• Commissioner's determination

    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

    In making his determination, the Commissioner assumes the depreciating asset is new and has regard to general industry circumstances of use.

    Taxation Ruling TR 2006/15 - Income tax: effective life of depreciating assets (applicable from 1 January 2007) lists the Commissioner's determination of effective life for various depreciating assets.

    Taxation Ruling TR 2006/15 applies from 1 January 2007; for examples from this Taxation Ruling see Examples of effective lives.

    For the period 1 July 2006 to 31 December 2006 Taxation Ruling TR 2006/5 - Income tax: effective life of depreciating assets deals with the effective life of depreciating assets.

    For 1 July 2001 to 30 June 2006 Taxation Ruling TR 2000/18 - Effective life of depreciating assets and associated schedules, lists the Commissioner's determination of effective life for various depreciating assets.

    Taxation Ruling TR 2000/18 replaced Taxation Ruling IT 2685 - Income tax: 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.
    Attention

    Note

    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.

    End of attention

    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 whether Taxation Ruling TR 2006/15 (from 1 January 2007) or Taxation Ruling TR 2006/5 applies (from 1 July 2006), or which schedule accompanying Taxation Ruling TR 2000/18 you need to refer to for a particular asset's determined effective life.

    As a general rule, use the Taxation Ruling or version of the Taxation Ruling 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 2006/15 showing the effective lives of some commonly used depreciating assets, see Examples of effective lives - from Taxation Ruling TR 2006/5 as at 1 July 2006, also applicable for TR 2006/15 effective from 1 January 2007.

    Last modified: 27 Aug 2007QC 27892