Compliance
ATO’s Effective Life Rules & Other Compliance Shifts Businesses Need to Know
Australia’s ATO has finalized key instruments on effective life of assets, PAYG withholding, and GST treatment of second-hand goods—affecting depreciation, allowances, and input-tax credits.
By NomadicTax Research Team • 5 min read • November 21, 2025
## Recent Compliance Instruments Finalised by the ATO (Oct 2025)
From recent updates:
- The **Income Tax (Effective Life of Depreciating Assets) Determination 2025**, made under section 40-100(1) of the Income Tax Assessment Act 1997, replaces the 2015 version due to sunset. Taxpayers may use the Commissioner’s determined effective life or self-assess under section 40-105. It commenced 16 September 2025. ([au.andersen.com](https://au.andersen.com/october-2025-monthly-tax-update/?utm_source=openai))
- A new legislative instrument allows the Commissioner to reduce **PAYG withholding to nil** for certain allowances in specific cases. This offers relief for specific payments. ([au.andersen.com](https://au.andersen.com/october-2025-monthly-tax-update/?utm_source=openai))
- The **GST Determination on Input Tax Credits for Second-Hand Goods** (Acquisitions of Second-hand Goods Determination 2025) enables GST-registered entities to use the global accounting method for eligible second-hand goods acquired from *unregistered suppliers*, reverting to a pooled input tax credit model rather than item-by-item tracking. It replaces the 2015 instrument and came into effect 17 September 2025. ([au.andersen.com](https://au.andersen.com/october-2025-monthly-tax-update/?utm_source=openai))
## What These Mean in Practice
**Depreciation / Effective Life Adjustments:**
- Businesses need to check whether their assets are listed under the new Determination’s tables for effective life. If not, they’ll need to use self-assessment.
- A shorter or longer effective life affects annual depreciation deductions: more frequent deductions (shorter life), or slower depreciation (longer life).
**PAYG Withholding Nil Rate for Some Allowances:**
- Employers should review what allowances they pay. If eligible, applying nil withholding reduces cash flow burdens for recipients.
- However, careful documentation and confirmation from the ATO is essential to ensure compliance.
**GST & Second-Hand Goods:**
- Prior, businesses acquiring second-hand goods from unregistered suppliers often had to track each purchase for input tax credit entitlement. Now for eligible goods, they can pool input tax credits under a global accounting method—simplifying compliance.
- This can particularly benefit second-hand car dealers, second-hand goods retailers, charity shops, etc.
## Action Steps to Stay Compliant
1. **Audit your asset schedules** — identify which assets fall under tables vs self-assessment for effective lives.
2. **Review allowance payments** — classify them, check eligibility for nil PAYG rate instrument, update payroll systems accordingly.
3. **GST accounting methods** — if involved in trading second-hand goods, confirm whether you can use the new global method; ensure records support pooling where applicable.
4. **Training and system updates** — ensure your accounting, payroll, and reporting teams/software are updated to reflect legislative and instrument changes.
## Example Scenario
*Sam’s Second-Hand Electronics Store* has been buying items from private sellers (unregistered suppliers). Under the old system, Sam tracked each purchase’s GST-exclusive cost to claim input tax credits when items are resold (if applicable). With the new pooled or global accounting method, eligible purchases in a period may be aggregated, reducing administrative burden.
Additionally, *Luxury Goods Boutique* which pays certain allowances to overseas remote staff can check the new instrument to reduce or zero PAYG withholding on some allowances, improving cash flow for staff and simplifying payroll compliance.
## Final Thoughts
- These changes are already in effect (as legislative instruments) or very close to commencement; businesses should **act now**, not later.
- The risk of non-compliance is real as the ATO is tightening oversight. Document and maintain evidence for all positions taken.
- When in doubt, seeking advice from a tax professional is recommended.