52Reduction of taxable value—otherwise deductible rule

#### 52 Reduction of taxable value—otherwise deductible rule (1) Where: (a) the recipient of a residual fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and (b) if the recipient had, at the comparison time, incurred and paid unreimbursed expenditure (in this subsection called the gross expenditure), in respect of the provision of the recipients benefit, equal to the amount that, but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the residual fringe benefit in relation to the year of tax—a once‑only deduction (in this subsection called the gross deduction) would, or would if not for Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of the gross expenditure; and (ba) the amount (in this subsection called the notional deduction) calculated in accordance with the formula:  where: > GD is the gross deduction; and > RD is: (i) if there is no recipients contribution in relation to the residual fringe benefit—nil; or (ii) if there is a recipients contribution in relation to the residual fringe benefit equal to, or calculated by reference to, an amount of consideration paid by the recipient to the provider or to the employer in respect of the provision of the recipients benefit—the amount (if any) that would, or that would but for Divisions 28 and 900 of the Income Tax Assessment Act 1997 have been allowable as a once‑only deduction to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of so much of that consideration as was taken into account for the purposes of section 4‑15 or 8‑1 of the Income Tax Assessment Act 1997, if that consideration had been incurred and paid by the recipient at the comparison time; exceeds nil; and (c) except where the fringe benefit is: (i) an exclusive employee residual benefit; or (ia) covered by a recurring fringe benefit declaration (see section 152A); or (ii) an extended travel residual benefit; or (iii) a car residual benefit; the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients benefit; and (d) where the fringe benefit is an extended travel residual benefit (other than an international aircrew residual benefit)—the recipient gives to the employer, before the declaration date, a travel diary in relation to the travel undertaken by the recipient to which the fringe benefit relates; and (da) where: (i) the fringe benefit is a car residual benefit in respect of a car held by the recipient during a period (in this section called the holding period) in the year of tax; and (ii) the substantiation rules set out in Division 15 have been complied with in relation to the car in relation to the holding period; the following conditions are satisfied: (iii) the recipient gives to the employer, before the declaration date, a car substantiation declaration for the car for the year of tax; (iv) in a case where the substantiation rules require log book records or odometer records to be maintained by or on behalf of the recipient in relation to the car—the car substantiation declaration is accompanied by a copy of those documents; and (e) if: (i) paragraph (da) does not apply; and (ii) the fringe benefit is a car residual benefit in respect of a car held by the recipient during a period (the holding period) in the year of tax; the recipient gives a declaration to the employer, before the declaration date and in a form approved by the Commissioner, that purports to set out: (iii) the holding period; and (iv) the number of whole business kilometres travelled by the car during the holding period; and (v) the number of whole kilometres travelled by the car during the holding period; the taxable value, but for Division 14, of the residual fringe benefit in relation to the year of tax is the amount calculated in accordance with the formula:  where: > TV is the amount that, but for this subsection and Division 14, would be the taxable value of the residual fringe benefit in relation to the year of tax; and > ND is: (f) if neither paragraph (da) nor paragraph (e) applies and paragraph (k) does not apply—the notional deduction; or (g) where paragraph (da) applies and paragraph (k) does not apply—whichever of the following amounts is applicable: (i) if it would be concluded that the amount of the recipients contribution would have been the same even if the residual fringe benefit were not applied or used in producing assessable income of the recipient—the business use percentage of the amount that, but for this subsection and Division 14, would be the taxable value of the residual fringe benefit in relation to the year of tax; (ii) if subparagraph (i) does not apply—the business use percentage of the amount that, but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the residual fringe benefit in relation to the year of tax; or (h) where: (i) paragraph (e) applies; and (iia) paragraph (k) does not apply; whichever of the following amounts is the least: (iii) the notional deduction; (iv) if it would be concluded that the amount of the recipients contribution would have been the same even if the residual fringe benefit were not applied or used in producing assessable income of the recipient—33⅓% of the amount that, but for this subsection and Division 14, would be the taxable value of the residual fringe benefit in relation to the year of tax; (v) if subparagraph (iv) does not apply—33⅓% of the amount that, but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the residual fringe benefit in relation to the year of tax; or (k) if, under subsection 138(3), the residual fringe benefit is deemed to have been provided to the recipient only—the amount calculated in accordance with subsection (5). (2) For the purposes of the application of this section in relation to a fringe benefit, where the recipient: (a) while undertaking travel referred to in paragraph (1)(d), engages in an activity in the course of producing assessable income of the recipient; and (b) does not make, as mentioned in the definition of travel diary in subsection 136(1), an entry relating to the activity, being an entry of the kind referred to in that definition; the activity shall be deemed not to have been engaged in by the recipient in the course of producing assessable income. (5) For the purposes of paragraph (1)(k) (which applies to a residual fringe benefit that, under subsection 138(3), is deemed to have been provided to an employee only), the amount is calculated in accordance with the formula:  where: > employee’s percentage of interest: (a) is the percentage of the interest held by the employee, during a period (in this subsection called the holding period) in the year of tax, in the asset or other thing: (i) to which the residual fringe benefit relates; and (ii) that is applied or used for the purpose of producing assessable income of the employee; and (b) does not include the percentage of the interest held in that asset or other thing by the employee’s associate or associates during the holding period. > unadjusted ND is the amount that would be ascertained as representing the component ND in the formula in subsection (1) if paragraph (1)(k) did not apply in relation to the residual fringe benefit.