Tax Depreciation Rates (ATO) – 2012 Rates for your residential investment property

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.

Assets generally:
     Air conditioning assets (excluding ducting, pipes and vents):
         Air handling units 20
             Absorption 25
             Centrifugal 20
             Volumetrics (including reciprocating, rotary, screw, scroll):
                 Air-cooled 15
                 Water-cooled 20
         Condensing sets 15
         Cooling towers 15
         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 units 15
         Pumps 20
         Room units 10
     Ceiling fans 5
     Clocks, electric 10
     Digital video display (DVD) players 5
     Door closers 10
     Door stops, freestanding 10
     Escalators (machinery and moving parts) 20
     Evaporative coolers:
         Fixed (excluding ducting and vents) 20
         Portable 10
     Floor coverings (removable without damage):
         Carpet 10
         Floating timber 15
         Linoleum 10
         Vinyl 10
     Furniture, freestanding 13 1/3
     Garbage bins 10
     Garbage compacting systems (excluding chutes) 6 2/3
     Generators 20
     Gym assets:
         Cardiovascular 5
         Resistance 10
     Hand dryers, electrical 10
             Electric 15
                 Ducted central heating unit 20
                 Other 15
         Freestanding 15
     Hot water systems (excluding piping):
         Electric 12
         Gas 12
         Solar 15
     Intercom system assets 10
     Lifts (including hydraulic and traction lifts) 30
         Fittings (excluding hardwired) 5
         Freestanding 5
         Shades, removable 5
     Linen 5
     Master antenna television (MATV) assets:
         Amplifiers 10
         Modulators 10
         Power sources 10
     Mirrors, freestanding 15
     Radios 10
     Rugs 7
     Solar power generating system assets 20
     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 phones 4
         PABX computerised assets 10
         Telephone hand sets 10
     Television antennas, freestanding 5
     Television sets 10
     Vacuum cleaners:
             Hoses 10
             Motors 10
             Wands 10
         Portable 10
     Ventilation fans 20
     Video cassette recorder systems (VCR) 5
     Water pumps 20
     Window blinds, internal 10
     Window curtains 6
     Window shutters, automatic:
         Controls 10
         Motors 10
Bathroom assets:
     Accessories, freestanding (including shower caddies, soap holders, toilet brushes) 5
     Exhaust fans (including light/heating) 10
     Heated towel rails, electric 10
     Shower curtains (excluding curtain rods and screens) 2
     Spa bath pumps 20
Fire control assets:
         Heat 6
         Smoke 6
     Detection and alarm systems:
         Alarm bells 12
         Detectors (including addressable manual call points, heat, multi type and smoke) 20
         Fire indicator panels 12
     Emergency warning and intercommunication systems (EWIS):
         Master emergency control panels 12
         Speakers 12
         Strobe lights 12
         Warden intercom phone 12
     Extinguishers 15
     Hoses and nozzles 10
     Pumps (including diesel and electric) 25
     Stair pressurisation assets:
         A C variable speed drives 10
         Pressurisation and extraction fans 25
         Sensors 10
Kitchen assets:
     Cook tops 12
     Crockery 5
     Cutlery 5
     Dishwashers 10
     Freezers 12
     Garbage disposal units 10
     Microwave ovens 10
     Ovens 12
     Range hoods 12
     Refrigerators 12
     Stoves 12
     Water filters, electrical 15
Laundry assets:
     Clothes dryers 10
     Ironing boards, freestanding 7
     Irons 5
     Washing machines 10
Outdoor assets:
     Automatic garage doors:
         Controls 5
         Motors 10
     Barbecue assets:
         Fixed barbecue assets:
             Sliding trays and cookers 10
         Freestanding barbecues 5
     Floor carpet (including artificial grass and matting) 5
     Furniture, freestanding 5
     Gardening watering installations:
         Control panels 5
         Pumps 5
         Timing devices 5
     Garden lights, solar 8
     Garden sheds, freestanding 15
     Gates, electrical:
         Controls 5
         Motors 10
     Operable pergola louvres:
         Controls 15
         Motors 15
     Sauna heating assets 15
     Sewage treatment assets:
         Controls 8
         Motors 8
         Fixed spa assets:
             Chlorinators 12
             Filtration assets (including pumps) 12
             Heaters (electric or gas) 15
         Freestanding spas (incorporating blowers, controls, filters, heaters and pumps) 17
     Swimming pool assets:
         Chlorinators 12
         Cleaning assets 7
         Filtration assets (including pumps) 12
             Electric 15
             Gas 15
             Solar 20
     Tennis court assets:
         Cleaners 3
         Drag brooms 3
         Nets 5
         Rollers 3
         Umpire chairs 15
Security and monitoring assets:
     Access control systems:
         Code pads 5
         Door controllers 5
             Proximity 7
             Swipe card 3
     Closed circuit television systems:
         Cameras 4
         Monitors 4
             Digital 4
             Time lapse 2
         Switching units (including multiplexes) 5
     Security systems:
         Code pads 5
         Control panels 5
         Detectors (including passive infra-red, photo sensors and vibration) 5
         Global System for Mobiles (GSM) Units 5
         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.