29When the residual pricing method can be applied

29 When the residual pricing method can be applied

A cost‑plus price and netback price (and the related RPM price) can be calculated by applying the residual pricing method only if information is available about the direct costs (other than marketing and selling costs) associated with the relevant integrated operation that were incurred: (a) by all participants in the operation; and (b) for the relevant year of tax and previous financial years.

Note 1: If the information is not available, then section 25 will apply.

Note 2: The residual pricing method identifies:

(a) the pooled costs of the operation attributable to the project product; and
(b) the personal costs of the taxpayer attributable to the taxpayer’s share of project product.

Note 3: These pooled costs are used to calculate the major element of the cost‑plus and netback prices, and will be the same for each taxpayer participating in the operation. In contrast, the personal costs are used only to calculate a minor element of the netback price, and will vary for each taxpayer.

Note 4: These pooled costs and personal costs are used to work out the taxpayer’s cost‑plus price and netback price, which are then used to work out the RPM price under section 24.