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No. The 'otherwise deductible rule' does not apply to benefits provided to associates of employees. The operation of the 'otherwise deductible rule' is limited to benefits provided directly to employees.

The term 'associate' is defined in section 136(1) of the Fringe Benefits Tax Assessment Act 1986. It carries the same meaning as section 26AAB(14) of the Income Tax Assessment Act 1936. The definition is very broad and includes relatives, partners, trustees, beneficiaries and related companies.