states that, for the purpose of section 14ZH of the ITA, the prescribed percentages are as follows:
(a) Delivery services performed on foot, by public transport, or by the use of a bicycle (not being power-assisted): 20%.
(b) Delivery services performed by the use of a power-assisted bicycle, a motorised personal mobility device or a motor cycle: 35%.
(c) Delivery services performed by the use of a van: 60%.
These percentages are not merely descriptive; they are the legal rates that must be used when computing the deduction under section 14ZH. In other words, once a taxpayer’s delivery services fall within one of the categories, the corresponding percentage becomes the statutory multiplier (or percentage factor) for the deduction computation.
The Rules also include an important clarification in section 2(2): “For the avoidance of doubt, the delivery services mentioned in paragraph (1)(b) and (c) may be performed partly on foot.” This is a practical and litigation-relevant point. It addresses a common factual scenario—delivery routes that involve mixed modes (e.g., using a motorised device for part of the journey and then walking for the final leg).
However, the clarification is expressly limited to paragraphs (1)(b) and (c). That means that, while mixed-mode performance is expressly permitted for the higher-percentage categories (35% and 60%), the Rules do not expressly provide the same “partly on foot” clarification for paragraph (1)(a). Practitioners should therefore be careful in mixed-mode cases involving the 20% category. The safer approach is to analyse the dominant mode, the statutory meaning of “performed by” in the context of section 14ZH, and the factual evidence available (e.g., delivery logs, route records, or platform data) to support the classification.
How Is This Legislation Structured?
The Rules are structured in a minimal, two-section format:
Section 1 contains the citation and commencement provision.
Section 2 contains the substantive rule: it sets out the prescribed percentages for different delivery modes and includes the “avoidance of doubt” clarification regarding partial on-foot performance for certain categories.
There are no additional parts, schedules, definitions, or procedural provisions in the extract provided. As a result, the legal analysis largely depends on how section 14ZH of the ITA defines or frames the deduction and how “delivery services” and the relevant delivery modes are interpreted in that parent provision.
Who Does This Legislation Apply To?
The Rules apply to taxpayers who seek to claim a deduction under section 14ZH of the ITA. While the Rules themselves do not specify the class of taxpayers (e.g., individuals, companies, or specific employment or gig arrangements), the reference to section 14ZH indicates that the deduction is tied to the performance of delivery services and the method used to perform those services.
In practice, the prescribed percentages will be relevant to persons who perform delivery work using different modes—such as walking, using public transport, cycling (non-power-assisted), using power-assisted bicycles or motorised mobility devices, riding motorcycles, or using vans. The classification will be fact-sensitive. Lawyers advising clients should focus on the taxpayer’s actual delivery mode(s) during the relevant period and ensure that the evidence supports the categorisation under section 2(1).
Why Is This Legislation Important?
Although the Rules are short, they are significant because they directly affect the quantum of a tax deduction. A change in prescribed percentages can materially alter the tax outcome. For example, the difference between 20% (foot/public transport/bicycle) and 60% (van) is substantial. Where a taxpayer’s delivery activities straddle multiple categories, the correct classification can determine whether the deduction is computed at a lower or higher statutory rate.
From an enforcement and compliance perspective, the Rules also create a clear statutory basis for tax authority review. If a taxpayer claims the deduction using a certain percentage, the tax position will depend on whether the delivery services were “performed” using the relevant mode. This invites scrutiny of factual details such as the vehicle used, the nature of the delivery route, and whether any portion of the delivery was performed on foot.
Finally, the “avoidance of doubt” clause in section 2(2) is a practical drafting choice that reduces uncertainty for mixed-mode delivery. It signals that the law does not require a rigid, single-mode performance for the 35% and 60% categories. However, because the clause is not mirrored for the 20% category, practitioners should not assume that all mixed-mode scenarios are treated identically. Careful factual analysis and documentation remain essential.
Related Legislation
- Income Tax Act 1947 (in particular, section 14ZH and the rule-making power in section 7(1))
- Income Tax Act 1947 (general legislative context for deductions and tax computation)
- Legislation timeline (to confirm the applicable version as at the relevant tax period)
Source Documents
This article provides an overview of the Income Tax (Deduction under Section 14ZH) (Prescribed Percentages) Rules 2023 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.