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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 - 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.
As a general rule, the table of effective lives accompanying Taxation Ruling IT 2685 should be used only for depreciating assets:
- acquired under a contract entered into
- otherwise acquired, or
- started to be constructed
before 1 January 2001.
Taxation Ruling IT 2685 contains depreciation rates - accelerated rates and broadbanded rates - which you should use only 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 Taxation Ruling 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 in the previous paragraph applies to such plant.
For an extract from Taxation Ruling TR 2000/18 (as at 1 July 2005) showing the effective lives of some commonly used depreciating assets, see Examples of effective lives - from Taxation Ruling TR 2000/18.
Last modified: 18 Jul 2006QC 27742