17.6 Substantiation requirements
Where you use the otherwise deductible rule, you must have documentation to substantiate the extent to which the purchase price of the property would have been 'otherwise deductible' to the employee. You must obtain the documentation from the employee before lodging the relevant FBT return. Where the documentation is a Property benefit declaration by the employee, it must be in a form approved by the Commissioner of Taxation (refer to Declarations).
A travel diary is a diary or similar document that must be obtained from the employee where the property is provided for either of the following:
- for travel within Australia for more than five consecutive nights, not exclusively for performing employment-related duties. The fact that business travel requires the employee to stay away over a weekend does not, in itself, mean the trip is not undertaken exclusively in the course of their employment
- for travel outside Australia for more than five consecutive nights.
In determining whether a travel diary needs to be kept, you need to look at the number of nights the employee is away from home. The number of nights away from home includes transit time.
A travel diary shows the nature of each work or business activity, where and when it took place, the duration of the activity and the date the entry was made.
The requirement to obtain a travel diary is waived where both of the following apply:
- the employee is performing duties of employment as a member of an aircrew travelling outside Australia
- the property provided is food or drink, or is for accommodation, or otherwise incidental to the travel.
You must obtain a Property benefit declaration in the form approved by the Commissioner of Taxation (refer to Declarations), except where any of the following apply:
- the property (other than property used in respect of a car owned or leased by the employee) is used exclusively in the course of performing employment-related duties (for example, protective clothing, tools of trade)
- there is a requirement to keep a travel diary
- the requirement to keep a travel diary is waived because the employee is a member of an international aircrew
- the provision of the fringe benefit is covered by a recurring fringe benefit declaration.
Recurring fringe benefit declaration
The requirement to obtain an employee declaration is waived if the provision of a fringe benefit is covered by a Recurring property benefit declaration (refer to Declarations).
A fringe benefit is covered by a recurring fringe benefit declaration if:
- it is provided no later than five years after the day on which the declaration was made
- the deductible proportion of the benefit is not significantly less than the deductible proportion of the benefit for which the declaration was first provided (a difference of more than 10% is significant)
- it is 'identical' to the fringe benefit for which the declaration was first made.
Benefits are identical if they are the same in all respects except for any differences that:
- are minimal or insignificant
- relate to the value of the benefits
- relate to the deductible proportion of the benefits.
A recurring fringe benefit declaration is automatically revoked by a later recurring fringe benefit declaration made for an identical benefit. This means that the earlier declaration applies to the first benefit and to any identical benefits provided before the later declaration was made. The later declaration applies to the benefit for which it was provided and to any identical benefits provided subsequently.
The declaration must be in writing in a form approved by the Commissioner of Taxation. The employee must give you the declaration before the due date for lodging your FBT return or, if you are not required to lodge a return, by 21 May.