Capital allowances: effective life review of assets used in the natural and synthetic textile manufacturing industry – review to commence

We will start our review of the assets used in the natural and synthetic textile manufacturing industry (ANZSIC codes 13120 and 13130), 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).

The purpose of our review is to ensure our effective life determinations cover all assets commonly used by your industry, and reflect current industry practices and expectation. 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 the major segments of the industry, including:

  • broadwoven fabric and canvas manufacturing
  • wool spinning and yarn manufacturing
  • cotton and synthetic thread, towelling, cord, and woven fabric manufacturing
  • natural and synthetic yarn manufacturing
  • natural and synthetic fibre tops manufacturing.

Other segments of the industry may or may not be reviewed.

We expect to complete our review of these assets within 12 months, with new effective life determinations expected to apply from 1 July 2017.

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 2016/1 Income tax: effective life of depreciating assets (applicable from 1 July 2016)

Participating in the review

Participation in the review process is entirely voluntary. However, we find strong participation from industry gives members confidence 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:

Bernie Mosslar

For more 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.

For more information about reviews we have already completed, refer to Capital allowances: completed effective life reviews.

    Last modified: 26 Jul 2016QC 49111