Capped Effective Life

capped-effective lifeAs explained elsewhere, taxpayers claiming depreciation have a choice of determining effective life from a process of self-assessment, or by using a Tax Office schedule (“Commissioner’s Effective Life schedules“).

The Commissioner’s schedules for determining effective life contain a number of asset types and industry categories where the effective lives have been “capped”.

Capped effective lives are shorter than the effective life determined by the Commissioner’s normal determination process, and must be used when the Commissioner’s effective life method is selected.

This however does not remove the option to self-assess effective life as an alternative.

How to check or find capped effective life assets

Assets which have a cap applied to their effective life are indicated in the Commissioner’s schedules with the “#” symbol – see examples below:

examples-of-capped-effective-life

 

For the most recently released Commissioner’s Effective Life schedules -see Ato Depreciation rates

 

There are essentially two types of capped effective life assets:

General – assets which have a capped effective life regardless of the industry usage

 ItemAssetEffective Life (yrs)Start Time *
1Aeroplane used predominantly for agricultural spraying or agricultural dusting81 July 2002
2Aeroplane to which Item 1 does not apply101 July 2002
3Helicopter used predominantly for mustering, agricultural spraying or agricultural dusting81 July 2002
4Helicopter to which Item 3 does not apply101 July 2002
5Bus with a gross vehicle mass of more than 3.5 tonnes7.51 January 2005
6Light commercial vehicle with a carrying capacity of one tonne or greater and a gross vehicle mass of 3.5 tonnes or less (including utilities, vans, and light trucks)7.51 January 2005
7Minibuses with a gross vehicle mass of 3.5 tonnes or less and seats for 9 or more passengers7.51 January 2005
8Trailers with a gross vehicle mass greater than 4.5 tonnes101 January 2005
9Truck with a gross vehicle mass greater than 3.5 tonnes (other than a truck that is used in mining operations and that is not of a kind that can be registered to be driven on a public road in the place in which the truck is operated)7.51 January 2005

 

Assets which have a capped effective life ONLY where used in the specified industry

 ItemAssetIndustryEffective Life (yrs)Start Time *
1Gas Transmission AssetGas supply201 July 2002
2Gas Distribution AssetGas Supply201 July 2002
3Oil Production Asset (Other Than An Electricity Generation Asset Or An Offshore Platform)Oil And Gas Extraction151 July 2002
4Gas Production Asset (Other Than An Electricity Generation Asset Or An Offshore Platform)Oil And Gas Extraction151 July 2002
5Offshore PlatformOil And Gas Extraction201 July 2002
6Asset (Other Than An Electricity Generation Asset) Used To Manufacture Condensate, Crude Oil, Domestic Gas, Liquid Natural Gas Or Liquid Petroleum Gas But Not If The Manufacture Occurs In An Oil RefineryPetroleum Refining151 July 2002
7HarvesterPrimary Production Sector6 2/31 July 2007
8TractorPrimary Production Sector6 2/31 July 2007

 

* The start time of an asset is when it is first used, or installed ready for use.  A capped effective life cannot apply if a contract to acquire an asset or if it was acquired, or its construction commenced, before 21 September 1999

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This page was last modified on 2017-10-21