• Choice of recalculating effective life

    Attention

    Warning:

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

    End of attention

    You may choose to recalculate the effective life of a depreciating asset if the effective life you have been using is no longer accurate because the circumstances of the nature of your use have changed. You can recalculate an asset's effective life each time your circumstances change. It can be done in any income year after the one in which the asset's start time occurs and whether you worked out the previous effective life yourself or you used the effective life determined by the Commissioner.

    Some examples of changed circumstances relating to the nature of your use of the asset are:

    • your use of the asset turns out to be more or less rigorous than expected
    • there is a downturn in the demand for the goods or services that the asset is being used to produce that will result in the plant being scrapped
    • legislation prevents the asset's continued use
    • changes in technology make the asset redundant.

    You cannot choose to recalculate the effective life of any depreciating asset for which you:

    • used accelerated rates of depreciation before 1 July 2001-see Accelerated depreciation for information on accelerated rates of depreciation, or
    • could have used accelerated rates of depreciation before 1 July 2001 if you had used the asset to produce assessable income or had it installed ready for that use.

    In addition, the effective life of certain intangible depreciating assets cannot be recalculated-see Effective life of intangible depreciating assets.

    Last modified: 01 Jun 2005QC 27399