1. On 5 October 2022, the Respondent notified the Applicant that an audit was going to be conducted in relation to the 2022 Income Year.[2] Further information was requested from the Applicant supporting the deductions claimed.
2. On 9 January 2023, the Commissioner finalised the audit and issued reasons for the decision.[3] The Commissioner concluded that the travel related expenses were incurred while travelling to the departure point and were therefore private in nature. The Respondent also considered that the Applicant had not established the remaining expenses were incurred in the performance of his work duties.
3. The Commissioner issued a notice of assessment which reduced the claimed amounts for work related travel and self- education expenses to $0 and the other work- related expenses from $5,928 to $3,477.[4]

1. On 28 February 2023, the Applicant lodged an objection against the notice of assessment issued by the Commissioner.[5] In respect of the work -related travel expenses, the Applicant stated that although he is an offshore worker, his contract also allows him to work from other locations as required. As a result of Covid, employees were requested to remain in Western Australia to prevent staff being locked out due to border restrictions and lockdowns. He was able to work remotely outside of shift coverage requirements.
2. On 15 December 2024, the Commissioner allowed the objection in part.[6] The Commissioner did not allow the work-related travel expenses, 50% of the home office expenses or the decline in value expenses in respect of the Omega watch and the tool kit.
3. On 31 January 2024, the Respondent issued a notice of amended assessment reflecting the objection decision.[7]
4. On 11 February 2024, the Applicant lodged an application for review of the Respondent's decision with the Tribunal.[8]

1. The ultimate issue for the Tribunal is to determine whether the Applicant has discharged his onus of proving the income tax assessment for the 2022 Income Year is excessive and what it should have been. [9]
2. Determination of this issue requires consideration of whether the Applicant in the 2022 Income Year:

(a) is entitled to a deduction under s 8-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA 97) for work related travel expenses totalling $30,688.47;[10] > > (b) received a travel allowance as defined in s 900-30(3) of the ITAA 1997; > > (c) can rely on the exception from substantiation provisions in s 900-50 of the ITAA 97; > > (d) is entitled to a deduction under s 8-1 of the ITAA 97 for home office expenses totalling $579; and > > (e) is entitled to a deduction under s 40-25 of the ITAA 97 for the decline in value of an Omega watch and tool chest totalling $728.

3. In a proceeding such as this where s 144ZZK (b)(i) of the Taxation Administration Act (Cth) (TAA 53) applies, the correct or preferable decision to be made by the Tribunal will depend on whether the Applicant is able to discharge his burden of establishing on the balance of probabilities that the character of the payments made by him are properly deductable and substantiated.
4. It is for the taxpayer to establish any fact demonstrating the assessment to be excessive.[11] It is a well-established principle that self- serving uncorroborated evidence or evidence of witnesses who have an interest in the outcome of litigation, needs to be approached critically.[12]

Section 8-1 ITAA 97

1. Section 8-1 of the ITAA 97 is the provision that allows deductions for expenses incurred in gaining or producing assessable income, including work related travel and office expenses. It provides as follows:

General deductions > > (1) You can deduct from your assessable income any loss or outgoing to the extent that: > > (1) (a) it is incurred in gaining or producing your assessable income; or > > (1) (b) it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. > > (2) However, you cannot deduct a loss or outgoing under this section to the extent that: > > > (a) It is a loss or outgoing of capital, or of a capital nature; or > > > > (b) It is a loss or outgoing of a private or domestic nature; or > > > > (c) It is incurred in relation to gaining or producing your *exempt income or *non-assessable non-exempt income; or > > > > (d) A provision of the Act prevents you from deducting it.

2. The operative provision has a positive and a negative part which both need to be satisfied by the taxpayer. That is to say, that not only must the loss or outgoing have the requisite connection to the production of income, it must not also be prohibited by one of the conditions in s 8-1(2).

1. In order to deduct certain types of outgoings, including work expenses, a taxpayer needs to substantiate them under Division 900 of the ITAA 97. A work expense is a "loss or outgoing you incur in producing your salary and wages".[13] A travel allowance expense is also a work expense and is defined as a loss or expense incurred for travel that is covered by a travel allowance. The loss or outgoing must be for accommodation, food or drink or be incidental to the travel.[14]
2. A travel allowance in s 995-1 is defined in s 900- 30(3) of the ITAA 1997 as an allowance an employer pays, or is to pay to a taxpayer, to cover losses or outgoings that are incurred for travel away from their ordinary residence undertaken in the course of their duties as an employee and that are losses, or outgoings for accommodation, food or drink that are incidental to the travel. The travel may be within or outside Australia.
3. You do not need to keep written evidence of a travel allowance expense if the Commissioner considers the amount claimed covered by the travel allowance to be reasonable.[15] This concession is referred to as the substantiation exception.
4. The amount of a travel allowance expense the Commissioner considers reasonable is released in an annual Taxation Determination (TD) which is also a public ruling for the purposes of the TAA 53. The TD relevant for the purposes of this review is Taxation Determination 2021/6 Income Tax; what are the reasonable travel and overtime meal allowance expense amounts for the 2021-2022 income year? (TD 2021/6). The reasonable amounts for domestic travel expenses are set by reference to a salary range and place of travel.
5. TD 2021/6 is to be read together with Taxation Ruling 2004/6 Income Tax; substantiation exception for reasonable travel and overtime meal allowance expenses (TR 2004/6). TR 2004/6 explains the substantiation exception, and the way in which these expenses are able to be claimed. The Taxation Ruling clarifies that:

(a) For travel allowance expenses to be considered for exception from substantiation, the employee must be paid a bona fide travel allowance. The allowance must be paid to cover work-related travel expenses incurred for travel away from the employee's ordinary residence, undertaken in the course of performing duties as an employee[16] and which involve sleep away from home. The work-related travel expenses must be for accommodation, or food or drink, or expenses incidental to the travel; > > (b) An expense must be actually incurred before a claim can be made. A taxpayer cannot automatically claim a deduction just because they receive an allowance. If an expense is incurred partly for work purposes and partly for private purposes, only the work-related portion is deductible; and > > (c) Where there is an exception from substantiation, it remains a requirement of the law that the relevant expenditure covered by the travel allowance qualifies as a deduction under another provision of the ITAA 1997.[17]

Section 40-25 ITAA 97 deducting amounts for depreciating assets

1. A depreciating asset, is an asset that has a limited life expectancy and can reasonably be expected to decline in value (depreciate) over the time it is used.[18] If a depreciating asset is used in gaining assessable income, then generally a taxpayer can claim deductions for its decline in value over time.
2. Taxpayers can choose to work out the decline in value through either the diminishing value method[19] or the prime cost method.[20] Once the choice is made, it cannot be changed.[21]

1. It is generally accepted that the term "incurred in gaining or producing assessable income" in s 8-1(1)(a) of the ITAA 97 means incurred in the course of gaining or producing assessable income. For an expense to be incurred in gaining or producing assessable income it is both sufficient and necessary that the occasion of the expense should be in whatever is productive of that assessable income.[22]
2. However, not just any casual connection is enough to satisfy the statutory test. Deductibility requires a more immediate connection. It is not sufficient that it is for the purpose of deriving income, it must be in the course of the activity itself.[23]
3. It is generally accepted that travel between home and a place of employment is not deductible. This is because the expenditure was incurred before or after each income earning activity has been performed and therefore is not incurred in gaining or producing assessable income as required by s 8-1(1)(a) of the ITAA 97.[24]
4. The leading authority of the question of deductibility of travel expenses is Lunney v Federal Commissioner of Taxation.[25] In that case, the High Court decided by majority that the expenses associated with enabling taxpayers to get to their regular place of employment were not deductible. Williams, Kitto and Taylor JJ in a joint judgment said:

Expenditure of this character is not by any process of reasoning a business expense... [A]t the most, it may be said to be a necessary consequence of living in in one place and working in another.

5. When determining what is productive of an employee's assessable income, consideration should be given to the scope of the employee's income producing activities. This is a question of fact and degree and is not confined to the day-to-day activities performed by the employee. It requires consideration of the employment contract along with the duties to be observed and the tasks to be performed by the employee which may extend to tasks beyond those contained in the employment contract. [26]
6. Generally, the duties of a salary and wage earner will not commence until the arrival at the place of work and will cease upon the departure of work. In the case of John Holland Group Pty Ltd v Commissioner of Taxation[27] the Court considered the "otherwise deductible rule" in s 52 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). The issue for consideration by the Court was whether, under the statutory hypothesis, the amounts, if they had been incurred by the employees would be allowable deductions under s 8-1 of the ITAA 1997.
7. In that case, the employees travelled at their own expense to Perth airport which was the designated "point of hire". John Holland would then pay for the employees' flights from Perth to Geraldton. At the end of their rostered-on period, the employees would be transported back to Geraldton airport and would catch a flight back to Perth, at the cost of the employer. The employees would make their way home from Perth airport at their own expense. All flights to and from Perth to Geraldton occurred while the employees were rostered on. The flights were undertaken by the employees on the employer's time.
8. The Full Court found that from the time the employees checked in at Perth airport as directed by their employer they were travelling in the course of their employment subject to the directions of the employer, and being paid for it. That situation existed until they disembarked the plane at Perth airport at the end of their rostered-on work time. At no time during that period were they travelling to work; they were travelling on work and the cost of doing so under the statutory hypothesis in s 52(1) of the FBTAA would be an allowable deduction to them under s 8-1 of the ITAA 1997. Of particular significance in that case was the travel occurred during work time while the employees were rostered-on and paid.
9. This is to be contrasted with the case of Bechtel Australia Pty Ltd v Commissioner of Taxation[28] (Bechtel) which also concerned the 'otherwise deductible rule' in s 52 of the FBTAA. In that case, fly in, fly out workers were paid a salary and project allowance. All employees would travel the day before the commencement of their roster period to arrive at Curtis Island for the commencement of their roster period. On the last day of the period, employees would perform their duties for part of the day and would pack up and travel for the rest of the day. They would be paid for the full day.
10. For Bechtel's employees, it was concluded that employment duties commenced and ceased at Curtis Island. The Full Court referred to the appellant's travel procedure document which provided that rostered time off was "rest and recreation time off from the Project" which they were entitled to take after working their approved roster cycle at the Project. [29]
11. Importantly, the Full Court noted that matters such as distance between the home and project location, or the impracticality of sourcing local workers did not transform the character of the expenditure. Similarly, the fact that Bechtel organised, paid and issued an itinerary for the travel did not amount to an employer direction to travel, nor was it influential that Bechtel had policies directed at employee conduct outside of Curtis Island. The existence of those factors does not result in a conclusion that the employees were travelling in the course of performing employment duties.

1. The second limb contained in s 8-1(2) of the ITAA 97, denies a deduction for a loss or outgoing that is of a "private or domestic" nature. These terms are not defined in the legislation but it is generally accepted that they are those expenses which are of a personal or private capacity or relate to household or domestic affairs of the taxpayer.
2. There are a number of court and tribunal decisions that have determined that food and drinking expenditure will not ordinarily be deductible as a work-related expense because there isn't the necessary connection between the expense and the taxpayer's income earning activities.[30] A deduction will be denied if the expense is incurred for an item that is of private or domestic nature However, where an employee travels and stays away from their usual residence overnight in the course of performing their income producing activities and incurs accommodation and food and drink expenses, these expenses will generally be deductible under s 8-1. This is because the taxpayer is travelling on work.

1. The Applicant has provided three letters from his Employer in relation to his employment. Each of those letters differs in respect of the contents under "Other Information". In the earlier letter dated 30 August 2022[31], the Applicant's work location is stated to be the Facility, and he is described as an "offshore worker" whose entitlements are determined by the Offshore Personnel Policy Manual (OPPM).
2. In the letter dated 1 February 2023[32], the Applicant's location of work has been removed. Under "Other Information" the Applicant is described as a salaried employee who travels from Brisbane as the Designated Australian Airport. Employee entitlements are still as per the OPPM. It also states that arrangements may alter between offshore, the Employer's office and home.
3. In the final letter dated 8 February 2024[33], under "Other Information" that letter states the Applicant is "... employed from Base Location of Brisbane... and all Travel is company sourced from that location...He requires to travel as per ... Global Travel policy ...follow fatigue management... and people movement procedures."
4. A copy of the contract of employment dated 5 May 2017 (the Contract) is in evidence before the Tribunal.[34] The parties have acknowledged that since the date of the Contract, the Applicant has changed roles and there has also been a commensurate change in his salary. However, consistent with paragraph 3 of the Contract, the conditions contained within the document apply to all subsequent positions unless otherwise agreed in writing between the parties. The terms of the Contract are applicable to the 2022 Income Year.
5. The key provisions of the Contract are as follows:
   • Schedule 1, Item 4 provides the initial work location of the Applicant was the offshore Facility. However, the Employer can require the Applicant to work at another offshore or onshore location as directed (clause 4.1 and Schedule 1);
   • The Applicant was employed on a permanent full- time basis with the ordinary hours of work to average 38 hours per week plus reasonable additional hours. The remuneration includes compensation for work outside normal rostered hours (clause 6.1 and Schedule 1);
   • The Applicant was required to work a rotating cycle comprised of "on duty" periods and "off duty" periods. Initially it was a 15-week rotating cycle. Each on duty period commences at the commencement of work at the Facility. Each off-duty period commences on the date of the departure from the Facility (clause 6.2);
   • In addition to these days, the Applicant may be required to work a further 15 training/ work days. These days are accounted for in the Applicant's remuneration (clause 6.4 and Schedule 1);[35]
   • In addition to the base salary, the Applicant was entitled to an Offshore Allowance and a Commuting Allowance (clause 10, Schedule 1 and Schedule 2);
   • The Offshore Allowance covers all aspects associated with working offshore on a rotating cycle. It is intended for employees who are permanently located on the Facility. Should the employee's location change, the Offshore Allowance would no longer be payable (Schedule 2);
   • The Commuting Allowance covers transport from the employee's residence to the Designated Australian Airport for those working offshore on a rotating cycle. It is intended for employees who are permanently located on the Facility. Should the employee's location change, the Commuting Allowance would no longer be payable (Schedule 2);
   • The rotating cycle and remuneration compensate the Applicant for all leave entitlements including statutory leave, weekends, annual leave and public holidays. Personal leave and compassionate leave can only be accessed during on-duty periods (clause 11);
   • The Applicants "Designated Australian Airport" was Brisbane. The Designated Australian Airport is defined as the approved airport from which the Employer organised fixed wing transport to/ from Perth for the start and end of the rotation cycles (clause 14 and Schedule 1);
   • The "Assembly Point" means the location where the crew assemble prior to transport to the Facility departure point. The Assembly Point was Perth airport although it could be another location as nominated by the company from time to time (clause 14);
   • The Contract acknowledged that even though the documents do not form part of the Contract, the Applicant was expected to comply with a number of company policies including the Code of Conduct and the OPPM (clause 8.5).

1. Clause 8.5 of the Contract provides that the Applicant is to comply with the Employers policies and procedures, which includes the OPPM. The OPPM details the human resource policies that apply to the Employer's employees working on regular Australian contract terms and assigned to an ongoing role on the Facility. There are two versions of the OPPM before the Tribunal.[36] There is no material difference in the OPPMs for the purpose of this proceeding.[37]
2. Although the OPPM does not take precedence over the Contract, the following provisions are of some importance:

• The rotating cycle for the Facility is 3-weeks on, 4- weeks off, 3-weeks on, 5-weeks off. The ordinary hours of work are 12 hours per day plus any reasonable additional hours and handover periods (clause 3.1);
  • When mobilising to the Facility, employees are required to spend the night prior to the shift commencing, in Broome. The accommodation and meals for the night event only, are arranged by the Employer. No other expenses are to be reimbursed (clause 4.3);
  • Employees are to pay for their own transport from their residence to the approved Designated Australian Airport including the return journey (clause 4.4);
  • Clause 5.1 describes the Offshore Allowance as follows:

"The Offshore Allowance is in recognition of the remote work location and the need for you to be accommodated at the worksite. It compensates for day-night Shift work and reasonable additional hours such as call-outs in off-Shift time, when accommodated on the Facility. The Offshore Allowance includes recognition for all matters such as family separation, disturbance and discomfort, stand-by duties, time spent travelling, the loss of normal rest days / public holidays and to cover the specific conditions affecting the worksite."

• Clause 5.2 describes the Commuting Allowance as follows:

"You will receive a Commuting Allowance to subsidise the cost of travel and associated costs between your residence and the Assembly Point or, Company approved Designated Australia Airport. Given the application of this allowance, no other expenses associated with travel and/or accommodation will be reimbursed when you travel for the purposes of joining or leaving [the Facility] (including expenses that may be incurred if you are required to attend training or the office directly before or after an On-duty Period)."

• Clause 8 provides that employees are compensated for all statutory leave entitlements and weekends through the payment of remuneration and the rotating cycle, with some exceptions.
• The terms "On-duty Period" and "Off-duty Period" are also defined in Clause 16. The On-duty Period is the "... 3 week/ 21 consecutive days on-work period (and any ad-hoc work periods) that you are scheduled to work through the year as part of the Rotating Cycle, plus 7 annual training days." The On- duty period at the Facility of the 15-week cycle is known as "Swing". The Off-duty Period is the 4-week and 5-week off-work periods that are scheduled as part of a rotating cycle.

1. The Employer released an addendum to the OPPM. [38] The purpose of the policy was to outline to temporary measures put in place by the Employer in response to Covid 19. Relevantly it included the following:
   • An Additional Shift Payment for each day of self-quarantine completed during off duty time. This was in respect of the first quarantine period (clause 4);
   • A $200 daily allowance as recognition of the unique situation caused by Covid 19 self- quarantining requirements for every day of self -quarantine in off-duty time together with $100 per day meal and expenses allowance for everyday of self -quarantine in off-duty time for subsequent self-quarantine periods up to the commencement of the fourth period of quarantine (clause 4);
   • A $700 daily allowance for self-quarantine days in off-duty time undertaken from the fourth period of the self-quarantine onwards (clause 4);
   • It was open to employees who were located more than 100km from Perth airport to receive relocation support (clause 5).

1. The Applicant's payslips[39] reveal that in addition to the base salary, he received:

(a) In each month from July 2021 to 30 June 2022 an Offshore Allowance; > > (b) In each month from July 2021 to 30 June 2022, a Commuting Allowance; > > (c) From July 2021 to July 2022 a Secondment Allowance; > > (d) Additional shift payments; > > (e) Overcycle payments; > > (f) Performance bonus; and > > (g) Special recognition award.

2. The Secondment Allowance relates to the additional allowance paid in respect of Covid.

1. The Applicant provided a Roster Schedule[40] which confirms the rotating cycle as outlined in the Contract and the OPPM.
2. Where the Applicant was required to undertake additional work outside of the rotating cycle, this was formally submitted and approved through an Overcycle Approval form. The Applicant has provided the following Overcycle forms [41]for the 2022 Income year:

(a) 21 November 2021; > > (b) 22 December 2021; > > (c) 7 March 2022 to 14 March 2022; > > (d) 27 to 28 April 2022; > > (e) 29 April 2022; > > (f) 2 May 2022; > > (g) 24 May 2022; > > (h) 27 May to 2 June 2022; > > (i) 14 July 2022 > > (j) 19 to 20 July 2022

3. The Roster records that the Applicant was scheduled to work from the Perth Office of the Employer in the weeks beginning 5 October 2021, 18 January 2022 and 3 May 2022.
4. The Applicant also received approval to work from home for two weeks in January 2022.[42]

1. The Applicant has provided a Travel Diary[43] in respect of the travel for which he is claiming a deduction. The travel can be categorised as follows:

(a) Claim for days in Perth > > 1. On 17 September 2021, the Applicant flew from Broome to Perth and remained there until 4 October 2021. He then flew back to Broome in anticipation of his on-duty time on the Facility; > 2. On 29 October 2021, the Applicant flew from Broome to Perth and remained there until 29 November 2021. He then flew back to Broome in anticipation on his on-duty time on the Facility; > 3. On 21 December 2021, the Applicant flew from Broome to Perth, before flying out to Brisbane the following day; > 4. On 5 April 2022, the Applicant flew from Broome to Perth, before flying to Sydney. He then flew to Brisbane the following day; > 5. On 26 June 2022, the Applicant flew from Brisbane to Perth. He flew out to Broome to following day. > 6. On 25 May 2022, the Applicant flew from Broome to Perth, before flying out to Brisbane the following day. > > (b) Claim for days in Darwin > > 1. On 12 August 2021 the Applicant flew from Brisbane to Darwin where he stayed until 26 August 2021. He then commuted to Broome to commence work on the Facility. > > (c) Claim for days in Broome > > 1. 27 August 2021, 29 November 2021, 14 March 2022, 9 May 2022, 27 June 2022 prior to transfer to the Facility.

1. In addition to the Statement of Facts, Issues and Contentions[44] and the various documents provided in the course of the review[45] by the Applicant, he also gave oral evidence as to his working arrangements and circumstances in respect of the expenses claimed. He was not cross-examined by the Commissioner.
2. The Applicant's evidence in respect of these matters can be summarised as follows:
   • He has been employed from Brisbane since the commencement of the Contract. Although he may have been employed initially at a particular location, this could be varied in accordance with the Contract. The most recent letters from the Employer show that he was required to work from home and the Perth office and not just on the Facility;
   • His role is a highly specialised safety critical role for the Facility. This means that it must always be attended and cannot be left vacant. From time to time this means that an employee can be deployed earlier or required to stay on duty longer if the person rostered on is required to take leave at short notice. There are only two other people with the Employer qualified for this role;
   • Although he has on-duty and off-duty rostered days, he is also required to undertake "supporting activities" when he is rostered off. The supporting activities include undertaking assessments of other staff to determine their competency levels, training and management of change software work pack reviews. He often works outside the times he is on the Facility and considers that he is on-duty during these times;
   • A part of his role can be undertaken remotely. For example, if software changes are required, this can be done via his work laptop. It is not necessary to be in the office or at the Facility to undertake these types of tasks;
   • During Covid he was requested by his Employer to fly in early/ remain in Perth to maintain continuity as an essential service whilst complying with the Western Australian government travel requirements. This gave flexibility to the Employer especially if it was necessary to relieve the safety critical role at short notice. The travel was not for personal convenience but to meet the operational needs of the Employer;
   • The request to remain temporarily in Perth came from the Operations Manager of the Employer by way of letter;
   • Between 2021 and 2022 he stayed 94 days outside the rostered on-duty period. He was in Perth, Broome and Darwin during this time. The travel was required for work purposes and during this time he also attended training and worked on supporting activities;
   • Although he could have chosen to relocate, he did not because he thought the alternative offered him the most flexibility and opportunity to spend time with his family. He conceded that if he had relocated it would have been at the Employer's expense;
   • He is also subject to a number of internal policies including the OPPM, the Fatigue Risk Management Plan and the People Movement Procedure. Any travel undertaken must comply with these policies;
   • He has relied upon the substantiation exception as this was more convenient than sorting through the volume of receipts. He has, however, provided a travel diary and some bank statements to show the Tribunal the expenses have been incurred;
   • His home office is solely used by the Applicant for work or self-education purposes. He is required to undertake further reasonable additional hours and activities in order to obtain a bonus. He also uses the office for continuing professional development. In the 2022 Income Year he was also studying a Masters of Engineering. He does not use the home office for personal use;
   • The Omega watch is only worn for work purposes and is used in tasks on the Facility such as valve timing. The watch adheres to the safety protocols of the Facility as it is a mechanical movement timepiece;
   • The tool chest is required to safely secure tools and other equipment obtained over the years and necessary for his ongoing studies. The tools are not used by the Applicant in his day-to-day duties.

1. The Applicant has claimed a deduction in respect of travel related expenses with reference to the substantiation exception. Although the exception works to relieve taxpayers from keeping and producing written records for the purpose of s 900-15 of the ITAA 97, it is still necessary for the expenses to be properly incurred and incurred in the production of the salary or wage.
2. Further, the expenses must be travel allowance expenses_,_ and those expenses must satisfy the requirements under section 300-30 of the ITAA 97. A travel allowance expense requires it to be covered by a travel allowance. A travel allowance is an allowance paid, or is intended to be paid, for expenses incurred for travel undertaken in the course of the taxpayer's duties as an employee.
3. It is therefore not enough the taxpayer was paid any allowance, it must be one designed or intended to cover expenses incurred for travel that are undertaken in the course of the taxpayer's duties. That is to say there needs to be a sufficiently close connection between the expense and the means by which the taxpayer derives their income.
4. Before addressing whether the travel expenses were incurred by the Applicant in the course of gaining or producing his assessable income, the Tribunal makes the following findings in respect of the allowances received during the 2022 Income Year.
5. In respect of the Commuting Allowance, it can be discerned from the Contract and the OPPM that it is designed to cover some of the costs borne by the Applicant in travelling from home to the Designated Australian Airport. It is not intended to cover any costs from Brisbane to Broome, or onwards from there. It is not in dispute the travel from home to the Brisbane Airport was not on work time, or not properly characterised as a private expense. This being the case, the Commuting Allowance is not a travel allowance within the meaning of s 900-30(3) of the ITAA 97 because it is not an allowance that's paid for travel undertaken in the course of the Applicant's duties as an employee.
6. The Applicant was also in receipt of an Offshore Allowance in each of the months of the 2022 income year. The Contract and the OPPM explain the purpose of the Offshore Allowance, which is to recognise and compensate for the challenges of working remotely including family separation, discomfort, time travelling, and the loss of normal rest days and public holidays. The Offshore Allowance is also therefore not a travel allowance within the meaning of s 900-30(3) of the ITAA 97 as it is not paid for travel taken in the course of the Applicant's duties as an employee..
7. The Applicant received a third allowance in the 2022 Income Year, being the Secondment Allowance as set out in the addendum to the OPPM. In order to be entitled to this allowance, it was necessary for the Applicant to undertake 12 quarantine days in his off-duty time. For the reasons that are explained more fully below, expenses incurred in off-duty time are not sufficiently connected to the Applicant's income producing activities and so the allowance is not paid for travel taken in the course of the Applicant's duties as an employee. This means the Secondment Allowance is also not a travel allowance within the meaning of s 900-30(3) of the ITAA 97.
8. Whether the expenses were incurred in the course of gaining or producing assessable income for the purposes of s 8-1(1)(a), requires an examination of the circumstances of the Applicant. The necessary starting point are his rights and obligations as an employee as outlined in the Contract and the OPPM.
9. Having regard to the terms of the Contract and the parallel obligations as stated in the OPPM, the Applicant's permanent work location was the Facility: This is because:
   • Item 4 to Schedule 1 of the Contract specified that the Applicant's primary place of employment was the Facility. No evidence has been provided by the Applicant to show that this changed;
   • It is not in dispute the Applicant was subject to the OPPM. This document only applies to employees who are assigned ongoing roles on the Facility;
   • The Contract and the OPPM (including the addendum) outline the conditions in respect of the Offshore Allowance, Commuting Allowance and Secondment Allowance which is relevantly in respect of employees who are primarily located offshore; and
   • The OPPM clarifies the purpose of the Offshore Allowance is to compensate for the conditions associated with working on the Facility.
10. Further, the Applicant's payslips confirm receipt of the Offshore, Commuting and Secondment Allowance in the 2022 Income Year. His Employment Roster also confirms he predominantly worked on a rotating cycle which comprised of on-duty periods at the commencement of work at the Facility and off-duty periods which commenced upon departure from the Facility.
11. The Tribunal has considered the evidence from the Applicant that in accordance with the Contract, he may be required to work at the Perth office, from home or another location as required from time to time by the Employer. The Tribunal has also had regard to all three letters from the Employer provided by the Applicant.
12. The fact the Applicant may have been required to work from other locations from time to time does not, of itself, alter the Applicant's primary location of employment. Indeed, there is no evidence the Applicant and the Employer agreed to change the primary location of work as described in Schedule 2 of the Contract. Although the Applicant worked from the Perth office for three weeks and from home for two weeks in the 2022 Income Year, it does not follow that the primary work location changed or was otherwise displaced.
13. The letters of support do not assist. The Applicant confirmed in his evidence the contents of those letters were informed by the nature of the request to the Employer, which was made by the Applicant. I place no weight on this evidence and instead prefer to rely upon the Contract, the OPPM, the payslips and the Employment Roster which are independent and current to the income year and all point to the Applicant's position being permanently located at the Facility.
14. The Applicant's Contract expressly provides that he is required to work a 15-week rotating cycle which is comprised of on-duty and off-duty periods as well as other training and work days. Clause 6.2 of the Contract plainly states that each on-duty period commences at the commencement of work at the Facility. Consistent with this, the OPPM defines the on-duty period by reference to the Swing period which is the 3-week period on the Facility.
15. Having regard to the Contract and the OPPM, unless the Applicant was on training or undertaking other work, he ordinarily commenced work and performed his duties when he was at the Facility.
16. Clause 6.2 of the Contract also plainly states that each off-duty period commences on the date of departure from the Facility. The Contract also confirms that the off-duty periods include all statutory leave entitlements. The Applicant is only able to utilise any annual or other leave entitlements whilst he is on-duty. This is because while he is off-duty he is already accessing those leave entitlements.
17. The OPPM, consistent with the Contract provides in clause 8 that the Applicant can only access leave entitlements while he is on-duty, and the remuneration and rotating cycle compensate for all the statutory leave entitlements. The off-duty periods are described as the 4-week and 5-week off duty work periods as part of the rotating cycle.
18. Having regard to the Contract and the OPPM, unless the Applicant was on training, or undertaking other work as recorded in an Overcycle form, once he departs from the Facility he is effectively on leave. Therefore, not only did the Applicant ordinarily perform his duties at the Facility, but his work duties did not begin until he commenced work at the Facility and those duties concluded upon his departure from the Facility. The Applicant was not rostered on from the point of arrival at either the Brisbane or the Perth domestic airport but rather when he commenced his duties at the Facility. The travel to the Facility was not on the Employer's, but rather the Applicant's time.
19. The Applicant was also required to undertake training for up to 7 days[46] per calendar year. These days were considered part of the Applicant's on-duty time and were accounted for in his remuneration. Importantly, the OPPM provides that travel time to attend all training is in the employee's own time. Therefore, in respect of training days, the Applicant was not on-duty until he was at the training venue.
20. Therefore, the rights and obligations of the Applicant arising from a construction of the Contract and the OPPM establish that he is not actually on work until he is at his place of work. This has important consequences as to whether the travel expenses fall within the operation of s 8-1 of the ITAA 97.
21. The Applicant primarily derived his income in the performance of his duties on the Facility, subject to some minor periods for training, attendance at the Perth office or working from home. When no longer at his place of work, he was off-duty and on leave. Consistent with the decision in Bechtel, travel and any related expenditure was only incurred in the course of gaining or producing the Applicant's assessable income if the travel occurred in the course of performing employment duties, expressed as being on-duty. Otherwise the expenditure was either preliminary to the commencement of those duties, or occurred after employment duties had ceased, and the Applicant was on leave.
22. As was the case in Bechtel, the fact the Applicant was required to comply with policies or procedures outside of work or that the travel was arranged by the Employer does not elevate the travel to the performance of those duties. [47]

The claim in respect of stays in Perth totalling $23,091.05

1. Turning now to the specifics of the Applicant's claim, the first category of travel relates to stays in Perth, comprised of five trips. During first of those trips, the Applicant travelled from Broome to Perth on 17 September 2021, having immediately prior to this departed from the Facility. He then stayed in Perth for 17 days during which time he undertook some training[48] and gave evidence of that he undertook supporting activities from his hotel room. He then flew back to Broome on 4 October 2021 before commencing duty on the Facility the next day.
2. In respect of the second trip, the Applicant travelled from Broome to Perth on 29 October 2021, having immediately prior departed from the Facility. He then stayed in Perth until 28 November 2021 before commencing duty on the Facility the next day. During this time, he also undertook some training[49] and other work from his hotel room for which there is an Overcycle form. He gave evidence he also undertook some supporting duties.
3. The Applicant's payslips for these periods include the Offshore, Commuting and Secondment Allowance. At the time of each period of travel the Applicant's primary work location was the Facility. Upon his departure from the Facility, the Applicant was off-duty, which is confirmed by the Employment Roster. He remained off-duty, and therefore on leave, with the exception of the days he was actually present at the training or otherwise working as reflected in the overcycle forms. For these trips, the Applicant remained in Perth during his off-duty period instead of retuning to Queensland where he would have been required to quarantine upon his return to Western Australia prior to commencing his duties on the Facility.
4. The Tribunal recognises that Covid was a difficult and unpredictable time, and the Applicant became subject to a number of additional requirements in respect of travel, often a short notice. The decision of the Applicant not to relocate to Perth was made in this context, based on the circumstances as known to him at the time which included managing the obligations and expectations of the Employer and his family.
5. The Applicant advised the Tribunal that it was necessary for him to remain in Perth in order to maintain business continuity for the Employer and he did so at their direction. Instead of traveling back to Queensland between rostered periods, the Applicant stayed in Perth so he could be easily and quickly mobilized for the commencement of his next Swing.
6. The Tribunal has not been directed to any evidence from the Employer to confirm the Applicant was directed to remain in Perth during these periods. There is also no evidence the Applicant was specifically directed to undertake the training in Perth or whether the Employer/ Applicant simply took advantage of the decision to remain in the state between Swing periods.
7. The Tribunal acknowledges the evidence of the Applicant that he undertook supporting activities from the hotel. Unfortunately, independent evidence of those supporting tasks is not in evidence before the Tribunal.[50] There is also no evidence he was directed to undertake work activities outside the Overcycle forms provided.
8. Putting that evidentiary issue to one side, the supporting activities were completed by the Applicant in his off-duty time and remotely from his work laptop. Those activities could have been completed from any location, meaning it was not necessary for the Applicant to travel to Perth in order to undertake those duties. This is important because in order for the expenses to lose their inherently private nature the travel must be critical to the performance of the income producing activities. This is not the case here.
9. Without clear evidence of a written directive that the Applicant was required to remain in Perth, the Tribunal cannot be satisfied the travel expenses for these trips were incurred in the course of gaining or producing the Applicant's assessable income.
10. The third Perth trip involved the Applicant travelling from Brisbane on 26 June 2022 before mobilising to Broome the next day in anticipation of his on-duty time on the Facility. He was off-duty during this time, which is confirmed by the Employment Roster. These expenses were therefore not incurred in gaining or producing his assessable income.
11. The Applicant has also claimed deductions in respect of two overnight stays[51] in Perth while transitioning from Broome to Brisbane. These expenses were incurred by the Applicant while he was off-duty in circumstances where he was in the process of commuting home to Queensland. The Applicant was not traveling on work and therefore did not incur the expenses in the course of gaining or producing the accessible income.

The claim in respect of the stay in Darwin totalling $7,310.25

1. The Applicant has also made a claim for 15 days in Darwin between 12 August 2021 and 26 August 2021. The Applicant flew to Darwin where he quarantined for a period of time before flying to Broome in anticipation of his next shift on the Facility.
2. The Applicant was off-duty during this period according to the Employment Roster. Further, there are no Overcycle forms for this period and the Applicant was in receipt of the Secondment Allowance during this time.
3. The Tribunal has been provided with a letter from the Employer[52] which states that the Employer had given a commitment to the Western Australian government that the self-isolation requirements would be complied with and that those periods would be considered as part of the employee's Swing, being on work time. In circumstances where the letter is undated, the Tribunal prefers to rely upon the addendum to the OPPM which applied in respect of the 2022 Income Year. This document clarifies the Secondment Allowance was payable in respect of self -quarantine during off-duty periods.
4. Given the Tribunal has not been provided with a written directive from the Employer that the Applicant was directed to stay in Darwin, all the travel that occurred prior to the commencement of his on-duty period. The proper characterization of the travel expenses was not altered by the requirement to undertake government mandated quarantine while off- duty. Although inconvenient for the Applicant, the requirement to quarantine was no more than an essential pre-requisite to the derivation of income.[53]
5. The Applicant advised the Tribunal he was providing supporting activities during this time. Even if this were to be accepted, consistent with the Perth stay, it was not necessary for him to travel to Darwin in order to undertake those duties. The Applicant was not traveling on work and therefore did not incur the expenses in the course of gaining or producing the accessible income.

The claim in respect of stays in Broome totalling $495.30

1. The Applicant has claimed expenses for time spent in Broome prior to the transfer the Facility. Given he was off-duty at the time and the travel was part of the commute in anticipation of the commencement of his duties at the Facility, the expenses were not incurred by the Applicant gaining or producing his assessable income.

1. In respect of the home office expenses, the Commissioner's case centred around the limited use of the home office and the paucity of evidence in respect of the training and self-education activities. The Commissioner argued the expenses have an inherently private component to them.
2. At the hearing, the Applicant explained that he has his own office that is used exclusively for work and associated training and is separate from that of his wife due to the nature and sensitivity of the information connected to his work. He also confirmed that he did complete most of the requirements for a subject in respect of his Masters but it was necessary for him to withdraw from the subject when he became aware he would be unable to attend the examination due to work commitments. As an engineer, he is required to engage in continuing professional development and the Masters and other studies completed in the home officer were for this purpose. The Commissioner did not cross examine the Applicant in respect of this evidence.
3. In circumstances where the Commissioner's case is effectively based on an assumption that the expenses should be apportioned, the Tribunal accepts the unchallenged evidence of the Applicant and there is no evidence contradicting the sole purpose of those expenses, the Tribunal finds the expenses were incurred and gaining or producing the assessable income of the Applicant.

1. In respect of the Omega watch, the Applicant says it has the necessary connection to the income producing activities as it has special characteristics that make it safe in a work environment. He confirmed in his evidence that it is only used for work purposes notwithstanding the claim has been made on the basis that a portion is for private use.
2. In contrast to this, the Omega watch receipt indicates that it was acquired on 17 December 2010 for $10,934.58 from Omega boutique located in the Singapore Changi airport lounge. This is more than twelve years prior to the 2022 Income Year, and six years prior to the commencement of the Applicant's employment with the Employer. The fact that watch includes a chronograph feature which makes it suitable for use on the Facility is insufficient to establish the watch has a specialised use such as a stop watch or fob watch, which have been found to have the necessary nexus to the income producing activities.[54]
3. In addition, the calculation of the depreciation including the percentage attributed to the work- related use was not clearly articulated to the Tribunal. On this basis, the Applicant has not discharged his onus of establishing the expense is deductable under 40-25 of the ITAA 97
4. In respect of the tool chest, this was acquired by Applicant for $3500 on about 9 February 2023. The Applicant says the toolbox is required to store tools that have been attained over his career and necessary for continuing professional development.
5. In circumstances where the Applicant concedes the tools are not used as part of his employment function and exactly how they were used in respect of any professional development or self- education was not fully explained, the tool box does not have the necessary connection to the income producing activities and the Applicant has not discharged his onus of establishing the expense is deductible under s 40-25 of the ITAA 97.

1. The work-related travel expenses disputed by the Commissioner were not incurred in by the Applicant in the course of gaining or producing his assessable income. They were incurred when he was off-duty and therefore on leave between rotating cycles on the Facility. To the extent he was on training or otherwise working, he was not required to travel to either Perth or Darwin in order to complete those activities such that the expenses lost their private nature.
2. Further, the Applicant did not receive a travel allowance as defined in the ITAA 97 as the relevant expenses were not travel allowance expenses within the meaning of s 900-30 of the ITAA 97. The Applicant is therefore unable to utilise the substantiation exception.
3. The Tribunal accepts the home office expenses did not include a private element and have been allowed on this basis.
4. In respect of the depreciation expenses associated with the Omega watch and the tool chest, the Applicant has failed to discharge his burden of establishing the expenses were deductable for the purposes of 40-25 of the ITAA 97.

1. The Tribunal varies the decision under review so that the amount of $208.53 is allowed as work-related travel expenses and the amount of $579 is allowed as other work-related expenses.

Litigation and Legal Services, Australian Taxation Office

[9] Section 14ZZK of the Taxation Administration Act 1953 (Cth)

[10] The amount claimed by the Applicant is $30,897. This figure reflects the Commissioner's concession to allow the expenses associated with the travel undertaken on 21 December 2021.

[11] Hua-Aus Pty Ltd v Commissioner of Taxation [2010] FCA 341 at [22]

[12] Federal Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74; (2011) 193 FCR 149 at [82] per Ryan, Jessup and Perram JJ; see also Imperial Bottleshops Pty Ltd v Federal Commissioner of Taxation [1991] FCA 276; (1991) 22 ATR 148; 91 ATC 4546

[17] s 900-15(1) ITAA 97

[22] Ronpibon Tin NL v Federal Commissioner of Taxation [1949] HCA 15; (1949) 78 CLR 47 at [57]

[23] Commissioner of Taxation v Payne [2001] HCA 3; (2001) 202 CLR 93 at [9]

[24] It is not in dispute the Applicant is an employee and therefore s 8-1(1)(b) is not relevant.

[25] [1958] HCA 5

[26] Commissioner of Taxation v Payne [2001] HCA 3; (2001) 202 CLR 93 at [12]

[27] [2015] FCAFC 82; (2015) 232 FCR 59

[28] [2024] FCAFC 33

[30] See for example Commissioner of Taxation v Cooper [1991] FCA 190; (1991) 29 FCR 177 where the High Court found that notwithstanding the taxpayer had been instructed to consume additional food and drink, the expenses were not incurred in the course of gaining or producing assessable income.

[35] The Applicant stated in his evidence the number of training days had been reduced to seven (7) days. Confirmation of this from the Employer is not in evidence but it is consistent with the OPPM. Nothing in these reasons turns on the change.

[36] The version published on 23 October 2020 covers from July to May 2022. The later version which was updated in or around May 2022 covers the later period.

[37] Unless otherwise indicated the references are to Exhibit R1, T8

[46] The Contract refers to 15 days per year. The Applicant have evidence this changed to 7 days which is consistent with the OPPM. Nothing turns on the change in the number of days in the decision.

[48] The training was conducted on 20-24 September 2021 and 29 September to 1 October 2021

[49] The training was conducted on 1-5 November 2021 and 11 November 2021.

[50] The Applicant stated in his evidence that evidence (such as emails) of those tasks was no longer accessible to him.

[51] The Commissioner has conceded the third overnight stay and this concession is reflected in the decision.

[53] Lodge v Federal Commissioner of Taxation [1972] HCA 49; (1972) 128 CLR 171 at [10]

[54] London v Commissioner of Taxation [2022] AATA 644