5.3.1  Treatment of taxation

State taxes are an additional cost to bidders that government may not incur under the Reference Project. To the extent these are additional costs not borne by the government agency, an equivalent cost needs to be imputed in the PSC.

Taxes to be included in the PSC may typically include the following:

•  land tax;

•  local council rates;

•  payroll tax; and

•  stamp duties.

These amounts are added to the PSC, as government exemption represents an advantage to the Reference Project. The number and type of costs that are included should reflect their likely material impact on the PSC. Commonwealth taxes are excluded from the Competitive Neutrality inclusions as the net cash flows to Government are compared on a pre Commonwealth income tax basis.

Competitive Neutrality inclusions only arise if there is no actual tax, or tax equivalent obligation under the Reference Project.