3Additional value

3 Additional value

(1) For the purposes of this Act, the additional value added to bountiable yarn by a producer of the yarn shall be deemed to be the amount that is the factory cost incurred by the producer in connection with the process or processes carried out by that producer in the production of the yarn. (2) Subject to subsection (3), the factory cost incurred by a producer of bountiable yarn in connection with processes in the production of that yarn includes: (a) factory overhead charges apportioned on the basis of a full accounting period of the producer after deducting from those charges: (i) the amount realised on the disposal of waste; and (ii) profits realised on the disposal of buildings, machinery, plant or equipment; as so apportioned; and (b) other costs incurred by the producer in connection with those processes and the packaging of the yarn, including salaries, wages and other remuneration. (2A) In this section:

factory overhead charges includes the following:

(a) factory administration costs;
(b) losses incurred on the disposal of buildings, machinery, plant or equipment;
(c) the cost of reuseable packaging;
(d) the cost of machine maintenance and machine replacement parts;
(e) the cost of energy and water;
(f) the cost of solvents, detergents, machinery or spinning lubricants and similar materials used to facilitate the production of the yarn.

(3) The factory cost incurred by a producer of bountiable yarn in connection with processes in the production of that yarn does not include: (a) the cost of general administration (including, where the producer is a body corporate, corporate expenses), selling costs, interest, service charges or taxation (other than pay‑roll tax) or bonuses issued or paid to employees of the producer from the profits of the producer; (b) rent, hire or leasing costs in relation to land, buildings, plant or equipment, other than any part of those costs that: (i) constitutes rates or other municipal charges; (ii) constitutes the cost of the repair and maintenance of buildings, plant or equipment; or (iii) would normally be treated as depreciation; (c) the cost of: (i) the polymers, fibres or yarns from which the bountiable yarn was produced; (ii) any dyes, bleaches, yarn lubricants or yarn additives that were used in carrying out a process in the production of the bountiable yarn; or (iii) any disposable packaging for the yarn; (d) selling and service charges; (e) sales tax in respect of completed yarn; (f) tax on income, other than tax on income deducted in respect of the wages, salaries or other remuneration of employees; (g) costs incurred after the completion of the production of the yarn, other than costs relating to the testing or packaging of the yarn at registered premises; (h) the value of perquisites provided to employees of the producer that does not form part of their assessable income for the purposes of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997, as appropriate; (j) profit; (k) bonuses paid out of, or in anticipation of, profits; (m) costs charged or levied on the producer by an associate of the producer that are not costs actually incurred by the associate; (n) such of the depreciation of buildings as exceeds a rate of 4% per annum, or, if another rate is prescribed, that other rate, on the historic cost of factory buildings owned by the producer; (p) depreciation of machinery, plant or equipment, other than: (i) depreciation of the machinery, plant or equipment that is an allowable deduction to the producer under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997; or (ii) depreciation of the machinery, plant or equipment for which the producer can deduct amounts under Division 40 of the Income Tax Assessment Act 1997; (r) long service leave, other than provision for such leave; (s) severance pay, other than severance pay in relation to service during a period that is within the bounty period and during which the producer was a producer of the goods; (t) freight, and costs relating to vehicles, incurred in respect of the delivery of completed or partly completed yarn; (u) the cost of superannuation and similar schemes, other than cost that is an allowable deduction of the producer for the purposes of the Income Tax Assessment Act 1936; (v) workers compensation, other than insurance premiums for such compensation; (w) the cost of any material on which bounty has been paid or is to become payable to the producer under any law of the Commonwealth; or (y) such costs (if any) as are prescribed. (4) For the purposes of paragraph (3)(c), the cost of any materials, being polymers, fibres, yarns, dyes, bleaches, yarn lubricants, yarn additives or packaging, shall be taken to include the cost of any delivery of the materials. (5) Where, in relation to a claim for bounty or in relation to a return in accordance with section 10BA or otherwise for the purposes of this Act, the CEO: (a) is unable to verify the additional value added to bountiable yarn by a producer of the yarn; or (b) forms the opinion that, having regard to sound accounting principles, a cost included in the factory cost by reference to which the additional value added to the yarn by a producer is ascertained: (i) is incorrect or over‑estimated; (ii) is higher than would have been the case if the producer had not marginally costed or similarly disproportionately costed the production of yarn in respect of which bounty is not payable; (iii) has been fixed in order to obtain an increase in bounty; (iv) is unduly higher than a similar cost incurred by other producers of similar yarn; (v) has been increased as the result of the influence of a relationship between the producer and an associate of the producer; or (vi) is higher than would have been the case if the producer had provided services that were provided, and charged for, by an associate of the producer; the CEO may, by writing signed by him or her, determine the additional value added to that yarn by that producer, being the value that, having regard to all the relevant circumstances, the CEO considers to be appropriate, and the additional value added to that yarn by that producer shall be the value so determined.