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  • Capital allowances: effective life review of assets used in supermarket and grocery stores

    We have started a review of the assets used in the supermarket and grocery stores industry (ANZSIC code 41100) with a view to making new effective life determinations.

    You use effective lives to work out how much you can claim as a tax deduction for an asset's decline in value (depreciation deduction).

    For most depreciating assets, you have the choice of either working out the effective life yourself or using an effective life determined by the Commissioner of Taxation.

    The purpose of our review is to ensure our effective life determinations cover assets commonly used by your industry and reflect current industry practices and expectations.

    Our determinations save you the cost of self-assessing effective lives and provide you with an effective life that we will not challenge in case of an ATO review.

    The participation of industry stakeholders is critical to the success of any effective life review. The greater the level of participation by industry stakeholders, the more likely the resultant effective life determinations will be accurate and useful for industry participants.

    The Corporate Taxpayers Association and Chartered Accountants Australia and New Zealand encourage their members to assist in this important work.

    Scope of the review

    The review is anticipated to cover assets used in supermarket and grocery stores.

    We expect to complete our review of these assets within 12 months with the new effective life determinations expected to apply from 1 July 2019.

    Draft effective lives will be issued for public comment 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 with major interest groups, such as industry representative bodies, users and suppliers (including interviews and site asset inspections)
    • complete a report with recommendations for new effective lives based on an analysis of the factors listed in the effective life taxation ruling
    • remove redundant items currently in the effective life schedule (where applicable).

    See also:

    • TR 2018/4 Income tax: effective life of depreciating assets (applicable from 1 July 2018)

    Participating in the review

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

    Your participation may only take a few hours of your time in total and can be spread over the course of the review at time convenient to you.

    Any information that is provided to us will be subject to the secrecy provisions as well as classified as commercial in confidence and will only be used for recommending effective lives to the Commissioner.

    If you would like to participate in the review, contact Shirley Liao by:

    See also:

      Last modified: 02 Aug 2018QC 56382