107BPrescribed costs of factory overheads—section 153G of the Act

#### 107B Prescribed costs of factory overheads—section 153G of the Act (1) For the purposes of subsection 153G(1) of the Act, each of the following costs is prescribed: (a) the cost of inspection and testing of materials and goods; (b) the cost of insurance of the following kinds: (i) insurance of plant, equipment and materials used in the production of the goods; (ii) insurance of work in progress and finished goods; (iii) liability insurance; (iv) accident compensation insurance; (v) insurance against consequential loss from accident to plant and equipment; (c) the cost of dies, moulds, tooling and the depreciation, maintenance and repair of plant and equipment; (d) the cost of interest payments for plant and equipment; (e) the cost of research, development, design and engineering; (f) the cost of the following items in respect of real property used in the production of the goods: (i) insurance; (ii) rent and leasing; (iii) mortgage interest; (iv) depreciation on buildings; (v) maintenance and repair; (vi) rates and taxes; (g) the cost of leasing of plant and equipment; (h) the cost of energy, fuel, water, lighting, lubricants, rags and other materials and supplies not directly incorporated in manufactured goods; (i) the cost of storage of goods at the factory; (j) the cost of royalties or licences in respect of patented machines or processes used in the manufacture of the goods or in respect of the right to manufacture the goods; (k) the cost of subscriptions to standards institutions and industry and research associations; (l) the cost of the provision of medical care, cleaning services, cleaning materials and equipment, training materials and safety and protective clothing and equipment; (m) the cost of the disposal of non‑recyclable waste; (n) the cost of subsidisation of a factory cafeteria to the extent not recovered by returns; (o) the cost of factory security; (p) the cost of computer facilities allocated to the process of manufacture of the goods; (q) the cost of contracting out part of the manufacturing process within Australia or New Zealand; (r) the cost of employee transport; (s) the cost of vehicle expenses; (t) the cost of any tax in the nature of a fringe benefits tax. (2) In working out a cost for the purposes of subregulation (1), the following costs are not included: (a) any cost or expense relating to the general expense of doing business (including, but not limited to, any cost or expense relating to insurance or to executive, financial, sales, advertising, marketing, accounting or legal services); (b) the cost of telephone, mail and other means of communication; (c) the cost of international travel expenses, including fares and accommodation; (d) the cost of the following items in respect of real property used by persons carrying out administrative functions: (i) insurance; (ii) rent and leasing; (iii) mortgage interest; (iv) depreciation on buildings; (v) maintenance and repair; (vi) rates and taxes; (e) the cost of conveying, insuring or shipping the goods after manufacture; (f) the cost of shipping containers or packing the goods into shipping containers; (g) the cost of any royalty payment relating to a licensing agreement to distribute or sell the goods; (h) the manufacturer’s profit and the profit or remuneration of any trader, agent, broker or other person dealing in the goods after manufacture; (i) any other cost incurred after the completion of manufacture of the goods. (3) For the purposes of paragraphs (1)(c) and (f), the cost of depreciation of plant, equipment or buildings must be worked out in accordance with generally accepted accounting principles, as applied by the manufacturer. (4) Despite subregulation (2), if preference claim goods are claimed to be the manufacture of Papua New Guinea or a Forum Island Country the following costs, in addition to the costs prescribed by subregulation (1), are prescribed for subsection 153G(1) of the Act: (a) 25% of the cost of telecommunications; and (b) the cost of international travel expenses incurred to allow 1 person to travel, in a year, to attend 1 trade fair or to purchase equipment; and (c) the cost of contracting out part of the manufacturing process within Papua New Guinea or a Forum Island Country.