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  • Capital allowances: effective life review of assets used in the child care services industry

    We have started a review of the assets used in the child care services industry (ANZSIC code 87100) with a view to making new effective life determinations.

    Use effective lives to work out how much you 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 assets used by your industry, and reflect current industry practices and expectations. Our determinations provide you with 'safe harbour lives'.

    You also have the option to self-assess effective lives.

    Scope of the review

    It's anticipated the review will cover assets that relate to some primary activities, including:

    • child care service provision
    • childminding centre operation – except home or school
    • children's nursery operation – except preschool
    • early learning centre operation

    We expect to complete our review of these assets within 12 months, with new effective life determinations applying from 1 July 2020. 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 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 or update redundant items currently in the effective life schedule.

    See also:

    • TR 2019/5 Income tax: effective life of depreciating assets (applicable from 1 July 2019)

    Participating in the review

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

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

    See also:

      Last modified: 31 Jul 2019QC 59169