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ATO Finalises New Effective Life Determination for Depreciating Assets – 2025 Update

October 16, 2025

The Australian Taxation Office (ATO) has released a new legislative instrument that finalises the effective life of certain depreciating assets for tax depreciation purposes.

The new determination, titled the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025, was made under section 40-100(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and provides taxpayers with the Commissioner’s view of the effective life of various assets.

What This Means for Taxpayers

Under Division 40 of the ITAA 1997, taxpayers can choose between:

  • Using the Commissioner’s determined effective life (as outlined in this instrument), or
  • Self-assessing the effective life of their depreciating assets under section 40-105.

This new determination replaces the Income Tax (Effective Life of Depreciating Assets) Determination 2015, which was due to sunset on 1 October 2025. The 2025 version maintains the same substantive effect as the previous one, ensuring continuity and clarity in how businesses calculate depreciation.

The Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 officially commenced on 16 September 2025.

For tailored advice on how these updates may affect your business asset depreciation or tax planning, contact Gavin Ma & Co, your trusted accounting and tax experts in Australia.