How Plant and Equipment Is Valued in Australia — and Why One Machine Has Several Correct Values

Take a worked example. A press brake sitting on a factory floor could be carried at $420,000 and $95,000 at the same moment, and both figures can be correct. The first is what it would cost to replace its capacity, installed and commissioned, if the factory burned down. The second is what it would fetch if the receivers unbolted it and sent it to auction next month. Neither number is wrong. They answer different questions.

This is the single most misunderstood thing about plant and equipment valuation, and it is not a professional evasion — it is written into the standards. This guide explains what actually determines the number: the basis and premise of value, whether the asset is valued where it stands or stripped out, how obsolescence is actually measured, and why the depreciation in your accounts is not the same concept at all.

The standards say the number depends on the question

The international standard for this asset class is IVS 300, which in the edition effective 31 January 2025 is titled Plant, Equipment and Infrastructure — infrastructure was brought explicitly within its scope in that edition, a change worth knowing if you are working from older guidance.

IVS 300 states the point directly at paragraph 50.02:

“Using the appropriate basis(es) of value and associated premise of value … is particularly crucial in the valuation of PEI because differences in value can be significant, depending on whether an item of plant and equipment is valued under an ‘in use’ premise, orderly liquidation or forced liquidation … The value of most PEI is particularly sensitive to different premises of value.”

That is the standard-setter saying that a single correct value does not exist independently of the assumption you attach to it. For real property the choice of premise usually moves the number at the margin. For plant and equipment it can move it by a multiple.

Where Australian practice sits on top

IVS is the base layer. Over it sits guidance from the Australian Property Institute, which recognises the IVS edition in force at the date of valuation and adds Australian practice on top. The API notes that a court or tribunal “may take into account the contents of any relevant GP” in deciding whether a member met the standard required by law — so this guidance carries real weight even though it is not legislation.

A naming change catches people out here too. Since 1 July 2021 the API has retired its old Guidance Notes (ANZVGN) and Technical Information Papers, consolidating them into Guidance Papers. References to an “ANZVGN” on plant and equipment are references to a category that no longer exists. The papers most relevant to this asset class, as published by the API, are AVGP 302 on valuations of real property, plant and equipment for Australian financial reports, ANZVGP 102 on market value of property, plant and equipment in a business, ANZVGP 104 on insurance cost estimates, ANZVGP 103 on the concept of forced sale, and ANZVGP 110 on forming an opinion of value where market transactions are scarce — which, for specialised plant, is the normal condition rather than the exception. The API also certifies plant and machinery valuers separately from generalist practitioners, as CPV (P&M).

Five assumptions, five different values

Because plant is movable, the assumptions have to be stated explicitly. IVS 300 paragraph 40.03 requires them in the scope of work and gives five examples — an open list, not an exhaustive one:

“(a) that the assets are valued as a group, in place and as part of an operating business, (b) that the assets are valued as a group, in place but on the assumption that the business is not yet in production, (c) that the assets are valued as a group, in place but on the assumption that the business is closed, (d) that the assets are valued as a group, in place but on the assumption that it is a forced sale … (e) that the assets are valued as individual items for removal from their current location.”

Run the same production line through those five assumptions and you get five defensible numbers, generally but not invariably descending — the standard notes at 50.04 that a piecemeal sale may in some markets outperform a sale of the assets as a group. A line humming inside a profitable business carries its installation, its commissioning, its integration with everything around it. The same line in a closed plant carries none of that. The same line as individual items for removal is a collection of second-hand machines competing with every other machine on the market that week.

The standard also permits a valuer to report on more than one set of assumptions (paragraph 40.04) — for instance to show a board what closure would do to the asset base. If you are commissioning a valuation and you are not sure which question you are asking, that is often the right answer.

What disappears when you unbolt it

The in-place versus removed distinction has to be made explicit. IVS 300 paragraph 50.03:

“In determining any premise of liquidation value, it should be made clear as to whether the premise is required to be on an in-place (in-situ) or removed (ex-situ) basis. The characteristics associated with the asset’s or group of assets’ location, and underlying land tenure or lease term, will often impact on the in-place or removed consideration.”

Paragraph 50.06 raises what may be lost on removal — and this is the part that surprises owners:

“there will be certain asset components (or originally incurred indirect costs) that are not recoverable once the asset is removed (either physically or economically). Such items might include (but not be limited to) foundations, electrical and process piping, transportation costs, installation and commissioning costs, fixed buildings, safety and protection equipment, etc.”

On heavy or highly integrated plant, those unrecoverable costs are frequently a large share of what was originally spent. A machine that cost, say, $600,000 delivered may have absorbed another $150,000 in foundations, three-phase power, guarding, pipework and commissioning before it produced anything. Removal writes most of that off. It is the main reason auction results look brutal against book value, and it is not evidence that the earlier valuation was wrong.

Lease and tenure matter here too. Plant sitting in a leased facility with two years to run is in a materially different position from identical plant in a freehold site, because the clock on removal is already running.

The three approaches, applied to plant

All three valuation approaches are available for plant and equipment, and IVS 300 is realistic about when each works.

The market approach — direct comparison against sales of similar assets — works where a genuine second-hand market exists. IVS 300 names the classes: cranes, construction equipment, light and heavy motor vehicles, earthmoving equipment. These trade often enough, in standard enough configurations, that comparable evidence is real. But the standard warns that “many types of plant and equipment are specialised and in these instances care must be exercised in offering valuation using a market approach when available market data is poor or non-existent.” Three sales of a superficially similar machine are not a market if none of them shares the subject’s configuration, hours or condition.

The income approach applies where the asset or asset group generates identifiable cash flows of its own. In practice this is a minority of P&E engagements, because most individual machines do not produce separable income — the business does.

The cost approach is, in the standard’s words, “commonly adopted for PEI, particularly in the case of individual assets that are specialised or special-use facilities”. For most Australian industrial plant this is the workhorse, and it is where the technical work actually sits.

Depreciated replacement cost: reproduction or replacement?

The cost approach for plant runs through depreciated replacement cost, and IVS 300 paragraph 90.01 answers the question practitioners argue about most:

“The first step is to estimate the cost to a market participant of replacing the subject asset by reference to the lower of either reproduction or replacement cost. The replacement cost is the cost of obtaining an alternative asset of equivalent utility; this can either be a modern equivalent providing the same functionality or the cost of reproducing an exact replica of the subject asset. After concluding on a replacement cost, the value should be adjusted to reflect the impact on value of physical, functional, technological and economic obsolescence on value. In any event, adjustments made to any particular replacement cost should be designed to produce the same cost as the modern equivalent asset from an output and utility point of view.”

Two things follow. First, you take the lower of reproducing the existing asset and replacing it with something of equivalent utility — you do not get to price the most expensive route. Second, whichever route you take, the answer has to reconcile back to the modern equivalent asset on output and utility. Nobody replaces a 1990s machine with another 1990s machine; they buy today’s machine that does the same job, and the valuation has to reflect that even when it starts from a replica cost.

This is the same conceptual machinery that underpins depreciated replacement cost valuations of buildings and infrastructure, applied to movable assets.

Obsolescence — and why it is not depreciation

IVS 300 is blunt at paragraph 20.06: “Valuations of plant and equipment should reflect the impact of all forms of obsolescence on value.”

The core taxonomy has three categories, defined in IVS 103 paragraph A30.16:

• Physical obsolescence — “any loss of utility due to the physical deterioration of the asset or its components resulting from its age and usage”.
• Functional obsolescence — “any loss of utility resulting from inefficiencies in the subject asset compared with its replacement such as its design, specification or technology being outdated”.
• External or economic obsolescence — “any loss of utility caused by economic or locational factors external to the asset. This type of obsolescence can be temporary or permanent.”

A note on the count, because it trips people up. IVS 300 paragraph 90.03 lists four heads — physical, functional, technological and economic — breaking technological out on its own, while IVS 103 A30.16 and AASB 13 paragraph B9 both use three, treating outdated technology as a species of functional obsolescence. The concepts are the same; the grouping differs between the standards themselves, not just between valuation and accounting. Quoting “the three types” from a document that lists four, or vice versa, is a small slip that invites an auditor to keep pulling.

How each is actually measured matters more than the taxonomy. IVS 103 sets out the mechanics:

• Most obsolescence is measured by comparing the subject asset against the hypothetical asset the replacement cost is based on — but where market evidence of the effect of obsolescence exists, “that evidence should be considered” (A30.18).
• Physical splits into curable — the cost to fix it — and incurable, where the adjustment is “equivalent to the proportion of the expected total life consumed”, and total life may be expressed in years, mileage, units produced or any other reasonable measure (A30.19).
• Functional splits into excess capital cost — a modern equivalent would cost less to buy — and excess operating cost, where a modern equivalent would cost less to run (A30.20).
• Economic arises from external factors affecting an individual asset or all the assets employed in a business (A30.21). The standard’s worked examples at that paragraph are framed for real estate — falling demand, oversupply, disrupted labour or raw material supply, an asset operated by a business that cannot pay a market rent and still earn a market return, and “adverse changes in the environmental, social and governance characteristics of the subject asset” — but the principle applies across asset classes.

One sequencing rule is easy to miss and changes the answer: economic obsolescence “should be deducted after physical deterioration and functional obsolescence” (A30.21). Applying the deductions in the wrong order produces a different number.

Physical life and economic life are different things (A30.17). Physical life is how long the asset could be used before it is worn out or beyond economic repair. Economic life is how long it is anticipated to generate returns or provide benefit in its current use — and it “will be influenced by the degree of functional or economic obsolescence to which the asset is exposed”. A machine can be physically sound and economically finished.

Why your depreciation schedule is not a valuation

Accounting depreciation spreads what you paid across an estimated life on a chosen pattern — straight line, diminishing balance, units of production. It is an allocation exercise anchored to a historical number. It does not attempt to say what the asset is worth today, and it is not evidence of value.

The standards say this themselves, in both directions. IVS 103 paragraph A30.15 warns that in the cost approach, “depreciation” means adjustments for obsolescence, and that “this meaning is different from the use of the word in financial reporting or tax law where it generally refers to a method for systematically expensing capital expenditure over time”. And AASB 13 paragraph B9 states that obsolescence “is broader than depreciation for financial reporting purposes (an allocation of historical cost) or tax purposes (using specified service lives)”.

That last clause is the one to keep. The accounting standard itself says a valuer’s obsolescence assessment is broader than the ATO’s effective lives. An asset written down to nothing in the tax fixed asset register can carry real value; an asset barely depreciated can be worth very little.

Tax depreciation is a third thing again, and its framework changed recently in a way that has not filtered through much of the published commentary. The current authority is the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 (F2025L01097), registered on 15 September 2025 and made under section 40-100(1) of the Income Tax Assessment Act 1997. Its Schedule 1 repeals the 2015 Determination, which was due to sunset on 1 October 2025, and its Schedule 2 carries the effective life tables.

The repeal is prospective, and this catches people out. Section 6(1)(c) of the 2025 Determination applies its tables only where the entity “is not required to work out an effective life for that asset in accordance with a previous determination made under section 40-100 of the Act”, and the accompanying Note records that an entity “may need to refer to a previous determination to work out the effective life for a depreciating asset”. An asset first held in 2019 does not pick up a 2025 effective life because the 2015 Determination was repealed — it keeps the life from the determination in force when it was acquired. If you are looking up an older machine, the current tables may not be the ones that govern it.

There has also been a change in how effective lives are published, and it retired an authority a great deal of advice still cites. The ATO’s notice of withdrawal states that “Taxation Ruling TR 2022/1 is withdrawn with effect from 31 October 2025”, and the ATO’s own guidance is explicit about what that ended: “Historically, the ATO updated effective lives periodically through the publication of Taxation Rulings, a practice that ended with the withdrawal of TR 2022/1. The ATO now uses an on-demand approach to reviewing the effective life of depreciating assets.” The tables moved into the Determination, which “is periodically updated to incorporate determinations in respect of additional assets as effective life reviews are completed”. There is no longer an annual ruling to look up.

A related point that quietly undermines the idea that a tax life measures anything about the machine: a taxpayer can apply to have an effective life reviewed. The figure is contestable by application, which is not something one says about a physical property of an asset.

The Determination is worth opening, because it makes the same point as IVS 300 on the tax side. Its Schedule 2 carries two tables — Table A organised by industry using ANZSIC headings, and Table B a generic alphabetical list — and an entity uses Table A where the asset is used in a listed industry, falling back to Table B otherwise. The consequence is that one machine has several different correct effective lives depending on what it is doing:

• An excavator takes a 10-year effective life in a non-metallic mineral mining and quarrying context, but excavators and front end loaders in waste treatment and disposal services take 5 years.
• A forklift takes 11 years under the generic Table B, and 11 years in waste treatment if it is not used in waste handling — but 5 years if it is.

Same machine, same day, different correct answers, because the question changed. It is the tax mirror of the IVS 300 point about premises of value.

Two further details are worth noticing when you read those tables. Some effective lives carry a “last updated” date of 1 July 2002 — meaning the assumed life of certain assets predates roughly a quarter-century of technological change, which is precisely the gap a valuer’s technological and functional obsolescence assessment exists to close. And Table B lists foundations for plant and machinery — integral to the plant’s operation but not incorporated into the plant itself — at a 40-year life, which is the boundary between depreciating assets and capital works, and the same foundations IVS 300 paragraph 50.06 says you do not recover when the machine is removed.

That foundations entry sits on a boundary worth understanding, because tax and valuation both have to draw a line between the machine and the building — and they draw it for different reasons.

On the tax side the rule is that Division 43 comes first and Division 40 is residual: if an item is capital works deductible under Division 43, it is not a depreciating asset under Division 40. The ATO describes capital works as covering buildings and extensions, alterations or improvements to a building, alterations and improvements to a leased building “including shop fitouts and leasehold improvements”, structural improvements such as sealed driveways, fences and retaining walls, and earthworks for environmental protection. Capital works attract a statutory rate of 2.5% or 4.0% rather than an effective life — and the ATO is explicit that leasehold improvements and shop fitouts “cannot be claimed over their effective life or the term of the lease”.

On the valuation side, IVS 300 draws its line around what can actually be sold separately. Paragraph 40.02:

“PEI connected with the supply or provision of services to a building are often integrated within the building and, once installed, are often difficult to separate from it. These items will normally form part of the real property interest … Examples include assets with the primary function of supplying electricity, gas, heating, cooling or ventilation to a building and equipment such as elevators. If the purpose of the valuation requires these items to be valued separately, the scope of work must include a statement to the effect that the value of these items would normally be included in the real property interest and may not be separately realisable.”

Take a lift. The tax question asks which division it falls in so as to pick a rate. The valuation question asks whether it could be realised apart from the building it is bolted into. Those are different enquiries about the same steel, and they can land on different sides. Foundations make the point sharply: the Determination gives them a 40-year life as plant, while IVS 300 lists them among the components not recovered when the machine is removed. Forty years of tax life, nothing at all on an ex-situ sale.

Taxpayers may adopt the Commissioner’s effective life or self-assess their own under the Income Tax Assessment Act 1997, and a capped life applies to certain assets. Either way, a tax depreciation schedule and a valuation answer different questions, are prepared to different rules, and are not substitutes for one another.

One more reason tax figures are not value

The instant asset write-off threshold is the clearest illustration. As at 29 July 2026 the legislated threshold has reverted to $1,000. The $20,000 threshold was temporary and applied to assets first used or installed ready for use between 1 July 2023 and 30 June 2026; that window has closed. The Government has announced and introduced legislation for a permanent $20,000 threshold from 1 July 2026 for businesses with aggregated annual turnover under $10 million — Schedule 2 to the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, introduced on 25 June 2026 — but at the time of writing that Bill is before the House of Representatives and has not passed. It has been referred to the Senate Economics Legislation Committee, which is due to report on 13 August 2026. A good deal of current commentary states the $20,000 figure as though it were settled law for 2026-27. It is not, and anyone relying on it should check the Bill’s status first.

Step back and the threshold has moved through roughly nine settings in fourteen years, from $1,000 to unlimited and back again. Not one of those changes altered what a single machine was worth. That is the cleanest possible demonstration that a tax outcome and a value are different objects.

Which basis do you actually need?

The honest short answer is that it depends entirely on why you are asking. In Australian practice the common cases run like this:

Two definitional points are worth getting right, because they are widely muddled.

A forced sale is not a basis of value. IVS 102 states plainly that “a ‘forced’ sale is a description of the situation under which the exchange takes place, not a distinct basis of value”. Liquidation value is the basis; orderly and forced are the two premises it can be determined under, and the valuer must disclose which one is assumed. Nor does a weak market create a forced sale by itself — unless the seller is compelled by a deadline that prevents proper marketing, they remain a willing seller within the market value definition.

“Fair value” means at least two different things. There is fair value as defined by AASB 13 and IFRS 13 for financial reporting, and there is fair value as defined by courts and statutes for particular legal purposes. They are not interchangeable, and a report should say which one it means.

And the insurance number is not a valuation at all. This is the one that surprises people most. The Australian Property Institute’s guidance paper on the subject — ANZVGP 104 Insurance Cost Estimates, effective 1 July 2025 and issued jointly with the New Zealand bodies — defines an insurance cost estimate as “the result of a calculation by a Member of the cost of replacing, or reproducing, the tangible asset as at the relevant/assessment date”. A calculation of cost, not an opinion of value. The insurer is asking a different question from everyone else in the table, which is why the answer sits so far from the others.

That guidance sets out four distinct costing bases, and the gap between the first and the last is where most under-insurance originates:

• Reinstatement cost — the cost to reinstate the asset at the same location “to a condition equal to, but not better or more extensive than its condition when new”, notionally assuming a total loss.
• Replacement cost — the cost of an equivalent asset at the same location “providing similar function and utility, but which is of a current design and constructed or manufactured using current materials and techniques”.
• Reproduction cost — the cost of an exact replica, same materials and specifications.
• Indemnity value — restoration to substantially the condition immediately before the loss, “taking into consideration the age, condition and remaining useful life of the tangible asset”, and expressly taking depreciation into account.

For plant specifically, the guidance says an estimate “should be based on the replacement cost of currently available equipment, including costs of transport, installation, commissioning, consultants’ fees, engineering, procurement, and construction management (EPCM) costs and non-recoverable taxes and duties”, assessed from the perspective of reconstructing a complete facility rather than repurchasing the original assets.

Read that against IVS 300 paragraph 50.06 and the symmetry is exact: transport, installation and commissioning are precisely the costs the insurance estimate must include and the removal scenario writes off. The same line items explain both ends of the table. It is also why an obsolete machine can carry a real market value while being excluded from an insurance schedule altogether — the guidance notes that obsolete or unused assets are commonly excluded, and that the exclusion should be stated explicitly.

One boundary worth knowing if you commission this work: an insurance policy is a financial product, so a valuer who does not hold an Australian Financial Services Licence cannot advise on whether your policy is adequate. The cost estimate is the deliverable; the sufficiency of cover is a conversation for your broker.

The insurance figure and the liquidation figure sit at opposite ends of that table for the same machine. At the liquidation end that spread is exactly the point IVS 300 makes at 50.02; the insurance end sits outside the IVS framework entirely, which is part of why the two are so often confused. A valuation is only usable if the basis, the premise, and the in-situ or ex-situ assumption are stated on its face — and the standard gets there in two steps: paragraph 40.03 requires those assumptions to be settled in the scope of work, and paragraph 120.01 requires the report to include appropriate references to all matters addressed in that scope, along with the effect of any associated assets excluded from the assumed transaction.

If you are briefing a valuer, the useful information is not “what is my equipment worth”. It is what the number is for, who will rely on it, and what happens next to the business it sits in.

Methodology

• Standard text: International Valuation Standards, edition effective 31 January 2025 (published 31 January 2024 with a twelve-month transition), read directly. Quotations and references are from IVS 300 Plant, Equipment and Infrastructure paragraphs 20.06, 40.03, 40.04, 50.02, 50.03, 50.04, 50.06, 70.01, 90.01, 90.03 and 120.01; IVS 102 Bases of Value Appendix paragraphs A10.01, A60.01–A60.02, A70.01, A80.01, A110.01, A120.01 and A120.04; and IVS 103 Valuation Approaches Appendix paragraphs A30.15–A30.21. Note the edition is properly cited by its effective date rather than as an “IVS 2025” edition, and that IVS 300 was retitled to include infrastructure in this edition.
• Bases and premises of value: IVS 102 Bases of Value and its Appendix, including market value (A10.01), fair value (A70.01), fair value as defined in law (A80.01), liquidation value and its two premises (A60.01-A60.02), orderly liquidation (A110.01) and forced sale (A120.01, A120.04). Obsolescence mechanics: IVS 103 Valuation Approaches, Appendix A30.15-A30.22. Note that value in use is not an IVS-defined basis in this edition and is not treated as one here, and that insurable or reinstatement value is a policy and professional-guidance concept rather than an IVS basis.
• Australian professional guidance: Australian Property Institute Guidance Papers, in particular ANZVGP 104 Insurance Cost Estimates (effective 1 July 2025, issued jointly with the New Zealand Institute of Valuers and the Property Institute of New Zealand), paragraphs 1.2, 3.2, 6.2.1-6.2.4, 6.5 and 8.3(h). The list of current Guidance Papers and their effective dates is as published by the API; api.org.au blocks automated retrieval, so the list was read from an archived capture and should be checked directly if you are relying on a specific paper’s status.
• Accounting: AASB 13 Fair Value Measurement (Compilation No. 3, 31 December 2023), paragraphs B8 and B9. Value in use is defined in AASB 136 and useful life in AASB 116; neither is an IVS basis, and this article does not treat them as one. The obsolescence categories and the “broader than depreciation” characterisation are quoted from B9. AASB 13’s not-for-profit public sector provisions in Appendix F are not applied here — they govern assets not held primarily to generate net cash inflows and do not describe commercial plant valuation.
• Tax boundary: the Division 43 / Division 40 priority rule and the description of what capital works covers are taken from ATO guidance on capital works deductions; the statutory text of section 40-45(2) itself was not read from a primary source and is not quoted here.
• Tax: Federal Register of Legislation, Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 (F2025L01097), status In force, registered 15 September 2025, including Schedule 1 (repeal of the 2015 Determination) and Schedule 2 (effective life tables) — read directly from the Register. The withdrawal of TR 2022/1 with effect from 31 October 2025 is quoted from the ATO’s notice of withdrawal (TR 2022/1W, signed 30 October 2025); the end of the periodic-ruling practice is quoted from the ATO’s Effective life determinations, rulings and law guidance, last updated 17 November 2025. ato.gov.au returns 403 to automated retrieval, so both were read from Internet Archive captures of the ATO’s own pages — the withdrawal notice from a 6 January 2026 snapshot — rather than live. Note also that the ATO designates a PDF as the authorised version of the withdrawal notice; that PDF is not archived, so the quotation above is from the HTML Legal Database page.
• Instant asset write-off: Parliament of Australia Bill homepage and the Parliamentary Library Bills Digest for the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 (Bills Digest 26bd070, 28 July 2026), which records that “absent this amendment, the IAWO threshold would revert to $1,000 from 1 July 2026”. Bill status checked 29 July 2026. This item has a short shelf life — the Senate Economics Legislation Committee reports 13 August 2026.
• The press brake figures and the installation-cost example are illustrative of the relationship between bases and of the scale of non-recoverable costs. They are not quoted market prices for any specific asset, and no ratio should be read across from them.
• We have not published second-hand equipment market indices or auction clearance data, because we could not source them to a standard we would rely on in a report.

Frequently asked questions

Why do I get different values for the same machine?

Because the basis and premise of value differ. A valuation prepared for insurance answers what it would cost to replace the asset’s capacity installed; one prepared for a wind-up answers what it would realise removed and sold under time pressure. IVS 300 paragraph 50.02 states that the value of most plant and equipment is “particularly sensitive to different premises of value”. Both figures can be correct simultaneously.

What is the difference between in-situ and ex-situ valuation?

In-situ values the asset where it stands, usually as part of a working installation, so installation, commissioning and integration are reflected. Ex-situ values it as an individual item for removal. IVS 300 paragraph 50.06 notes that components and costs such as foundations, electrical and process piping, transportation, installation and commissioning, fixed buildings and safety equipment may not be recoverable on removal — which is why the ex-situ figure is materially lower.

Is depreciated replacement cost based on replacing with the same machine?

Not necessarily. IVS 300 paragraph 90.01 requires the lower of reproduction cost or replacement cost, where replacement cost is the cost of an asset of equivalent utility — usually a modern equivalent providing the same functionality. Whichever is used, the result must reconcile to the modern equivalent asset on output and utility.

How many types of obsolescence are there?

It depends which document you are reading, and the split runs within the IVS framework itself, not just between valuation and accounting. IVS 103 paragraph A30.16 defines three — physical, functional and external/economic — treating outdated technology as a form of functional obsolescence, and AASB 13 paragraph B9 uses the same three, writing “functional (technological) obsolescence”. IVS 300 paragraph 90.03 lists four, breaking technological out separately. The underlying concepts are the same; only the grouping differs.

Is accounting depreciation the same as obsolescence?

No. AASB 13 paragraph B9 describes obsolescence as broader than depreciation “for financial reporting purposes (an allocation of historical cost) or tax purposes (using specified service lives)”. IVS 103 paragraph A30.15 makes the same distinction from the valuation side, noting that in the cost approach “depreciation” means adjustment for obsolescence rather than the systematic expensing of capital expenditure. A fully depreciated asset can still have substantial value, and a lightly depreciated asset can be worth very little if the technology or the market has moved.

What is the current ATO ruling for effective life?

Effective lives now sit in a legislative instrument rather than a Taxation Ruling: the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 (F2025L01097), registered 15 September 2025, whose Schedule 1 repealed the 2015 Determination. TR 2022/1 was withdrawn with effect from 31 October 2025, and the ATO no longer reissues effective lives through periodic rulings. Note also that the repeal is prospective: under section 6(1)(c) an asset governed by an earlier determination keeps that determination’s effective life. Taxpayers may also self-assess effective life instead of adopting the Commissioner’s.

Can one report give me more than one value?

Yes, and sometimes it should. IVS 300 paragraph 40.04 contemplates reporting on more than one set of assumptions, for example to illustrate the effect of business closure on the asset base. What matters is that each figure is labelled with the basis, premise and in-situ or ex-situ assumption it rests on.

Is an insurance valuation the same as a market valuation?

No, and they are not even the same kind of exercise. Australian Property Institute guidance defines an insurance cost estimate as the result of a calculation of the cost of replacing or reproducing the asset — a cost figure, not an opinion of value. It is normally assessed on a reinstatement or replacement footing including transport, installation, commissioning and professional fees, which is why it sits well above a market or liquidation figure for the same machine. Note also that a valuer without an Australian Financial Services Licence cannot advise on whether a policy provides adequate cover; the cost estimate is the deliverable.

Is the instant asset write-off $20,000 for 2026-27?

Not as a matter of law at the time of writing. The legislated threshold reverted to $1,000 on 1 July 2026 when the temporary $20,000 threshold expired. A permanent $20,000 threshold for businesses with aggregated annual turnover under $10 million has been announced and introduced as Schedule 2 to the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, but that Bill had not passed Parliament as at 29 July 2026 and was referred to a Senate committee reporting on 13 August 2026. Check its current status before relying on the higher figure.

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Sources:

• International Valuation Standards — IVSC — edition effective 31 January 2025. Quoted here: IVS 300 Plant, Equipment and Infrastructure, IVS 102 Bases of Value and IVS 103 Valuation Approaches
• AASB 13 Fair Value Measurement (Compilation No. 3, 31 December 2023; paragraphs B8, B9)
• Australian Property Institute — Standards and guidance papers (ANZVGP 104 Insurance Cost Estimates, effective 1 July 2025)
• Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 (F2025L01097)
• Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 — Parliament of Australia
• ATO — Effective life determinations, rulings and law

This article is general information about valuation practice — it is not accounting, tax or financial advice. Bases of value, standards and tax instruments change; confirm the current position for your engagement with your valuer or adviser. Last verified 29 July 2026.

See also: Plant & Equipment Valuations · AASB 116 Property, Plant and Equipment Summary · AASB 13 Fair Value Measurement Summary · DRC Valuations · Asset Valuations · Financial Reporting Valuations · Tax Depreciation Schedules · Building Insurance Valuations