Check how tax ruling 2014 – 4 affects claims

The Australian Taxation Office (ATO) has released a new tax ruling effective from the 1st of July 2014.

Replacing Tax Ruling 2013/4, Tax Ruling 2014/4 explains the methods to be used when determining the effective lives of depreciating assets.

The tax ruling in effect at the time an asset is acquired determines the effective life of that asset. For this reason, any changes the ATO have made to effective lives of assets in Tax Ruling 2014/4 will only affect assets purchased and installed for use after the 1st of July 2014.

Changed industry categories

The 2014/4 Tax Ruling has resulted in a number of changes to industry category headings including:

1. Hydroponics has changed to vegetable growing (under cover)
2. Personal and other services has changed to funeral, crematorium and cemetery services
3. Vegetable and cane growing has changed to vegetable growing (outdoors) and sugar cane growing
4. Waste disposal services has changed to solid waste collection services

When determining the effective life of assets used in commercial buildings, non-residential property operators would need to refer to assets such as carpet, hot water systems and blinds on Table B. The non-residential industry category on Table A has now been populated with all the relevant assets, allowing commercial property owners and their Accountants to find the effective lives of assets easily.

New industry categories

A number of new industry categories have also been introduced. These include:

1. Polymer and sheet packaging manufacturing
2. Railway rolling stock manufacturing and repair services
3. Ready-mixed concrete manufacturing
4. Professional, scientific and technical services
5. Waste remediation and materials recovery services

Table A and B: removals and changes to effective lives

Tax Ruling 2014/4 has seen a number of assets removed from or changed in Table A or B. Examples of some assets amended include:

1. Cotton sheds (humidification)
2. Amenities provided for employees
3. Boiler pumps
4. Engines
5. Plants (live or simulated)
6. Turnstiles

The removal of assets does not indicate that the Commissioner no longer considers these assets to be depreciable. In some cases, it has been due to the difficulties in determining an appropriate effective life that accurately reflects all the facts and circumstances particular to that asset.