Investment Property

In previous posts we’ve looked at how effective lives are calculated, how depreciation rates are calculated and the difference between the diminishing value and prime cost methods.

As we often get questions about the specific effective lives for residential property, we’ve decided to post the current effective lives here. These effective lives are current at the time of posting, and come from Tax Ruling 2011/2 (TR 2011/2). This legislation replaced TR 2010/2 and applies from the 1st of July 2011 to the present. We expect there to be an update to this ruling prior to the start of the next financial year, however the residential list is not as dynamic as the commercial one. Consequently, we don’t expect too many changes but will keep you updated nonetheless. Most of these effective lives are unchanged from 2003/2004.

As a reminder, for all property purchased after the 10th of May 2006, the diminishing value rate will be 200 divided by the effective life, and the prime cost method rate is 100 divided by the effective life. More information on that calculation is available here.

ASSETLIFE
(YEARS)
Assets generally:
     Air conditioning assets (excluding ducting, pipes and vents):
         Air handling units20
         Chillers:
             Absorption25
             Centrifugal20
             Volumetrics (including reciprocating, rotary, screw, scroll):
                 Air-cooled15
                 Water-cooled20
         Condensing sets15
         Cooling towers15
         Damper motors (including variable air volume box controller)10
         Fan coil units (connected to condensing set)15
         Mini split systems up to 20KW (including ceiling, floor and high wall split system)10
         Packaged air conditioning units15
         Pumps20
         Room units10
     Ceiling fans5
     Clocks, electric10
     Digital video display (DVD) players5
     Door closers10
     Door stops, freestanding10
     Escalators (machinery and moving parts)20
     Evaporative coolers:
         Fixed (excluding ducting and vents)20
         Portable10
     Floor coverings (removable without damage):
         Carpet10
         Floating timber15
         Linoleum10
         Vinyl10
     Furniture, freestanding13 1/3
     Garbage bins10
     Garbage compacting systems (excluding chutes)6 2/3
     Generators20
     Gym assets:
         Cardiovascular5
         Resistance10
     Hand dryers, electrical10
     Heaters:
         Fixed:
             Electric15
             Gas:
                 Ducted central heating unit20
                 Other15
         Freestanding15
     Hot water systems (excluding piping):
         Electric12
         Gas12
         Solar15
     Intercom system assets10
     Lifts (including hydraulic and traction lifts)30
     Lights:
         Fittings (excluding hardwired)5
         Freestanding5
         Shades, removable5
     Linen5
     Master antenna television (MATV) assets:
         Amplifiers10
         Modulators10
         Power sources10
     Mirrors, freestanding15
     Radios10
     Rugs7
     Solar power generating system assets20
     Stereo systems (incorporating amplifiers, cassette players, compact disc players, radios and speakers)7
     Surround sound systems (incorporating audio-video receivers and speakers)10
     Telecommunications assets:
         Cordless phones4
         PABX computerised assets10
         Telephone hand sets10
     Television antennas, freestanding5
     Television sets10
     Vacuum cleaners:
         Ducted:
             Hoses10
             Motors10
             Wands10
         Portable10
     Ventilation fans20
     Video cassette recorder systems (VCR)5
     Water pumps20
     Window blinds, internal10
     Window curtains6
     Window shutters, automatic:
         Controls10
         Motors10
Bathroom assets:
     Accessories, freestanding (including shower caddies, soap holders, toilet brushes)5
     Exhaust fans (including light/heating)10
     Heated towel rails, electric10
     Shower curtains (excluding curtain rods and screens)2
     Spa bath pumps20
Fire control assets:
     Alarms:
         Heat6
         Smoke6
     Detection and alarm systems:
         Alarm bells12
         Detectors (including addressable manual call points, heat, multi type and smoke)20
         Fire indicator panels12
     Emergency warning and intercommunication systems (EWIS):
         Master emergency control panels12
         Speakers12
         Strobe lights12
         Warden intercom phone12
     Extinguishers15
     Hoses and nozzles10
     Pumps (including diesel and electric)25
     Stair pressurisation assets:
         A C variable speed drives10
         Pressurisation and extraction fans25
         Sensors10
Kitchen assets:
     Cook tops12
     Crockery5
     Cutlery5
     Dishwashers10
     Freezers12
     Garbage disposal units10
     Microwave ovens10
     Ovens12
     Range hoods12
     Refrigerators12
     Stoves12
     Water filters, electrical15
Laundry assets:
     Clothes dryers10
     Ironing boards, freestanding7
     Irons5
     Washing machines10
Outdoor assets:
     Automatic garage doors:
         Controls5
         Motors10
     Barbecue assets:
         Fixed barbecue assets:
             Sliding trays and cookers10
         Freestanding barbecues5
     Floor carpet (including artificial grass and matting)5
     Furniture, freestanding5
     Gardening watering installations:
         Control panels5
         Pumps5
         Timing devices5
     Garden lights, solar8
     Garden sheds, freestanding15
     Gates, electrical:
         Controls5
         Motors10
     Operable pergola louvres:
         Controls15
         Motors15
     Sauna heating assets15
     Sewage treatment assets:
         Controls8
         Motors8
     Spas:
         Fixed spa assets:
             Chlorinators12
             Filtration assets (including pumps)12
             Heaters (electric or gas)15
         Freestanding spas (incorporating blowers, controls, filters, heaters and pumps)17
     Swimming pool assets:
         Chlorinators12
         Cleaning assets7
         Filtration assets (including pumps)12
         Heaters:
             Electric15
             Gas15
             Solar20
     Tennis court assets:
         Cleaners3
         Drag brooms3
         Nets5
         Rollers3
         Umpire chairs15
Security and monitoring assets:
     Access control systems:
         Code pads5
         Door controllers5
         Readers:
             Proximity7
             Swipe card3
     Closed circuit television systems:
         Cameras4
         Monitors4
         Recorders:
             Digital4
             Time lapse2
         Switching units (including multiplexes)5
     Security systems:
         Code pads5
         Control panels5
         Detectors (including passive infra-red, photo sensors and vibration)5
         Global System for Mobiles (GSM) Units5
         Noise makers (including bells and sirens)5

It’s important to note that for a particular asset, if you were using an effective life from the determination as in force before the latest amendment (for example, as contained in the Schedule to TR 2010/2), you should continue to use that life for that asset.

There are also specific rules for plant and equipment items acquired prior and post the 21st of September 1999, which can be found in the ruling itself linked below.

We provide a copy of the current effective lives here for convenience and more information can be found via the ruling itself here.

Remember that there is more to tax depreciation that applying the correct effective life and calculating the rate. Legislation allowing immediate deductions and low value pools also come into play. It’s important that you engage a suitably qualified tax depreciation expert to prepare your report, as the ATO state that valuers, real estate agents, accountants and solicitors do not have the relevant qualifications or experience to assess and calculate the capital allowances and residual values relating to construction costs.