What does an effective life review involve?
Broadly, these reviews involve:
- identifying the assets currently used in the industry
- consulting (including interviews and asset inspections) with major interest groups such as industry representative bodies, users and suppliers
- completing a report with recommendations for new effective lives based on analysis of the factors listed in Taxation Ruling TR 2016/1 Income tax: effective life of depreciating assets (applicable from 1 July 2016)
- removing redundant items currently in the effective life schedule.
Our effective life team is responsible for creating and authorising our view on all issues concerning the effective life of depreciating assets.
An important part of the team’s role is to update and expand the effective life schedule attached to TR 2016/1. We do this by conducting effective life reviews, either of single asset such as buses, or industries such as the gold mining industry.
New effective lives arising from these reviews are published yearly in a new taxation ruling as illustrated in the table below.