When must you recalculate effective life?

You must recalculate the effective life of a depreciating asset if the asset's cost increases by at least 10% in an income year and you:

  • self-assessed the effective life of the asset
  • used the Commissioner's determination of effective life and the prime cost method to calculate the asset's decline in value.

You may conclude that the effective life has not changed.

There are special rules for recalculating effective life where depreciating assets are transferred between associates.

    Last modified: 22 Aug 2016QC 16295