Some annual updates from manufacturing and the ATO about depreciation repair services; and improvements for CGT noting right now.
Effective life of depreciating assets
Taxation Ruling TR 2014/4
This Ruling commenced 1 July 2014 and explains the methodology used by the commissioner in making determinations of the effective life of depreciating assets under s40-100 of the ITAA 1997. It replaces Taxation Ruling TR 2013/4.
To the extent the commissioner’s views in that Ruling still apply, they have been incorporated into TR 2014/4. The ATO has prepared a consolidated version of the amended determination, which is set out in the Schedule to the Ruling.
The commissioner has made new determinations, determining the effective life of assets covered by the following descriptions:
. a polymer film and sheet packaging material manufacturing;
. railway rolling stock manufacturing and repair services;
. ready-mixed concrete manufacturing;
. scientific research services; and waste remediation and materials recovery services.
These determinations, which formerly appeared in the schedules attached to TR 2013/4, are now incorporated in consolidated Tables A and B in the new Schedule to TR 2014/4.
Taxpayers may have to work out the effective life of some assets; however, they will need to be able to justify the basis of that to the ATO.
Note that the removal of assets from Table A or B does not indicate that the commissioner no longer considers them to be depreciating assets. In some cases, the Ruling says 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. In these cases, the ATO has put the onus on taxpayers to work out the effective life themselves.
Capital gains: improvement threshold 2014/15
Taxation Determination TD 2014/16
This TD specifies for the purposes of s1O8-85 of the ITAA 1997 that the CGT improvement threshold for the 2014/15 income year is $140,443 (up from $136,884 that applied for the 2013/14 year). The improvement threshold is determined for the purposes of sto8-70 of the TAA 1997 (when a capital improvement to a pre-CGT asset is a separate asset) and so CS-75 of the TAA 1997 (capital improvements to CGT assets for which a rollover may be available).
Car depreciation limit 2014/15 – no change
Taxation Determination TD 2014/17
This TD states that the car limit for the 2014/15 financial year is $57,466, the same as the previous year. The car limit is used to work out decline in value deductions of certain cars under the income tax law.
The ATO says the index number for the year ended 31 March 2013 was 395.1 and the index for the year ended 31 March 2014 was 384.6, for an indexation factor of 0.973. As the factor is less than 1, the car limit for the current year has not been indexed and remains the same as the previous year.
