Capital allowances: effective life review of assets used in the mining support services industry – review to begin
We are starting a review of the assets used in the mining support services industry (ANZSIC code 10900) 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 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 all major segments of the industry, namely:
- cementing oil and gas well casings
- drilling and blasting services to mining
- mining draining and pumping service
- gas and oil mine site preparation.
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 applying from 1 July 2017.
Draft effective lives will be issued for public comment well 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 using 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.
- 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:
John Di Francesco
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.
We will review the assets used in the mining support services industry.