The accuracy of the content is not guaranteed. Please rely only on the authorised document. Tax Commissioner Michael Carmody announced today the first step in updating the schedule for the effective life of assets which are used in calculating depreciation deductions. "Industry has been calling for the modernisation of the depreciation schedule for some time and the matter was raised in the context of the Ralph Review. A draft ruling, released today, has been developed with input from a wide range of industry, representative bodies and manufacturers. "Taxpayers are able to self assess their own effective life for assets but many choose to use the 'safe harbour' rates published by the Tax Office. "Factors to take into account in working out the effective life of assets are set out in the ruling. Taxpayers should consider these factors if they choose to self assess," Mr Carmody said. The Tax Office's approach has been tested on four commonly used assets: computers, shipping containers, air cargo containers and certain horticultural plants. For all other items in the schedule released today, the effective lives remain the same. The Tax Office will progressively review other commonly used assets. "The ATO's approach will allow the effective life of equipment to be calculated more realistically. For example, the effective life of computers is now three years for laptops and four years for other computer types, whereas previously it was five years for all types. "The ruling updates the schedule by removing redundant items such as gramophones, carts and horse-drawn lorries. "The schedule has been restructured to make it easier for business to use; it is now available in two tables based on industry use. One table lists assets used by particular industries and the other lists assets used by more than one industry," Mr Carmody said. The effective life of an asset determines how long a business can claim depreciation for tax purposes. Some of the factors used in the approach for determining effective life include: the asset's market value; the way in which the asset is used by an industry; the level of repairs and maintenance commonly adopted by users of the asset and industry standards. The ruling will replace Taxation Ruling IT 2685 and is available at www.ato.gov.au. It is open for comment until 7 June 2000. CANBERRA
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