If you enjoy keeping up to date with the tax laws, the following will interest you!  This new ruling and determination is issued as part of an ongoing review of the Commissioner’s effective life determinations. Taxpayers use ‘effective lives’ to work out how much they can claim as a tax deduction for an asset’s decline in value (depreciation deduction).

The Commissioner has made a determination of the effective life of certain depreciating assets. This will take effect from 1 July 2013. If you have your property or business in the following ANZIC categories this will affect reporting on your new purchases after July 1 2013 of Division 40 Plant/Assets.

Industries and industry activities affected are:

• Ammonia and ammonium nitrate manufacturing (fertiliser, dyes, herbicides)
• Meat processing (beef, pig & sheep abattoirs – not chicken)
• “Non-ferrous metal casting (aluminium)
• Pet food manufacturing (canned, bird feed, cereal for fodder, sheep lick)
• Prefabricated concrete manufacturing (precast walls, panels)
• Sanitary paper product manufacturing (toilet paper, tissues, napkins)

Determinations made by The Commissioner for the effective life and depreciation assets, has been applied for the purpose of provisions under division 40, which will be effective in the life of depreciating assets. This will be used to work out the assets decline in value.

The above Ruling also discusses the methodology used by the Commissioner of Taxation in making a determination of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997 (ITAA 1997).   It is important to note that effective lives for various items commonly found in commercial real estate has also been amended as a result of TR 2013/14.

If a depreciating asset has been purchased for use within a five year period, the effective life that will apply is the one in force from the date the depreciating asset is first used or installed.

The effective life determination and the period of the depreciating asset can be used for the purpose specified in subsection 40-100(5) (a specified purpose3). This can be used for taxable purposes and deductions may be available under Division 40 for the depreciating assets decline in value (see section 40-25).

Napier & Blakeley were the first to prepare audited depreciation schedules in Australia and we continue to keep our knowledge and experience current for our client’s benefits.

Contacts

Property Depreciation & Insurance
John Mathew – 03 9915 6300 – jmathew@napierblakeley.com
Peter Guerra – 02 9299 1899 – pguerra@napierblakeley.com
Peter Osborn – 02 9299 1899 – psoborn@napierblakeley.com
Paul Mazoletti – 07 3221 8255 – pmazoletti@napierblakeley.com

Transaction & Asset Advisory
Rob Howells – 03 9915 6300 – rhowells@napierblakeley.com
Alastair Walker – 02 9299 1899 – awalker@napierblakeley.com
Gavin Peach - 02 9299 1899 – gpeach@napierblakeley.com

Sustainable Property Solutions
Peter Frith – 03 9915 6300 – pfrith@napierblakeley.com

Development Advisory & Quantity Surveying
Craig Smith – 03 9915 6300 – csmith@napierblakeley.com
Peter Hammond – 02 9299 1899 – phammond@napierblakeley.com
Paul Cosker – 07 3221 8255 – pcosker@napierblakeley.com