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  • Capital allowances: review of assets used in the clothing manufacturing industry

    We have started a review of the assets used in the clothing manufacturing industry defined within ANZSIC code 13510, with a view to making new effective life determinations.

    Effective lives are used 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 primary activities, namely:

    • manufacturing clothing (except knitted clothing), including outerwear, underwear, sleepwear, infant clothing, headwear, fur or leather clothing and clothing accessories. Also included is clothing trade services such as hem stitching, basque knitting or buttonholing.

    We are scheduled to complete our review of these assets within 12 months, with new effective life determinations applying from 1 July 2022. 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/update redundant items currently in the effective life schedule.

    See also:

    • TR 2021/3 Income tax: effective life of depreciating assets (applicable from 1 July 2021)

    Participating in the review

    Participation in the review process is voluntary. However, we find 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:

    Kim Dziedzic

    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 – general information

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

      Last modified: 07 Jul 2021QC 65840