IS 11/01
27 May 2011

IS 11/01: Income tax - depreciation: meaning of 'obsolescence' in the definition of 'estimated useful life'

This interpretation statement sets out the Commissioner's view on the meaning of the term 'obsolescence' in the definition of 'estimated useful life' in the depreciation provisions of the Income Tax Act 2007. Section EE 63 provides that certain factors must be taken into account when determining the estimated useful life of an item. One of these factors is 'obsolescence'. The Commissioner considers that, in the context of s EE 63, obsolescence means that causes external to that item, and outside the control of the taxpayer, will result in that item being no longer useful in deriving assessable income before the end of its physical life.