28  Annual Report The net GST paid to, or received from the IRD including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows. Commitments and contingencies are disclosed exclusive of GST. Taxation The Law Commission is a public authority in terms of the Income Tax Act 2007 and consequently is exempt from income tax. Budget figures The budget figures are those as disclosed in the 2008-2011 Statement of Intent as approved by the Commissioners. The budget figures have been prepared in accordance with NZ IFRS, using accounting policies that are consistent with those adopted by the Commission for the preparation of the financial statements. Cost allocation Direct costs identifiable against specific projects are charged directly to those projects. Indirect costs are charged to specific projects in proportion to the direct labour hours recorded against those projects. “Direct costs” are those costs directly attributable to a speci “Indirect costs” are those costs which cannot be identified in an economically feasible manner with a specific project. Critical accounting estimates and assumptions In preparing these financial statements the Law Commission has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Property, plant and equipment useful lives and residual value At each balance date the Law Commission reviews the useful lives and residual values of its property, plant and equipment. Assessing the appropriateness of useful life and residual value estimates of property, plant and equipment requires the Law Commission to consider a number of factors such as the physical condition of the asset, expected period of