Class Ruling CR 2018/47
Date of effect: 1 April 2018

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provisions 2. The relevant provisions dealt with in this ruling are: All references in this Ruling are to the FBTAA unless otherwise stated. Class of entities 3. The class of entities to which this Ruling applies is those employer clients who use Smartgroup Corporation Ltd's web-based log book system for car log book and odometer record-keeping requirements through Smartgroup Corporation Ltd's wholly-owned subsidiaries. These wholly-owned subsidiaries include Smartfleet Management Pty Ltd, Smartsalary Pty Limited, Salary Packaging Solutions Pty Ltd t/a Advantage Salary Packaging, Fleet West Pty Ltd, Salary Solutions Australia Pty Ltd, AccessPay Pty Ltd, Autopia Management Pty Ltd and/or Selectus Pty Ltd (collectively herein referred to as 'Smartgroup'). Qualifications 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 26 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then:

Class of entities or scheme: 3. The class of entities to which this Ruling applies is those employer clients who use Smartgroup Corporation Ltd's web-based log book system for car log book and odometer record-keeping requirements through Smartgroup Corporation Ltd's wholly-owned subsidiaries. These wholly-owned subsidiaries include Smartfleet Management Pty Ltd, Smartsalary Pty Limited, Salary Packaging Solutions Pty Ltd t/a Advantage Salary Packaging, Fleet West Pty Ltd, Salary Solutions Australia Pty Ltd, AccessPay Pty Ltd, Autopia Management Pty Ltd and/or Selectus Pty Ltd (collectively herein referred to as 'Smartgroup'). | Qualifications: 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 26 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This Ruling applies from 1 April 2018 to 31 March 2023. The Ruling continues to apply after 31 March 2023 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10 Public Rulings ). 8. The following description of the scheme is based on information provided by the applicant. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 9. The Smartgroup Logbook Solution is a web-based log book system which can be used to log the journeys of a car during a pre-determined period. The Smartgroup Logbook Solution offers a default 12 week period but allows the log book to record any period of time as determined by the user. 10. The Smartgroup Logbook Solution consists of the following features: 11. The user is prompted to enter the following information prior to commencing the first trip for which the Smartgroup Logbook Solution is used: 12. The user provides information to set up the user account at the time of registration. This information includes the following: 13. This information is stored securely on the Platform. 14. The Platform processes the data entered and generates a log for the specific device which represents the individual driver. Part of the processing includes collation of various entries to create individual trips referred to in the Smartgroup Logbook Solution as a 'Trip Log'. 15. The Smartgroup Logbook Solution allows the user to view, review and report on all data. The journey identifies the user's classification of the trip as either business or personal using the available selection menu. There is also a display of the current business use percentage based on the Trip Logs that have already been classified. 16. The Smartgroup Logbook Solution calculates and displays 'business use percentage' and 'personal use percentage' with the percentage calculated using the following formula: | Business Percentage: Number of business kilometres travelled by the car during the holding period / Total number of kilometres travelled by the car during the holding period * 100 | Personal Percentage: Number of personal kilometres travelled by the car during the holding period / Total number of kilometres travelled by the car during the holding period * 100 17. The Smartgroup Logbook Solution calculates both the number of business kilometres and the total number of kilometres travelled by the car during the holding period where it is used continuously for the whole of the period of the year for which the car is held thereby calculating the business use percentage for the holding period. 18. Where the Smartgroup Logbook Solution is not continuously used for the whole of the period of the year for which the car is held, the system will not record the number of business kilometres travelled during the holding period nor the total number of kilometres travelled during the holding period. The user will need to separately determine the business use percentage using the estimated number of business kilometres and the odometer readings from the beginning and end of the holding period. | Trip Report: 19. An employer client can, at any stage, export a progress report of trip data outlining all trips completed during the log book period. The employer client can then use the information contained within the Smartgroup Logbook Solution to generate a 'Trip Report' on demand as required, which details each individual journey undertaken by each car. 20. The Trip Report provides the following information for each journey undertaken in the selected period: 21. In relation to the trip purpose, each Smartgroup Logbook Solution employer client can customise the trip purpose reason in the Trip Report to suit their own business. That is, Smartgroup Logbook Solution employer clients may wish to have any number of trip purposes all relating to the business usage - for example, 'client care visit', 'call out trip', 'delivery' etc. 22. An employer client will use the Smartgroup Logbook Solution to produce, in English, a Trip Report for any selected period for each car that has the system fitted and/or each employee who uses the car that has the system fitted. 23. The Trip Report also provides details of the calculated business use percentage for the selected period based on the information contained in the Smartgroup Logbook Solution. 24. All employer clients using the Smartgroup Logbook Solution will make an election under paragraph 162G(1)(b) to treat a relevant current year of tax as a 'log book year of tax'. | FBT Logbook Report: 25. The employer client can use the information contained in the Smartgroup Logbook Solution to generate a 'FBT Logbook Report' which provides details of the calculated business use percentage for the selected period. 26. The FBT Logbook Report provides: 27. The Smartgroup Logbook Solution's 'Trip Report' and 'FBT Logbook Report' are documents which satisfy the requirements of the definition of 'log book records' in subsection 136(1). 28. The Smartgroup Logbook Solution's 'Trip Report' and 'FBT Logbook Report' are documents that satisfy the requirements of the definition of 'odometer records' in subsection 136(1). 29. An employer in a log book year of tax who uses the Smartgroup Logbook Solution continuously for: satisfies the requirements in section 10A and is entitled to claim a reduction of operating costs. 30. An employer in a log book year of tax who uses the Smartgroup Logbook Solution continuously for: satisfies the requirements in section 10A and is entitled to claim a reduction of operating costs provided the employer: 31. An employer in a non-log book year of tax who uses the Smartgroup Logbook Solution's 'Trip Report' and 'FBT Logbook Report' continuously for the whole of the 'holding period', as that term is defined in section 162C, satisfies the requirements in section 10B and is entitled to claim a reduction of operating costs. 32. An employer in a non-log book year of tax who has used the Smartgroup Logbook Solution in one of the previous four FBT years continuously for an 'applicable log book period' but: satisfies the requirements in section 10B and will be entitled to claim a reduction of operating costs of the car on account of business journeys undertaken in the car during the holding period provided the employer: Commissioner of Taxation 21 November 2018 | What is the operating cost method under section 10?: 33. Section 10 allows employers to elect to calculate the taxable value of a car fringe benefit using the cost basis method (operating cost method). 34. Where the election is made, the taxable value of the car fringe benefit using the operating cost method is calculated according to the following formula in subsection 10(2): (C * (100% - BP)) - R 35. Therefore, an employer intending to claim a reduction in the operating cost of a car, on account of business journeys undertaken during the holding period, must meet the requirements of either section 10A (if the year is a 'log book year of tax' (as defined below)) or section 10B (if the year is not a 'log book year of tax'), as applicable. | Do the Trip Report and FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) meet the relevant requirements of section 10A?: 36. Section 10A states: 10A NO REDUCTION OF OPERATING COST IN A LOG BOOK YEAR OF TAX UNLESS LOG BOOK RECORDS AND ODOMETER RECORDS ARE MAINTAINED 37. Section 162G sets out various circumstances under which a particular year can be treated as a 'log book year of tax'. It is accepted that all employer clients using the Smartgroup Logbook Solution will make an election under paragraph 162G(1)(b) to treat a relevant current year of tax as a 'log book year of tax'. Do the Trip Report and the FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) satisfy the requirements of the definition of 'log book records' under subsection 136(1)? 38. Subsection 136(1) defines 'log book records' as: 39. The Smartgroup Logbook Solution's web-based log book system collects all applicable information for each journey undertaken by a car (that is, it records the location, date, purpose and distance travelled for each journey) and automatically sends the data to the Smartgroup Logbook Solution's centralised server. 40. In addition to this, the business use or private use details for each journey are input by each respective driver through the Smartgroup Logbook Solution's online portal. The relevant employer client then uses the Smartgroup Logbook Solution to produce, in English, a Trip Report and a FBT Logbook Report for the selected period. 41. Paragraph (c) of the definition of 'log book records' in subsection 136(1) requires the date on which the journey began and ended to be entered in the relevant records. The Smartgroup Logbook Solution records the start and end dates and times of each journey and this information is detailed in both the Trip Report and the FBT Logbook Report. Therefore, this requirement is satisfied. 42. Paragraph (d) of the definition of 'log book records' requires the respective odometer readings of the car at the beginning and at the end of the journey be entered into the relevant records. 43. The term 'odometer' is not defined in either the FBTAA or the Income Tax Assessment Act 1997 but the Macquarie Dictionary (online edition) defines that term as being 'an instrument for measuring distance passed over, as by a motor car'. 44. The term 'odometer records', as defined in subsection 136(1) makes reference to 'odometer reading of the car'. Whilst odometer readings must pertain to the car, it does not necessarily mean that they must also be attributable either wholly or in part to the rotation of the car's wheels, thereby mechanically moving the standard odometer fitted in the car by the manufacturer. 45. Provided the device used by the Smartgroup Logbook Solution to determine the car's odometer readings is of sufficient integrity, it is accepted that a system other than the car's own odometer may meet the FBTAA legislative requirements. 46. The user is prompted to enter the opening odometer reading displayed on the car's built-in odometer prior to commencing the first trip for which the Smartgroup Logbook Solution is used. Each time the car is driven, the start and end odometer readings for the journey are automatically calculated by the Smartgroup Logbook Solution's web-based log book system from the data recorded. It is therefore accepted that the opening and closing odometer readings calculated by the Smartgroup Logbook System's web-based log book system are of sufficient integrity to be 'odometer readings of the car'. 47. It is accepted that the opening and closing odometer readings for each car journey as detailed in both the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution satisfies the requirements of paragraph (d) of the definition of 'log book records' in subsection 136(1). 48. The number of kilometres travelled by the car in the course of each journey is also detailed in both the Trip Report and the FBT Logbook Report, thus satisfying the requirement in paragraph (e) of the definition of 'log book records' in subsection 136(1). 49. Paragraph (f) of the definition of 'log book records' in subsection 136(1) requires the purpose or purposes of the business journeys to be recorded. Further, the definition of 'log book records' requires that entries be made at, or as soon as reasonably practicable after, the end of the journey. 50. In relation to the trip purpose, each Smartgroup Logbook Solution employer client can customise the trip purpose reason in the Trip Report to suit their own business. That is, Smartgroup Logbook Solution clients may wish to have any number of trip purposes all relating to the business usage - for example, 'client care visit', 'call out trip', 'delivery' etc. For each journey, the driver/user classifies the journey as either business or personal using the available selection menu, and records the purpose of each journey. The system automatically checks the trip reason, and requests the driver to provide more detail if required. The Smartgroup Logbook Solution allows the user to view, review and report on all data. 51. It is expected that the reason recorded for each business journey is sufficiently descriptive so as to enable the journey to be classified as a business journey and that the relevant classification and description will be made at the end of each journey, or as soon as reasonably practicable thereafter. 52. It is accepted that both the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report satisfy the requirements in paragraph (f) of the definition of 'log book records' in subsection 136(1). 53. It is considered that the Trip Report and FBT Logbook Report generated by the Smartgroup Logbook Solution is 'a daily log book or similar document' that satisfies the requirement of having the relevant entries 'made in the English language at, or as soon as reasonably practicable after, the end of the journey'. 54. The Trip Report and FBT Logbook Report generated by the Smartgroup Logbook Solution satisfy the definition of 'log book records' in subsection 136(1) provided, for the purposes of section 10A, the Trip Report and FBT Logbook Report are completed for an 'applicable log book period'. | Are the log book records maintained for an 'applicable log book period'?: 55. The definition of 'log book records' in subsection 136(1) also requires that each business journey recorded in the log book records be in relation to a 'period'. Paragraph 10A(a) refers to 'log book records' being maintained for an 'applicable log book period'. 56. The term 'applicable log book period' is defined in subsection 162H(1) as follows: 162H APPLICABLE LOG BOOK PERIOD 162H(1) [Car Fringe Benefit] 57. The Trip Reports and FBT Logbook Reports that are generated by the Smartgroup Logbook Solution must be for a minimum 12 week period. The log book beginning and end date is displayed on the printed log book. It is accepted that in the absence of evidence to the contrary in a particular case, all employer clients using the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report in relation to any car fringe benefits that they provide will maintain the necessary records for the duration of the 'applicable log book period' (as that latter term is defined in subsection 162H(1)). 58. Accordingly, it is considered that the Trip Report and FBT Logbook Report generated by the Smartgroup Logbook Solution satisfy all of the relevant requirements of the definition of 'log book records' as defined in subsection 136(1). Do the Trip Report and the FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) satisfy the requirements of the definition of 'odometer records' under subsection 136(1)? 59. In order to meet the requirements of section 10A, it is essential that 'odometer records' are maintained in addition to 'log book records'. 60. The term 'odometer records' is defined in subsection 136(1) as: 61. The definition of 'odometer records' in subsection 136(1) requires that odometer readings be recorded both at the 'commencement of the period' and at the 'end of the period'. 62. The Smartgroup Logbook Solution's Trip Report and the FBT Logbook Report provide details of the odometer reading for the car at the start of the first recorded journey and also the odometer reading for the car at the end of the last recorded journey that were undertaken during each reporting period. 63. As stated at paragraph 57 of this Ruling, it is accepted that in the absence of evidence to the contrary in a particular case, all employer clients using the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report in relation to any car fringe benefits they provide will maintain the necessary records for the 'applicable log book period'. 64. A report can be generated at the end of the log book period showing the odometer recordings made and the type of journey undertaken. It is accepted that the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report meet the necessary requirement of having entries made in English at, or as soon as reasonably practicable after, the end of the journey. 65. It is considered that the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution satisfy all of the relevant requirements of the definition of 'odometer records' as defined in subsection 136(1). | Are the odometer records maintained 'for the holding period'?: 66. Paragraph 10A(b) requires odometer records to be maintained for the 'holding period' as defined in section 162C. 67. Section 162C states: 162C HOLDING PERIOD OF CAR 68. Subsection 162(1) states, amongst other things, that a car will be held by a person if that person either owns or leases the car. Therefore, the continuous period during a fringe benefits tax (FBT) year (including the whole year of tax, where applicable) where the employer client either owns or leases a car will be the 'holding period' of that car. 69. Consequently, the odometer readings at the beginning and end of the period during the FBT year (including the whole year of tax, where applicable) where the employer client either owns or leases a car will have to be determined. If the Smartgroup Logbook Solution is used continuously for the whole period that a car is held during a FBT year, the Smartgroup Logbook Solution will provide the odometer readings for both the beginning and end of that holding period. 70. However, if the Smartgroup Logbook Solution is not used continuously for the whole of the holding period of the car during the FBT year, the employer client will need to separately maintain the odometer readings for the holding period. 71. It is accepted that, in the absence of any evidence to the contrary in a particular case, the requirement in paragraph 10A(b) will be met by employer clients using the Smartgroup Logbook Solution. Do the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution enable the employer to estimate the number of business kilometres travelled during the holding period in a log book year of tax? 72. Paragraph 10A(d) requires the employer client to estimate the number of business kilometres travelled by the car during the holding period. This estimate is used to calculate the business use percentage required by paragraph 10A(e). 73. The basis used to estimate the number of business kilometres is set out in section 162F which states: 162F REASONABLE ESTIMATE OF NUMBER OF BUSINESS KILOMETRES 74. The Smartgroup Logbook Solution calculates both the number of business kilometres and the total number of kilometres travelled by the car during the holding period where it is used continuously for the whole of the period of the year for which the car is held. Therefore, where the Smartgroup Logbook Solution is used continuously for the whole of the period of the year for which the car is held, both the Trip Report and the FBT Logbook Report will enable the employer client to determine the number of business kilometres travelled during the holding period. 75. However, where the Smartgroup Logbook Solution is not continuously used for the whole of the period of the year for which the car is held, the system will not record the number of business kilometres travelled during the holding period, or the total number of kilometres travelled during the holding period. In such a situation, the employer client, in estimating the number of business kilometres travelled during the holding period, will need to take all relevant matters into account including any other log book records and odometer records maintained by or on behalf of the user/driver, and any variations in the pattern of use of the car. 76. It is accepted that, in the absence of any evidence to the contrary in a particular case, the requirement in paragraph 10A(d) will be met by employer clients using the Smartgroup Logbook Solution. Do the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution enable employer clients to specify the business use percentage for the holding period in a log book year of tax? 77. Paragraph 10A(e) requires the employer client to specify a percentage as the 'business use percentage' applicable to a car for the holding period in a log book year of tax. 78. Subsection 136(1) defines 'business use percentage' to mean the percentage worked out using the formula: Number of business kilometres travelled by the car during the holding period / Total number of kilometres travelled by the car during the holding period * 100 79. The Smartgroup Logbook Solution calculates both the number of business kilometres and the total number of kilometres travelled by the car during the holding period where it is used continuously for the whole of the period of the year for which the car is held. Therefore, where the Smartgroup Logbook Solution is used continuously for the whole of the period of the year for which the car is held, both the Trip Report and FBT Logbook Report automatically calculate for the employer client the business use percentage for the holding period. 80. However, where the Smartgroup Logbook Solution is not continuously used for the whole of the period of the year for which the car is held, the system will not record the number of business kilometres travelled during the holding period, nor the total number of kilometres travelled during the holding period. In such a situation, the employer client will need to separately determine the business use percentage using the estimated number of business kilometres and the odometer readings for the beginning and the end of the holding period. 81. It is accepted that, in the absence of any evidence to the contrary in a particular case, the requirement in paragraph 10A(e) will be met by employer clients using the Smartgroup Logbook Solution. | Conclusion on whether the Trip Report and FBT Logbook report generated by the Smartgroup Logbook Solution satisfies the requirements of section 10A: 82. Both the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution's web-based log book system are documents that satisfy the definitions of 'log book records' and 'odometer records' in subsection 136(1) for the purposes of paragraph (a) of section 10A. 83. It is accepted that, in the absence of any evidence to the contrary in a particular case, all remaining applicable requirements of section 10A will be met by employer clients who use the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution. 84. In particular: | Do the Trip Report and the FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) meet the relevant requirements of section 10B?: 85. Section 10B states: 10B NO REDUCTION OF OPERATING COST IN A NON-LOG BOOK YEAR OF TAX UNLESS LOG BOOK RECORDS AND ODOMETER RECORDS ARE MAINTAINED IN LOG BOOK YEAR OF TAX 86. Where the Smartgroup Logbook Solution is used continuously for the whole of the holding period, both the Trip Report and the FBT Logbook Report will meet all the necessary requirements of section 10B in a non-log book year of tax as they: 87. An employer client in a non-log book year of tax who does not use the Smartgroup Logbook Solution in that year of tax, or does not use it for the whole of the period that the car is held but has used the system in one of the previous four FBT years continuously for an 'applicable log book period', will not by itself satisfy the requirements of section 10B. The employer client will also need to: 88. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft.

Ruling: 27. The Smartgroup Logbook Solution's 'Trip Report' and 'FBT Logbook Report' are documents which satisfy the requirements of the definition of 'log book records' in subsection 136(1). 28. The Smartgroup Logbook Solution's 'Trip Report' and 'FBT Logbook Report' are documents that satisfy the requirements of the definition of 'odometer records' in subsection 136(1). 29. An employer in a log book year of tax who uses the Smartgroup Logbook Solution continuously for: satisfies the requirements in section 10A and is entitled to claim a reduction of operating costs. 30. An employer in a log book year of tax who uses the Smartgroup Logbook Solution continuously for: satisfies the requirements in section 10A and is entitled to claim a reduction of operating costs provided the employer: 31. An employer in a non-log book year of tax who uses the Smartgroup Logbook Solution's 'Trip Report' and 'FBT Logbook Report' continuously for the whole of the 'holding period', as that term is defined in section 162C, satisfies the requirements in section 10B and is entitled to claim a reduction of operating costs. 32. An employer in a non-log book year of tax who has used the Smartgroup Logbook Solution in one of the previous four FBT years continuously for an 'applicable log book period' but: satisfies the requirements in section 10B and will be entitled to claim a reduction of operating costs of the car on account of business journeys undertaken in the car during the holding period provided the employer: Commissioner of Taxation 21 November 2018


Appendix: What is the operating cost method under section 10?: 33. Section 10 allows employers to elect to calculate the taxable value of a car fringe benefit using the cost basis method (operating cost method). 34. Where the election is made, the taxable value of the car fringe benefit using the operating cost method is calculated according to the following formula in subsection 10(2): (C * (100% - BP)) - R 35. Therefore, an employer intending to claim a reduction in the operating cost of a car, on account of business journeys undertaken during the holding period, must meet the requirements of either section 10A (if the year is a 'log book year of tax' (as defined below)) or section 10B (if the year is not a 'log book year of tax'), as applicable. | Do the Trip Report and FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) meet the relevant requirements of section 10A?: 36. Section 10A states: 10A NO REDUCTION OF OPERATING COST IN A LOG BOOK YEAR OF TAX UNLESS LOG BOOK RECORDS AND ODOMETER RECORDS ARE MAINTAINED 37. Section 162G sets out various circumstances under which a particular year can be treated as a 'log book year of tax'. It is accepted that all employer clients using the Smartgroup Logbook Solution will make an election under paragraph 162G(1)(b) to treat a relevant current year of tax as a 'log book year of tax'. Do the Trip Report and the FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) satisfy the requirements of the definition of 'log book records' under subsection 136(1)? 38. Subsection 136(1) defines 'log book records' as: 39. The Smartgroup Logbook Solution's web-based log book system collects all applicable information for each journey undertaken by a car (that is, it records the location, date, purpose and distance travelled for each journey) and automatically sends the data to the Smartgroup Logbook Solution's centralised server. 40. In addition to this, the business use or private use details for each journey are input by each respective driver through the Smartgroup Logbook Solution's online portal. The relevant employer client then uses the Smartgroup Logbook Solution to produce, in English, a Trip Report and a FBT Logbook Report for the selected period. 41. Paragraph (c) of the definition of 'log book records' in subsection 136(1) requires the date on which the journey began and ended to be entered in the relevant records. The Smartgroup Logbook Solution records the start and end dates and times of each journey and this information is detailed in both the Trip Report and the FBT Logbook Report. Therefore, this requirement is satisfied. 42. Paragraph (d) of the definition of 'log book records' requires the respective odometer readings of the car at the beginning and at the end of the journey be entered into the relevant records. 43. The term 'odometer' is not defined in either the FBTAA or the Income Tax Assessment Act 1997 but the Macquarie Dictionary (online edition) defines that term as being 'an instrument for measuring distance passed over, as by a motor car'. 44. The term 'odometer records', as defined in subsection 136(1) makes reference to 'odometer reading of the car'. Whilst odometer readings must pertain to the car, it does not necessarily mean that they must also be attributable either wholly or in part to the rotation of the car's wheels, thereby mechanically moving the standard odometer fitted in the car by the manufacturer. 45. Provided the device used by the Smartgroup Logbook Solution to determine the car's odometer readings is of sufficient integrity, it is accepted that a system other than the car's own odometer may meet the FBTAA legislative requirements. 46. The user is prompted to enter the opening odometer reading displayed on the car's built-in odometer prior to commencing the first trip for which the Smartgroup Logbook Solution is used. Each time the car is driven, the start and end odometer readings for the journey are automatically calculated by the Smartgroup Logbook Solution's web-based log book system from the data recorded. It is therefore accepted that the opening and closing odometer readings calculated by the Smartgroup Logbook System's web-based log book system are of sufficient integrity to be 'odometer readings of the car'. 47. It is accepted that the opening and closing odometer readings for each car journey as detailed in both the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution satisfies the requirements of paragraph (d) of the definition of 'log book records' in subsection 136(1). 48. The number of kilometres travelled by the car in the course of each journey is also detailed in both the Trip Report and the FBT Logbook Report, thus satisfying the requirement in paragraph (e) of the definition of 'log book records' in subsection 136(1). 49. Paragraph (f) of the definition of 'log book records' in subsection 136(1) requires the purpose or purposes of the business journeys to be recorded. Further, the definition of 'log book records' requires that entries be made at, or as soon as reasonably practicable after, the end of the journey. 50. In relation to the trip purpose, each Smartgroup Logbook Solution employer client can customise the trip purpose reason in the Trip Report to suit their own business. That is, Smartgroup Logbook Solution clients may wish to have any number of trip purposes all relating to the business usage - for example, 'client care visit', 'call out trip', 'delivery' etc. For each journey, the driver/user classifies the journey as either business or personal using the available selection menu, and records the purpose of each journey. The system automatically checks the trip reason, and requests the driver to provide more detail if required. The Smartgroup Logbook Solution allows the user to view, review and report on all data. 51. It is expected that the reason recorded for each business journey is sufficiently descriptive so as to enable the journey to be classified as a business journey and that the relevant classification and description will be made at the end of each journey, or as soon as reasonably practicable thereafter. 52. It is accepted that both the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report satisfy the requirements in paragraph (f) of the definition of 'log book records' in subsection 136(1). 53. It is considered that the Trip Report and FBT Logbook Report generated by the Smartgroup Logbook Solution is 'a daily log book or similar document' that satisfies the requirement of having the relevant entries 'made in the English language at, or as soon as reasonably practicable after, the end of the journey'. 54. The Trip Report and FBT Logbook Report generated by the Smartgroup Logbook Solution satisfy the definition of 'log book records' in subsection 136(1) provided, for the purposes of section 10A, the Trip Report and FBT Logbook Report are completed for an 'applicable log book period'. | Are the log book records maintained for an 'applicable log book period'?: 55. The definition of 'log book records' in subsection 136(1) also requires that each business journey recorded in the log book records be in relation to a 'period'. Paragraph 10A(a) refers to 'log book records' being maintained for an 'applicable log book period'. 56. The term 'applicable log book period' is defined in subsection 162H(1) as follows: 162H APPLICABLE LOG BOOK PERIOD 162H(1) [Car Fringe Benefit] 57. The Trip Reports and FBT Logbook Reports that are generated by the Smartgroup Logbook Solution must be for a minimum 12 week period. The log book beginning and end date is displayed on the printed log book. It is accepted that in the absence of evidence to the contrary in a particular case, all employer clients using the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report in relation to any car fringe benefits that they provide will maintain the necessary records for the duration of the 'applicable log book period' (as that latter term is defined in subsection 162H(1)). 58. Accordingly, it is considered that the Trip Report and FBT Logbook Report generated by the Smartgroup Logbook Solution satisfy all of the relevant requirements of the definition of 'log book records' as defined in subsection 136(1). Do the Trip Report and the FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) satisfy the requirements of the definition of 'odometer records' under subsection 136(1)? 59. In order to meet the requirements of section 10A, it is essential that 'odometer records' are maintained in addition to 'log book records'. 60. The term 'odometer records' is defined in subsection 136(1) as: 61. The definition of 'odometer records' in subsection 136(1) requires that odometer readings be recorded both at the 'commencement of the period' and at the 'end of the period'. 62. The Smartgroup Logbook Solution's Trip Report and the FBT Logbook Report provide details of the odometer reading for the car at the start of the first recorded journey and also the odometer reading for the car at the end of the last recorded journey that were undertaken during each reporting period. 63. As stated at paragraph 57 of this Ruling, it is accepted that in the absence of evidence to the contrary in a particular case, all employer clients using the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report in relation to any car fringe benefits they provide will maintain the necessary records for the 'applicable log book period'. 64. A report can be generated at the end of the log book period showing the odometer recordings made and the type of journey undertaken. It is accepted that the Smartgroup Logbook Solution's Trip Report and FBT Logbook Report meet the necessary requirement of having entries made in English at, or as soon as reasonably practicable after, the end of the journey. 65. It is considered that the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution satisfy all of the relevant requirements of the definition of 'odometer records' as defined in subsection 136(1). | Are the odometer records maintained 'for the holding period'?: 66. Paragraph 10A(b) requires odometer records to be maintained for the 'holding period' as defined in section 162C. 67. Section 162C states: 162C HOLDING PERIOD OF CAR 68. Subsection 162(1) states, amongst other things, that a car will be held by a person if that person either owns or leases the car. Therefore, the continuous period during a fringe benefits tax (FBT) year (including the whole year of tax, where applicable) where the employer client either owns or leases a car will be the 'holding period' of that car. 69. Consequently, the odometer readings at the beginning and end of the period during the FBT year (including the whole year of tax, where applicable) where the employer client either owns or leases a car will have to be determined. If the Smartgroup Logbook Solution is used continuously for the whole period that a car is held during a FBT year, the Smartgroup Logbook Solution will provide the odometer readings for both the beginning and end of that holding period. 70. However, if the Smartgroup Logbook Solution is not used continuously for the whole of the holding period of the car during the FBT year, the employer client will need to separately maintain the odometer readings for the holding period. 71. It is accepted that, in the absence of any evidence to the contrary in a particular case, the requirement in paragraph 10A(b) will be met by employer clients using the Smartgroup Logbook Solution. Do the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution enable the employer to estimate the number of business kilometres travelled during the holding period in a log book year of tax? 72. Paragraph 10A(d) requires the employer client to estimate the number of business kilometres travelled by the car during the holding period. This estimate is used to calculate the business use percentage required by paragraph 10A(e). 73. The basis used to estimate the number of business kilometres is set out in section 162F which states: 162F REASONABLE ESTIMATE OF NUMBER OF BUSINESS KILOMETRES 74. The Smartgroup Logbook Solution calculates both the number of business kilometres and the total number of kilometres travelled by the car during the holding period where it is used continuously for the whole of the period of the year for which the car is held. Therefore, where the Smartgroup Logbook Solution is used continuously for the whole of the period of the year for which the car is held, both the Trip Report and the FBT Logbook Report will enable the employer client to determine the number of business kilometres travelled during the holding period. 75. However, where the Smartgroup Logbook Solution is not continuously used for the whole of the period of the year for which the car is held, the system will not record the number of business kilometres travelled during the holding period, or the total number of kilometres travelled during the holding period. In such a situation, the employer client, in estimating the number of business kilometres travelled during the holding period, will need to take all relevant matters into account including any other log book records and odometer records maintained by or on behalf of the user/driver, and any variations in the pattern of use of the car. 76. It is accepted that, in the absence of any evidence to the contrary in a particular case, the requirement in paragraph 10A(d) will be met by employer clients using the Smartgroup Logbook Solution. Do the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution enable employer clients to specify the business use percentage for the holding period in a log book year of tax? 77. Paragraph 10A(e) requires the employer client to specify a percentage as the 'business use percentage' applicable to a car for the holding period in a log book year of tax. 78. Subsection 136(1) defines 'business use percentage' to mean the percentage worked out using the formula: Number of business kilometres travelled by the car during the holding period / Total number of kilometres travelled by the car during the holding period * 100 79. The Smartgroup Logbook Solution calculates both the number of business kilometres and the total number of kilometres travelled by the car during the holding period where it is used continuously for the whole of the period of the year for which the car is held. Therefore, where the Smartgroup Logbook Solution is used continuously for the whole of the period of the year for which the car is held, both the Trip Report and FBT Logbook Report automatically calculate for the employer client the business use percentage for the holding period. 80. However, where the Smartgroup Logbook Solution is not continuously used for the whole of the period of the year for which the car is held, the system will not record the number of business kilometres travelled during the holding period, nor the total number of kilometres travelled during the holding period. In such a situation, the employer client will need to separately determine the business use percentage using the estimated number of business kilometres and the odometer readings for the beginning and the end of the holding period. 81. It is accepted that, in the absence of any evidence to the contrary in a particular case, the requirement in paragraph 10A(e) will be met by employer clients using the Smartgroup Logbook Solution. | Conclusion on whether the Trip Report and FBT Logbook report generated by the Smartgroup Logbook Solution satisfies the requirements of section 10A: 82. Both the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution's web-based log book system are documents that satisfy the definitions of 'log book records' and 'odometer records' in subsection 136(1) for the purposes of paragraph (a) of section 10A. 83. It is accepted that, in the absence of any evidence to the contrary in a particular case, all remaining applicable requirements of section 10A will be met by employer clients who use the Trip Report and the FBT Logbook Report generated by the Smartgroup Logbook Solution. 84. In particular: | Do the Trip Report and the FBT Logbook Report generated by Smartgroup's web-based log book system (the Smartgroup Logbook Solution) meet the relevant requirements of section 10B?: 85. Section 10B states: 10B NO REDUCTION OF OPERATING COST IN A NON-LOG BOOK YEAR OF TAX UNLESS LOG BOOK RECORDS AND ODOMETER RECORDS ARE MAINTAINED IN LOG BOOK YEAR OF TAX 86. Where the Smartgroup Logbook Solution is used continuously for the whole of the holding period, both the Trip Report and the FBT Logbook Report will meet all the necessary requirements of section 10B in a non-log book year of tax as they: 87. An employer client in a non-log book year of tax who does not use the Smartgroup Logbook Solution in that year of tax, or does not use it for the whole of the period that the car is held but has used the system in one of the previous four FBT years continuously for an 'applicable log book period', will not by itself satisfy the requirements of section 10B. The employer client will also need to:


Summary - what this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | C is the operating cost of the car during the holding period; | R is the amount (if any) of the recipient's payment. | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: FBTAA 1986 FBTAA 1986 10 FBTAA 1986 10A FBTAA 1986 10A(b) FBTAA 1986 10A(d) FBTAA 1986 10A(e) FBTAA 1986 10B FBTAA 1986 10(2) FBTAA 1986 136(1) FBTAA 1986 162(1) FBTAA 1986 162C FBTAA 1986 162F FBTAA 1986 162G FBTAA 1986 162G(1)(b) FBTAA 1986 162H(1) FBTAA 1986 162K(2)(b) FBTAA 1986 162L(2)(b) ITAA 1997 TAA 1953
Other references: Macquarie Dictionary (online edition)