Capital allowances: effective life review of polymer film and sheet packaging material manufacturing assets

We have started a review of assets used in the polymer film and sheet packaging material manufacturing industry, as defined by ANZSIC code 19110, with a view to making new effective life determinations.

Taxpayers use effective lives to work out how much they can claim as a tax deduction for an asset's decline in value (depreciation deduction). The purpose of our review is to ensure our effective life determinations cover all assets that are commonly used by the polymer film and sheet packaging material manufacturing industry, and reflect current industry practices and expectations. Our determinations operate as a 'safe harbour' for taxpayers. The option of self-assessing effective lives is also available.

Scope of the review

The review will cover all assets used to manufacture items such as:

• plastic film and sheeting packaging material
• plastic bags, food wrapping bags and garbage bags.

We expect our review of these assets to be completed within 12 months, with new effective life determinations applying from 1 July 2013. Draft effective lives will be issued for public comment well before final decisions are made.

How we will conduct the review

As part of this review, we will:

• identify the assets currently used in the industry
• consult (including via interviews and asset inspections) with major interest groups, such as industry representative bodies, users and suppliers
• complete a report with recommendations for new effective lives based on analysis of the 14 factors listed in the effective life ruling
• remove redundant items currently in the effective life schedule.

Participating in the review

Participation in the review process is entirely voluntary. However, we find that strong participation from industry members gives them confidence that we will properly consider their range of experience and that the determinations will be useful to them.

If you would like to participate in the review, contact Janet Koh by:

• phoning (07) 3213 5171
• faxing (07) 3213 5200
• emailing janet.koh@ato.gov.au

What to read/do next

For information about:

• the review process, including examples of the type of questions we like to ask industry members, refer to Capital allowances: effective life reviews - general information
• reviews we have already completed, refer to Completed effective life reviews.