PETROLEUM RESOURCE RENT TAX ASSESSMENT REGULATIONS 2005 (REPEALED)

PART 5 - THE RESIDUAL PRICING METHOD  

Division 5.2 - Identifying and classifying included costs  

REGULATION 28   DIRECT, INDIRECT AND PERSONAL COSTS  

28(1)    
For Step 3 of the residual pricing method, costs associated with an integrated operation are divided into direct costs and indirect costs in accordance with this regulation.

28(2)    
A cost is a relevant sector cost if it is wholly and directly attributable to 1 or more of the following activities of the operation:

(a) production;

(b) transport;

(c) storage;

(d) marketing;

(e) selling.

28(3)    
A relevant sector cost that is wholly attributable to either the upstream stage or the downstream stage of the operation is a direct costs .

28(4)    
A relevant sector cost that:

(a) is not wholly attributable to either the upstream stage or the downstream stage; and

(b) is greater than the threshold amount;

is taken to be divided into two direct costs , attributed to the upstream and downstream stages, each of the amount that can reasonably be apportioned to that stage.

28(5)    
A cost that is not a direct cost because of subregulation (3) or (4) is an indirect costs .

Examples of indirect costs

Business insurance, office expense, administrative and accounting costs, payment in respect of land and buildings used in connection with administrative or accounting activities, intra company charges, contract penalties, legal and audit costs, travel and buyer liaison costs.

28(6)    
If a cost is related to the marketing and selling of project liquid or project electricity, the cost is a personal cost of the participant that incurred it.

28(7)    
For this regulation, the threshold amount for a financial year is:

(a) an amount agreed by the taxpayer and the Commissioner for that financial year; or

(b) if the taxpayer and the Commissioner cannot agree on an amount for a financial year:

(i) if that financial year is the financial year 2005 - 2006 or an earlier financial year - $20 million; and

(ii) if that financial year is a later financial year - $20 million indexed by the GDP factor as applied under the Act, adjusted from 1 January each year.