Taxation for Australian Businesses: Understanding Australian Business Taxation Concessions

Appendix A: Effective life schedule

When a small business purchases an asset it is recorded in their accounting records and depreciated at a set rate. If the business is a micro business then that rate is 15 per cent for the first year and 30 per cent based on the diminishing value for subsequent years. If the small business has an income in excess of $2 million per year then it must depreciate the asset based on the asset’s effective life, usually using the diminishing value method.

The effective life of an asset can be determined by the business itself or you can use the ‘safe harbour’ provisions of effective life as published by the Tax Office at the time you purchased the asset. If you determine the effective life yourself you can be ...