Final ATO guidance on effective life of depreciating assets released

The ATO has published its final guidance on the effective life of depreciating assets for income tax purposes, with updates to the legislative instrument now in force.

The new instrument, Income Tax (Effective Life of Depreciating Assets) Determination 2025, was finalised following consultation in June and replaces the 2015 version, which sunsets on 1 October 2025.  The determination sets out the periods over which various types of assets are expected to be used to produce income, forming the basis for calculating annual depreciation deductions.

In conjunction with this update, Tax Ruling TR 2022/1, which explained the methodology used to determine effective life, will be withdrawn at the end of October 2025.  The reasoning and background previously included in the ruling are now incorporated into the ATO’s web guidance as non-binding explanatory material.

Link: https://www.legislation.gov.au/F2025L01097/asmade/text