35Types of cost associated with relevant operation

35  Types of cost associated with relevant operation

 (1) For the purposes of step 1 of the residual pricing method, identify all costs associated with a relevant operation in accordance with this section.

 (2) Include all costs incurred by or on behalf of the participants that are attributable, indirectly attributable or partly attributable to the operation, whether incurred during the operating life of the operation or before the production year.

 (3) However, do not include, under subsection (2), a cost incurred by or on behalf of a participant that relates to acquiring an interest, directly or indirectly, in a brought‑in unit of property.

Note: For example, if a participant purchases a brought‑in unit of property for use in the relevant operation, the cost of purchasing the unit is not included. Instead, certain capital costs incurred in respect of the construction, improvement or maintenance of the unit may be included (see subsection (10)).

 (4) A payment or allowance between participants is not a cost associated with the relevant operation, unless it is a commercial tolling fee.

Tolling

 (5) A cost incurred by or on behalf of a participant is not a cost associated with the relevant operation to the extent that:

 (a) the cost is incurred in carrying out one or more actions mentioned in section 8 in relation to petroleum recovered from the source project of the relevant operation; and

 (b) a commercial tolling fee is paid by or on behalf of one or more participants in the relevant operation in consideration of the action or actions.

Note: The commercial tolling fee may be a cost associated with the relevant operation.

Costs partly attributable to the relevant operation

 (6) A capital cost that was incurred in relation to a unit of property that:

 (a) was not, at the time it was incurred, used in the relevant operation; and

 (b) was later used in the operation;

may be treated as a cost partly attributable to the operation.

 (7) If a cost is only partly attributable to the relevant operation, the amount of the cost is taken to be the amount that can reasonably be apportioned to the operation.

 (8) Subsections (6) and (7) do not apply to capital costs included under subsection (10).

Capital costs for units of property brought into the relevant operation

 (9) For the purposes of this section, a unit of property is a brought‑in unit of property if:

 (a) when the unit of property was created, the unit of property was not used, and was not intended to be used, in the relevant operation or any other relevant operation; and