• Working out the effective life yourself

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    If you decide to work out the effective life yourself, you need to take into account:

    • how long you expect the asset can be used for a taxable purpose or for the purpose of producing exempt income, irrespective of who uses it
    • the wear and tear you reasonably expect from your expected circumstances or use
    • that it will be maintained in reasonably good order and condition
    • how you expect to use the asset
    • whether it would be likely for the asset to be scrapped or abandoned before the end of its useful life.

    The sort of information which you could use to make an estimate of effective life of an asset includes:

    • manufacturer's specifications
    • independent engineering information
    • your own past experience with similar assets
    • the past experience of other users of similar assets
    • the level of repairs and maintenance commonly adopted by users of the asset
    • retention periods
    • scrapping or abandonment practices
    • the physical life of the asset.

    You work out the effective life of a depreciating asset from the asset's start time.

    Last modified: 01 Jun 2005QC 27399