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In making his determination, the Commissioner assumes the depreciating asset is new and has regard to general industry circumstances of use.
Taxation Ruling TR 2000/18 - Income tax: effective life of depreciating assets lists the Commissioner's determination of effective life for various depreciating assets. TR 2000/18 came into force on 1 January 2001 and replaced Taxation Ruling IT 2685 - Depreciation. The table attached to IT 2685 lists the effective life of various items of plant as determined by the Commissioner.
As a general rule, the table of effective lives accompanying IT 2685 should only be used for depreciating assets:
- acquired under a contract entered into
- otherwise acquired, or
- started to be constructed before 1 January 2001.
IT 2685 contains depreciation rates - accelerated rates and broadbanded rates - which you should only use for plant that was acquired before 11.45am (by legal time in the ACT) on 21 September 1999 or by certain small business taxpayers before 1 July 2001 - see Accelerated depreciation.
Because the Commissioner often reviews his determinations of effective life, the determined effective life for a particular asset may change during an income year. You need to work out which version of the schedule accompanying TR 2000/18 to refer to for a particular asset's determined effective life.
As a general rule, use the version of the schedule that is in force at the time you:
- enter into a contract to acquire an asset
- otherwise acquire it, or
- start to construct it.
However, if the asset's start time does not occur within five years of this time, you must use the effective life that is in force at the asset's start time. For an item of plant acquired under a contract entered into, otherwise acquired or started to be constructed before 11.45am (by legal time in the ACT) on 21 September 1999, there is no restriction on the period within which the plant must be used. The general rule applies to such plant.
For an extract from TR 2000/18 (as at 1 July 2004) showing the effective lives of some commonly used depreciating assets, see Examples of effective lives - from Taxation Ruling TR 2000/18 .
Last modified: 01 Oct 2006QC 27597