Private ruling: Log book records
Date of advice: 5 November 2018
Published: February 2019
Ruling period: FBT year ending 31 March 2016 | FBT year ending 31 March 2017 | FBT year ending 31 March 2018
Date scheme commenced: FBT year ending 31 March 2014

Ruling: Q1: Does the log book maintained by the employee satisfy the definition of “log book records” in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: No

Relevant facts and circumstances: A government employer in Australia has provided a motor vehicle to an employee in Australia under a salary packaging arrangement for the Fringe Benefits Tax (FBT) years ended 31 March 2014 to 31 March 2018. The motor vehicle is available for the private usage of the employee. For the purposes of the FBTAA, “car” has the same meaning as that given in subsection 995-1(1) of the Income Tax Assessment Act 1997 . Under that subsection, “car” is defined to be a motor vehicle designed to carry a load of less than 1 tonne and fewer than 9 passengers. The motor vehicle provided in this case meets the definition of a car for the purposes of the FBTAA. For the FBT years ended 31 March 2014 to 31 March 2018, the motor vehicle was inadvertently assessed under the statutory formula method instead of the operating cost method. The employer is exploring the opportunity to amend relevant FBT returns and seeks confirmation as to whether the provided log book maintained by the employee is tax compliant for the purposes of the FBTAA. The log book documents all travel made by the employee for a three month period in the FBT year ending 31 March 2014 commencing after the employee was provided with the car. The business travel is comprised predominantly of travel in respect of running his private business operations as well as some work-related travel for his government employment as an IT expert. Daily activity would consist of driving to the client’s site, typically for wireless network administration, then driving to the government office, then home to work on tasks remotely. This is stated descriptively in the log book, then was consolidated to “Client Peninsula Wireless, Work, Home IT” as separate entries, then “Workday (typical)”, with any divergence being entered as required. Ultimately this reduction in description was to reduce the repetition of writing “Drive to client – Wireless monitoring”, “Drive from client to work (government department)” and “drive from work to home for remote monitoring”. Towards the end of the log book for the period, for a number of weeks, there were single entries made covering more than one day, such as “Workday (typical) x 3”, “Workday (typical) x 7”, “Workday (typical) x 15” and “Workday (typical) x 20”, with corresponding consolidated date, odometer and kilometre entries also made. The employee’s role for the Data Warehouse (i.e. government employment) required him to start work in the morning from home by running diagnostics on the previous nightly ETL processes, triage any failures, and restart any processes that needed to be restarted. This responsibility also required him to have access to emails and desktop remotely so that these tasks could be completed. Following this he would do morning administration from home on his client’s network prior to driving to work. The employee has confirmed there was no major change in the pattern of use of the motor vehicle for the FBT years in question.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Reasons for decision: Summary: The definition of “log book records” for the purposes of calculating the taxable value of car fringe benefits using the operating cost method is contained in subsection 136(1) of the FBTAA. It states: log book records , in relation to a car held by a person (in this definition called the holder ), in relation to a period, means a daily log book or similar document in which, in respect of each business journey: (a) that is undertaken in the car during the period; and (b) that the holder, or a person acting on behalf of the holder, chooses to record in the document for the purpose of demonstrating the pattern of use of the car during the period; an entry setting out particulars of: (c) the date on which the journey began and the date on which it ended; and (d) the respective odometer readings of the car at the beginning and end of the journey; and (e) the number of kilometres travelled by the car in the course of the journey; and (f) the purpose or purposes of the journey; is made in the English language at, or as soon as reasonably practicable after, the end of the journey [emphasis added]. The key requirements of “log book records” under subsection 136(1) are that the log book must include for each business journey : ● The date the journey began and ended; ● Odometer readings at the start and end of the journey; ● Kilometres travelled on the journey; and ● The purpose of the journey. The record must be made at the end of the journey or as soon as reasonably practicable afterwards. Log book records contain a record of business use and are usually maintained for a continuous 12-week period. In FBT- a guide for employers , we state at chapter 4.2 that: When recording the purpose of the journey, an entry stating ‘business’ or ‘miscellaneous business’ will not be enough. Your entry should sufficiently describe the purpose of the journey so that it can be classified as a business journey. … Where two or more business trips are undertaken consecutively on any day, only one entry for the series needs to be recorded in the log book. For example, an entry for a salesman who called on 10 customers while working in the Bathurst-Orange area of New South Wales could record the odometer readings at the start and end of the consecutive journeys and describe the purpose of the travel as ’10 customer calls, Bathurst-Orange area’. In Re Latif and Federal Commissioner of Taxation 2008 ATC 10-039, it was held that the where the logbook was unreliable and did not appear to have been completed progressively or after trip, or with sufficient description, it could not be accepted as an accurate record of business kilometres. The initial entries in the log book were made descriptively and sufficiently described the purpose of each journey made on a day so that it could be classified as a business journey, along with all the other required information, with several entries being made for each journey made on the day. Later on in the log book, consolidated entries began to be made for each day, in order to reduce the repetition of writing, for example: “Client Peninsula Wireless, Work, Home IT”. In the middle and end of the logbook, entries were consolidated even further with fewer details. For example entries were made recording: “Workday (typical)”, “Workday (typical) x 3”, “Workday (typical) x 7”, “Workday (typical) x 15” and “Workday (typical) x 20”, with consolidated odometer entries also made for the relevant period, be 3 days, 7 days, 15 days or 20 days. We consider that the entries made in the beginning of the log book met all the requirements for log book records under subsection 136(1), with entries made sufficiently describing the purpose of each journey undertaken on each day so that it can be classified as a business journey. Odometer readings were also recorded for each journey undertaken. However, the entries made from the middle to the end of the log book did not meet all the requirements for log book records, as they were consolidated, covering periods from 3 to 20 days, with too little detail provided about the purpose of the particular journey undertaken on each day, so that it can be classified as a business journey. In addition, the odometer readings have not been recorded for each journey undertaken. Instead, consolidated entries have been made for the relevant period, be it 1 day, 7 days, 15 days or 20 days. We recognise that where two or more business journeys are made consecutively during the one day, only one log book entry for that day is required. However the odometer readings at the start and end of the consecutive journeys must still be recorded. This allowance does not extend to making one log book entry for more than one day (be it 3 days, 7 days, 15 days or 20 days), or for not making consolidated odometer readings at the start and end of the consecutive journeys on each day. The log book entry must also be made at, or as soon as reasonably practicable after, the end of each journey. Consolidated entries for more than one day do not meet this requirement as well. We therefore consider that the log book maintained by the employee for the period 28 February 2013 to 31 May 2013 does not satisfy the definition of “log book records” in subsection 136(1) of the FBTAA. The reason being that the log book does not, “in respect of each business journey”, contain entries setting out all the required particulars, “at, or as soon as reasonably practicable after, the end of the journey” for the relevant period.