Many free standing tubs are not waterproofed and this one little step can cause a whole host of problems down the road. It is advisable and many times required by local code to do this step.
Here is a look at a new project here in North Vancouver where we used some 1/2" Hardi Board and some Mapei HPG for the backer board.
The tile detail also includes a nice large niche detail and like the rest was clad in Hardi Board and covered with HPG.
This is a kids bathroom and I'm sure the niche will receive lots of play time and lots of splashing. With a seat like this tub has perhaps even Mom and Dad will add to the problem.