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Who this affects

• Any taxpayer (business, trust, company or individual) that:
  • owns or acquires assets that are "depreciating assets" under Division 40, and
  • elects to use the Commissioner’s effective life for those assets under section 40‑95 of the Act.
• Tax advisers and accountants who apply depreciation rules and prepare tax returns.
• Lenders and investors who model after‑tax cash flows where depreciation timing matters.

Why it matters (practical effect)

• The listed effective life determines how quickly an asset’s cost can be claimed for tax purposes (shorter life = faster deductions; longer life = slower deductions).
• Those timings affect taxable income in each year, and therefore cash flow, tax payable and investment payback calculations.
• The instrument standardises the Commissioner’s view of technical asset lives across many industries, reducing (but not eliminating) arbitrary variation in practice.

How it works in borderline cases and key operational details

• If an asset corresponds exactly to a Table A row the listed life applies. If it does not match exactly but is "of a kind" or "broadly satisfies the function" described, the Table A life still applies (section 6(2)(a)–(b)).
• If Table A does not apply, and the asset corresponds to an entry in Table B, the Table B life applies (section 6(3)).
• The Guide to Schedule 2 explains interpretative signals used in the tables (e.g. meaning of "including", "incorporating", "freestanding" versus "fixed", the # (capped life) symbol and the * (review flag)). Those guide points affect how components are treated and whether items are separate assets or parts of a bigger asset (Guide to Schedule 2, paragraphs (1)–(12)).
• Many entries carry a "Last Updated" date and a review flag; these are administrative metadata showing when the Commissioner last reviewed that effective life.

Stated purpose and how to evaluate it against costs and incentives

• The instrument’s stated purpose (inherent in the Commissioner’s authority under subsection 40‑100(1) of the Act) is to prescribe effective lives so entities that choose the Commissioner’s measure can calculate depreciation consistently. See: section 3 (authority).
• Practical trade‑offs to note:
  • Who pays: taxpayers bear the economic effect of whatever life is specified (timing of deductions). The Commissioner (via the ATO) sets the lives and therefore influences tax timing but not statutory tax rates. (See section 6 and notes about caps under section 40‑102 of the Act.)
  • Compliance burden: there is a non‑trivial compliance cost — taxpayers and advisers must find the correct ANZSIC heading or Table B category, interpret wording like "broadly satisfies the function", and check caps and prior determinations (see section 6 and the Schedule 2 Guide). Misclassification can change year‑by‑year taxable income.
  • Discretion and implementation risk: the Commissioner determines lives by instrument (s40‑100(1)); the Guide contains interpretative rules that require judgment (e.g. what "broadly satisfies" means), so some discretion in application and audit risk remains.
  • Opportunity cost and private choice: entities can avoid the Commissioner’s list by not electing to use it and instead determining effective life themselves under section 40‑105 of the Act; that preserves contractual and investment flexibility but increases recordkeeping and evidentiary burden.
  • Concentrated benefits/diffuse costs: any change in a particular asset life benefits the specific businesses that hold that asset (concentrated) while the administrative overhead and modelling effort are spread across many taxpayers and advisers (diffuse).

Implementation steps for a taxpayer

1. Decide whether to use the Commissioner’s effective life (section 40‑95 decision). If you do, check whether a previous determination (pre‑2025) applies (section 6(1)(3)).
2. Search Table A under the relevant ANZSIC industry heading. If there is a precise or functional match, apply that life (section 6(2)).
3. If Table A does not apply, search Table B for the asset category and apply that life (section 6(3)).
4. Check for a capped life under section 40‑102 of the Act (noted in the Schedule using #) and account for that if relevant.
5. If uncertain, document the classification rationale and, if appropriate, obtain advice from the ATO or a tax adviser.

(Primary statutory hooks in the instrument: section 3 (authority under subsection 40‑100(1) of the Act); section 6(1)–(3) (application rules); Schedule 1 (repeal of 2015 determination); Schedule 2 (tables and Guide).)

  Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

6  Effective life of a depreciating asset

 (1) An entity must work out the effective life of a depreciating asset in accordance with subsections 6(2) and 6(3) where the entity:

1.     is satisfied that the asset is a depreciating asset for the purpose of Division 40 of the Act;
2.     has made a choice under section 40-95 of the Act to use an effective life determined by the Commissioner for the asset; and
3.     is not required to work out an effective life for that asset in accordance with a previous determination made under section 40-100 of the Act.

Note: An entity’s choice to use an effective life determined by the Commissioner for a depreciating asset is limited by subsection 40-95(2) of the Act. The operation of that subsection means that the entity may need to refer to a previous determination to work out the effective life for a depreciating asset.

 (2) For a depreciating asset used in an industry specified in a heading in Table A of Schedule 2, if the asset:

 (a) corresponds exactly to the description in column 1 of a row in the table, the effective life of the asset is the period specified in column 2 of that row; or

 (b) does not correspond exactly to but is of a kind that falls within or broadly satisfies the function described in column 1 of a row in the table, the effective life of the asset is the period specified in column 2 of that row.

 (3) Where subsection 6(2) does not apply and the depreciating asset corresponds to a description in column 1 of a row in Table B of Schedule 2, the effective life of the asset is the period specified in column 2 of that row.

Note 1: If an entity chooses to use an effective life determined by the Commissioner for a depreciating asset, a capped life may apply to the asset under section 40-102 of the Act.

Note 2: If an entity does not choose to use an effective life determined by the Commissioner for a depreciating asset, the effective life of the asset must be worked out in accordance with section 40-105 of the Act.

Schedule 1—Repeals

Income Tax (Effective Life of Depreciating Assets) Determination 2015

1  The whole of the instrument

Repeal the instrument

Schedule 2—Effective Life Tables A and B

Guide to understanding this Schedule

 (1) The industry headings in Table A are drawn from the classification subject categories in the Australian and New Zealand Standard Industrial Classification (ANZSIC) Codes. The codes are listed alongside the industry headings.

 (2) The column titled ‘Last Updated’ refers to the date the specified effective life of an asset was last reviewed and determined by the Commissioner.

 (3) If the words “including” or “includes” are used in the description of an asset in column 1 of a table, then each item listed in that description is to be treated as a separate asset and the effective life of that item is the period specified in column 2.

 (4) If the word “incorporating” is used in the description of an asset in column 1 of a table, then all the items that are listed in that description are merely components of that asset and are not to be treated as separate assets.

 (5) A hash (#) in the third column of a table indicates a capped life is available for the depreciating assets under section 40-102 of the Act.

 (6) An asterisk (*) in the third column of a table indicates that the effective life for the asset to which it relates have been reviewed as part of the Commissioner’s ongoing review of the effective life determination.

 (7) Where the term “Freestanding” is used to describe certain assets, that describes items designed to be portable or movable; any attachment to the premises is only for the item's temporary stability.

 (8) Where the term “fixed” is used to describe certain assets, that describes items that are annexed or attached by any means (for example screws, nails, bolts, glue, adhesive, grout or cement) but not merely for temporary stability.

 (9) Where “environmental control structure” is used to describe certain agricultural assets, it refers to a structure designed to provide a protective environment within which the operator is able to monitor and manipulate factors influencing the growing environment. This includes factors such as temperature, humidity, air movement, light, water and pests to enable the greatest efficiency in producing the desired product.

 (10) Where “protective structure” is used to describe certain agricultural assets, it refers to a structure used primarily and principally for protecting a growing product from one or more natural elements such as sun, hail, birds and wind.

 (11) If the term “hire car” is used in the description of an asset, that refers to a passenger car hired with a driver, not being a taxi.

 (12) If the term “rental car” is used in the description of an asset, that refers to a passenger car hired, leased or rented for short-term use without a driver.

Table A – Effective life (Industry categories)

• Agriculture(01110 to 01990)
• ASSET LIFE(IN YEARS) REVIEWED LAST UPDATED
• Bridges (wooden) 20 1 Jan 2001
• Grain, cotton, peanut and rice assets:
• Chemical spraying assets:
• Generally (including broad acre trailed or linkage boom and utility) 10 * 1 Jan 2007
• Self-propelled 8 * 1 Jan 2007
• General assets:
• Aeration assets:
• Controllers 10 * 1 Jan 2007
• Kits 15 * 1 Jan 2007
• Augers (including conveyors) 15 * 1 Jan 2007
• Dryers 20 * 1 Jan 2007
• Moisture meters 5 * 1 Jan 2007
• Mulchers 10 * 1 Jan 2007
• Peanut pre-cleaners 10 * 1 Jan 2007
• Slashers 7 * 1 Jan 2007
• Harvesting assets:
• Boll buggies 15 * 1 Jan 2007
• Chaser bins 15 * 1 Jan 2007
• Combine harvesters 12 *# 1 Jul 2007
• Cotton picker/strippers 10 *# 1 Jul 2007
• Field bins 20 * 1 Jan 2007
• Fuel trailers 15 * 1 Jan 2007
• Module builders 15 * 1 Jan 2007
• Module tarpaulins 5 * 1 Jan 2007
• Peanut diggers (including peanut pullers) 10 *# 1 Jan 2007
• Peanut threshers 12 *# 1 Jul 2007
• Precision farming assets (including GPS, controllers, lightbars, variable rate technology assets, but excluding hydraulic automated steering) 5 * 1 Jan 2007
• Seeding and fertilizing assets:
• Fertilizer spreaders (including linkage and trailed) 10 * 1 Jan 2007
• Planters (including bar, box, combined seeders, precision planters and row crop planters) 15 * 1 Jan 2007
• Seed and fertilizer bins 15 * 1 Jan 2007
• Tillage assets:
• Generally 15 * 1 Jan 2007
• Harrows 5 * 1 Jan 2007
• Laser controlled scraping assets:
• Buckets 10 * 1 Jan 2007
• Transmitters 7 * 1 Jan 2007
• Rippers 10 * 1 Jan 2007
• Harvesters/sweepers 62/3 # 1 Jan 2001
• Hay and foraging assets:
• Bale handling attachments (including accumulator grabs, bale stackers, hay forks/spikes/spears (incorporating metal frame), round bale grabs) 12 * 1 Jan 2007
• Balers 10 * 1 Jan 2007
• Bale wrappers 10 * 1 Jan 2007
• Baler and wrappers 10 * 1 Jan 2007
• Forage harvesters 10 *# 1 Jul 2007
• Hay rakes (including finger wheel, rotary and parallel) 10 * 1 Jan 2007
• Moisture probes 5 * 1 Jan 2007
• Mower conditioners:
• Self-propelled:
• Attachments 8 * 1 Jan 2007
• Prime movers 12 * 1 Jan 2007
• Trailed 8 * 1 Jan 2007
• Super conditioners (hay re-conditioners) 8 * 1 Jan 2007
• Tedders 10 * 1 Jan 2007
• Trailed bale handling assets:
• Big square bale stackers 10 * 1 Jan 2007
• Generally (including accumulators and bale carriers) 15 * 1 Jan 2007
• Windrowers:
• Self-propelled:
• Attachments 8 * 1 Jan 2007
• Prime movers 12 * 1 Jan 2007
• Trailed 8 * 1 Jan 2007
• Hop growers’ plant:
• Hop picking machines 131/3 1 Jan 2001
• Kilns 20 1 Jan 2001
• Levee banks and revetments 40 1 Jan 2001
• Silos:
• Ancillary equipment 20 1 Jan 2001
• Grain (metal) 30 * 1 Jul 2001
• Trellis 20 1 Jan 2001

• Nursery and floriculture production(01110 to 01150)
• ASSET LIFE(IN YEARS) REVIEWED LAST UPDATED
• Chemical spraying assets:
• Generally (including broad acre trailed or linkage boom and utility) 10 * 1 Jul 2006
• Environmental control assets:
• Boilers (including piping) 20 * 1 Jul 2006
• Control systems 10 * 1 Jul 2006
• Evaporative coolers 10 * 1 Jul 2006
• Heating assets 10 * 1 Jul 2006
• Instruments (including sensors) 10 * 1 Jul 2006
• Retractable screens 8 * 1 Jul 2006
• Ventilation fans 5 * 1 Jul 2006
• Fertigation system assets (incorporating control systems, pumps and tanks) 10 * 1 Jul 2006
• General assets:
• Bins and pallets 5 * 1 Jul 2006
• Fertiliser spreaders 10 * 1 Jul 2006
• Fumigation assets 5 * 1 Jul 2006
• Pasteurisation assets:
• Pasteurisation rooms 20 * 1 Jul 2006
• Steam boilers 15 * 1 Jul 2006
• Racks 15 * 1 Jul 2006
• Ride on mowers 5 * 1 Jul 2006
• Refrigeration assets:
• Insulation panels used in cool rooms 40 * 1 Jul 2006
• Refrigeration generally 10 * 1 Jul 2006
• Trailers 15 * 1 Jul 2006
• Trolleys 15 * 1 Jul 2006
• Weed mats 5 * 1 Jul 2006
• Harvesting assets:
• Bed lifters and diggers 10 * 1 Jul 2006
• Tree spades 15 *# 1 Jul 2006
• Packaging assets:
• Bunching and bundling machines 15 * 1 Jul 2006
• Deleafers 15 * 1 Jul 2006
• Gradi

This is an opening excerpt, not the complete document.