37Direct, indirect and personal costs

37  Direct, indirect and personal costs  (1) For the purposes of step 3 of the residual pricing method, classify the remaining costs associated with the relevant operation as direct costs or indirect costs in accordance with this section.  (2) A cost is a relevant sector cost if:  (a) it is wholly and directly attributable to one or more of the following activities of the operation:  (i) production;  (ii) transport;  (iii) storage;  (iv) marketing;  (v) selling; or  (b) it is a commercial tolling fee.  (3) A relevant sector cost that is wholly attributable to either the upstream stage or the downstream stage of the operation is a direct cost.  (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 2 direct costs, attributed to the upstream and downstream stages, each of the amount that can reasonably be apportioned to that stage.  (5) A cost that is not a direct cost because of subsection (3) or (4) is an indirect cost. Note: Examples of indirect costs are business insurance, office expenses, administrative and accounting costs, payments 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.  (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.  (7) For the purposes of this section, the threshold amount for a taxpayer 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; or  (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.