XGPH and Commissioner of Taxation (Taxation)

XGPH and Commissioner of Taxation (Taxation) [2022] AATA 567 (29 March 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2020/7556
Re:XGPH
APPLICANT

AndCommissioner of Taxation
RESPONDENT

DECISION
Tribunal:Member D Mitchell
Date:29 March 2022
Place:Brisbane

The Tribunal varies the objection decision to the extent that the Applicant’s allowable deduction:
(a)at Item D4: work-related self-education expenses for the year ended 30 June 2019 is $6,678.91, to include deductions for all of the expenses allowed by the Respondent at audit, however not reflected in the audit decision and assessment that issued; and
(b)at Item D5: other work-related expenses for the year ended
30 June 2019 is $4,117.49, to include deductions for the follow expenses:
(i)$2,916.50 in relation to the office space rent;
(ii)$35.99 in relation to the purchase of the Audiobook – Journey to Ixilan: The Lessons of Don Juan; and
(iii)$500.00 in relation to the training services received.

.................[SGD]............................
Member D Mitchell
CATCHWORDS
TAXATION – income tax – deductions – employee – work-related car expenses – work- related travel expenses – other work-related expenses – incurred – in the course of deriving assessable income - substantiation of expenses – decision under review varied
LEGISLATION
Income Tax Assessment Act 1997 (Cth)
Taxation Administration Act 1953 (Cth)
CASES
Bhatti and Commissioner of Taxation [2016] AATA 24
Case J3 (1976) 77 ATC 39
Commissioner of Taxation v Day [2008] HCA 53
FC of T v Edwards 94 ATC 4255
Fletcher & Ors v FC of T (1991) 173 CLR 1
Mansfield v FC of T 96 ATC 4001
Ronpibon Tin NL & Tong Kah Compound NL v Federal Commissioner of Taxation [1949] HCA 15; (1949) 78 CLR 47
Sanchez and Federal Commissioner of Taxation [2008] AATA 896
SECONDARY MATERIAL
Practice Statement PSLA 2001/6: Verification approaches for home office running expenses and electronic device expenses
Taxation Determination 93/114 Income tax: is a police officer, who is required to maintain an adequate level of physical fitness in order to undertake police duties, entitled to claim a deduction for fitness related expenditure?
Taxation Determination TD 97/19 Income tax: substantiation: car expenses: how do you calculate the cost of fuel and oil when using the 'one-third of actual expenses' method or the 'log book' method, if you have not kept written evidence of the expense?
Taxation Ruling IT 2198 Income tax: allowable deductions expenditure voluntarily incurred by employee taxpayer
Taxation Ruling TR 95/20 Income tax: employee performing artists – allowances, reimbursements and work-related expenses
Taxation Ruling TR 97/24 Taxation Ruling – Income tax: relief from the effects of failing to substantiate
Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses
REASONS FOR DECISION
Member D Mitchell
29 March 2022

XGPH (the Applicant) is seeking review of an objection decision made by the Commissioner of Taxation (the Respondent) on 18 September 2020.[1]
[1] Exhibit 1, Tribunal Book, Tab 3, T Documents, T43, pages 406-411, Notification letter and reasons for decision.
The reviewable objection decision disallowed the Applicant’s objection to a Notice of Assessment for the income year ended 30 June 2019 (the 2019 year). The reviewable decision was made on the basis that the Respondent disallowed a number of work-related deductions being claimed by the Applicant.[2]
[2] Exhibit 1, Tribunal Book, Tab 3, T Documents, T2, pages 407-411, Reasons for decision.
The present dispute before the Tribunal relates to the deductibility of the Applicant’s claimed work-related car, travel and other expenses.
BACKGOUND
The Applicant in this matter is an actor and performing artist who during the 2019 year was taking steps to pursue his art. As like many artists starting out in the creative arts industry, as well as deriving assessable income from those pursuits he derived the bulk of his income from positions outside of the creative arts industry. In the 2019 year the Applicant was also employed as a therapeutic care worker which involved the provision of care to vulnerable young people.
In the Applicant’s 2019 income tax return he disclosed income in relation to his therapeutic care work of $51,842.00 (being wages, allowances and workers compensation),[3] artistic pursuits of $2,048.00 (being the sum of his wages as a performing artist)[4] as well as $14,227.00 in relation to government benefits received.[5]
[3]     Exhibit 1, Tribunal Book, Tab 3, T Documents, T4, pages 35, 39-41, Applicants income tax return for the 2019 income year, being $243.00 + $45,562.00 + $457.00 + $5,580.00.
[4]     Exhibit 1, Tribunal Book, Tab 3, T Documents, T4, pages 36-38, Applicants income tax return for the 2019 income year, being $797.00 + $289.00 + $962.00.
[5]     Exhibit 1, Tribunal Book, Tab 3, T Documents, T4, page 41, Applicants income tax return for the 2019 income year.
In the Applicant’s 2019 income tax return he sought to claim deductions for work-related car, travel, clothing, self-education and other expenses totalling $27,732.00.[6]
[6] Exhibit 1, Tribunal Book, Tab 3, T Documents, T3, page 31, Notice of Assessment for the 2019 income year, being $1,678.00 + $2305.00 + $6039.00 + $17,710.00.
The Applicant submitted his 2019 income tax return on 16 July 2019.[7] On 31 July 2019, prior to Applicant’s income tax return being finalised, the Respondent wrote to him seeking that he contact them as they required further information.[8]
[7] Exhibit 1, Tribunal Book, Tab 3, T Documents, T4, page 33, Applicants income tax return for the 2019 income year.
[8] Exhibit 1, Tribunal Book, Tab 3, T Documents, T5, page 97, SMS from the Auditor to the Applicant.
On 6 August 2019, the Respondent wrote to the Applicant advising that his 2019 income tax return had been stopped and that a refund would not be issued until the finalisation of the audit. In order to progress his return, the Respondent requested that the Applicant provide evidence to support his claimed deductions.[9] The Applicant provided information in response on 11 and 24 September 2019.[10]
[9] Exhibit 1, Tribunal Book, Tab 3, T Documents, T6, pages 98-110, Email from the Auditor to the Applicant and attachments.
[10] Exhibit 1, Tribunal Book, Tab 3, T Documents, T9, pages 115-153, Email from the Applicant to the Auditor and attached bank statements and T10, pages 154-191, Email from the Applicant to the Auditor and attached bank statements.
On 22 October 2019, the Respondent requested further information from the Applicant.[11] The Applicant provided information in response on 20 November 2019.[12]
[11] Exhibit 1, Tribunal Book, Tab 3, T Documents, T11, pages 192-196, Email from the Auditor to the Applicant requesting information.
[12] Exhibit 1, Tribunal Book, Tab 3, T Documents, T12, pages 197-225, Email and attachments from the Applicant to the Auditor and T13, pages 226-260, Email and attachments from the Applicant to the Auditor.
On 10 December 2019, the Respondent notified the Applicant of the outcome of the audit, which was a reduction in the Applicant’s claimed deductions, reducing his expected income tax refund by $9,279.91.[13] The audit decision:[14]
(a)reduced the Applicant’s claimed work-related car expenses from $17,710.00 to $3,400.00;
(b)disallowed the Applicant’s claimed work-related travel expenses of $1,678.00 and clothing laundry and dry-cleaning expenses of $2,305.00 in full;
(c)allowed the Applicant’s claimed-related self-education expenses of $5,817.00;
(d)reduced the Applicant’s claimed other work-related expenses from $6,039.00 to $665.00; and
(e)did not apply penalties.
[13] Exhibit 1, Tribunal Book, Tab 3, T Documents, T15, pages 262-265, Notification of finalisation of audit.
[14] Exhibit 1, Tribunal Book, Tab 3, T Documents, T15, pages 262-265, Notification of finalisation of audit.
The Applicant lodged an objection dated 7 January 2020, to the audit decision.[15] On

2 April 2020, the Respondent requested that the Applicant provide further information in order to validate his objection.[16]
[15] Exhibit 1, Tribunal Book, Tab 3, T Documents, T16, pages 266-271, Notice of Objection.
[16] Exhibit 1, Tribunal Book, Tab 3, T Documents, T19, pages 275-276, Email from the Objection Officer to the Applicant.
On 16 April 2020, the Applicant wrote to the Respondent stating that he was objecting to:
·Item D2 (being work-related travel expenses) and sought to be allowed to claim a deduction of $10,989.00; and
·Item D5 (being other work-related expenses) and sought to be allowed to claim a deduction of $11,699.00.[17]
[17] Exhibit 1, Tribunal Book, Tab 3, T Documents, T20, page 277, Email from the Applicant to the Objection Officer.
On 9 May 2020, the Respondent wrote to the Applicant requesting he provide further information. The Respondent also provided guidance in relation to requirements for claiming work-related expenses in general and a fact sheet in relation to what performing artists may claim as deductions.[18]
[18] Exhibit 1, Tribunal Book, Tab 3, T Documents, T21, pages 278-281, Email from the Objection Officer to the Applicant requesting information and attaching an occupation poster for performing artists.
On 9 and 11 May 2020, the Applicant provided to the Respondent his car logs in support of his claimed deductions for item D1 work-related car expenses.[19] They were again provided by post and received by the Respondent on 19 August 2020.[20]
[19] Exhibit 1, Tribunal Book, Tab 3, T Documents, T22, pages 282-292, Email from the Applicant to the Objection Officer and attachments and T24, pages 294-298, Car log part 1.
[20] Exhibit 1, Tribunal Book, Tab 3, T Documents, T37, pages 349-366, Vehicle log sheets received via post.
On 19 June 2020, the Respondent contacted the Applicant’s employer regarding his role as a therapeutic care worker seeking information in relation to whether he was required to use his own motor vehicle, mobile phone and computer in undertaking his duties during the 2019 year.[21]
[21] Exhibit 1, Tribunal Book, Tab 3, T Documents, T28, pages 306-307, Email from the Objection Officer to the Applicant’s employer.
On 22 June 2020, the employer advised that generally all of its workers had the ability to claim kilometres for any work undertaken in their personal vehicles and that they had access to a phone and computer in the offices of their care houses.[22]
[22] Exhibit 1, Tribunal Book, Tab 3, T Documents, T29, pages 308-310, Email from the Applicant’s employer to the Objection Officer.
On 7 July 2020, the Respondent wrote to the Applicant seeking further information in relation to the submitted log sheets.[23]
[23] Exhibit 1, Tribunal Book, Tab 3, T Documents, T34, pages 329-332, Email from the Objection Officer to the Applicant.
On 19 August 2020, the Applicant provided a document outlining that his objection also related to item D1 – work-related car expenses and that he sought to be allowed to claim a deduction of $17,710.00.[24] He also provided a breakdown of his claims for items D2 and D5 and some supporting receipts.[25] The Tribunal notes that the Applicant did not object against the decision made in relation to his claim at item D3 for work-related clothing expenses.
[24] Exhibit 1, Tribunal Book, Tab 3, T Documents, T38, page 367-368, Applicant’s submission.
[25] Exhibit 1, Tribunal Book, Tab 3, T Documents, T38, pages 367-368 and 387-392, Applicant’s submissions.
On 18 September 2020, the Respondent disallowed the Applicant’s objection.[26]
[26] Exhibit 1, Tribunal Book, Tab 3, T Documents, T43, pages 406-411, Notification of Objection Decision and reason for decision.
On 17 November 2020, the Applicant lodged an Application for Review with this Tribunal.[27]
[27] Exhibit 1, Tribunal Book, Tab 3, T Documents, T1, pages 1-6, Application for Review.
On 11 August 2021, the Applicant filed a statement of facts and contentions together with supporting documents.[28] Further on 24 December 2021, the Applicant filed further documents in support of his application.[29]
[28] Exhibit 1, Tribunal Book, Tab 1, Applicant’s Statement of Facts and attachments.
[29] Exhibit 1, Tribunal Book, Tab 2, Applicant’s further submissions and attachments.
On 16 February 2022, a Hearing was conducted using Microsoft Teams. At the Hearing, the Applicant had a support person attend, however was self-represented and provided evidence under affirmation.
The relevant law in this matter includes the Income Tax Assessment Act 1997 (Cth)

(ITAA 1997) and the Taxation Administration Act 1953 (Cth) (TAA 1953).
Where a taxpayer is dissatisfied with an objection decision made by the Respondent, they may apply to the Tribunal for a review of the decision or appeal to the Federal Court against it.[30]
[30] Section 14ZZ of the TAA 1953.
On application for review of a reviewable objection decision, the Applicant has the burden of proving that the assessment is excessive or otherwise incorrect and what the assessment should have been.[31]
[31] Section 14ZZK(b)(i) of the TAA 1953
ISSUES
The issue before the Tribunal is whether the Applicant has discharged his burden of proof to substantiate and establish an entitlement to the work-related deductions claimed for the 2019 year.
LEGISLATIVE FRAMEWORK AND PRINCIPLES
The general deductibility and substantiation provisions of the ITAA 1997 are the key provisions for consideration by the Tribunal in this matter.
Section 8-1 of the ITAA 1997 relevantly provides:
General deductions
(1)You can deduct from your assessable income any loss or outgoing to the extent that:
(a)it is incurred in gaining or producing your assessable income; or
(b)……
(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 a capital nature; or
(b) it is a loss or outgoing of a private or domestic nature; or
…
It has been long settled that incurred “in” gaining or producing means incurred “in the course of” producing assessable income. The High Court in Ronpibon Tin NL & Tong Kah Compound NL v Federal Commissioner of Taxation [1949] HCA 15; (1949) 78 CLR 47 explained at 57:
… it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income or, if none be produced, would be expected to produce assessable income.
In regard to the question posed by section 8-1 of the ITAA 1997, the High Court observed in the Commissioner of Taxation v Day [2008] HCA 53 at [30] (Day):
Section 8-1(1)(a) is couched in terms intended to cover any number of factual and legal situations in which expenditure is incurred by a taxpayer. Its language and breadth of application do not make possible a formula capable of application to the circumstances of each case. Cases are helpful to show the connection found on the facts there present, but not always to explain how the search for the requisite connection is to be undertaken. Payne directs attention to the statement made in Ronpibon Tin, as to the question posed by a provision such as s 8-1(1)(a), as correct and appropriate to be applied. The question, as restated in Payne, is: "is the occasion of the outgoing found in whatever is productive of actual or expected income?" That inquiry will provide a surer guide to ascertaining whether a loss or expenditure has been "incurred in [the course of] gaining or producing … assessable income".
For the purposes of section 8-1 of the ITAA 1997, a loss or outgoing is only deductible where it is incurred in gaining or producing the taxpayer’s assessable income.
In relation to substantiation requirements, Division 900 of the ITAA 1997 sets out the rules in respect of “work expenses”. Work expenses are defined in section 900-30 of the ITAA 1997 to mean “a loss or outgoing you incur in producing your salary or wages”.
Section 900-15 of the ITAA 1997 provides:
900-15 Getting written evidence
(1)To deduct a work expense:
(a)it must qualify as a deduction under some provision of his Act outside this Division; and
(b)you need to substantiate it by getting written evidence.
Subdivision 900-E tells you about the evidence you need.
In Bhatti and Commissioner of Taxation [2016] AATA 24 at [31], Senior Member Lazanas helpfully explained the substantiation requirements as follows:
Subdivision 900-E is directed towards the written evidence required for the purposes of s 900-15. Section 900-105 explains that the legislation provides for a set of rules for getting written evidence to substantiate deductions and that the rules that can be used depend on the type of expense. Section 900-110 provides that there is no time limit for getting written evidence of an expense (unless the expense is recorded by the taxpayer in specified situations), “[b]ut until you get written evidence of it, you are not entitled to a deduction for the expense”. Section 900-110(2) further provides that if “when you lodge your *income tax return for the income year you have good reason to expect to get written evidence of the expense within a reasonable time, you can deduct the expense without actually getting the evidence. But if you don’t get the evidence within a reasonable time, your entitlement to the deduction ceases...”
Section 900-115 in Subdivision 900-E (Written Evidence) of the ITAA 1997 outlines relevantly, the requirements in relation to written evidence from a supplier are as follows:
900-115 Written evidence from supplier
…..
(2)      You must get a document from the supplier of the goods or            services the expense is for. The document must set out:
(a)     the name or business name of the supplier; and
(b)     the amount of the expense, expressed in the currency in which it      was incurred; and
(c)     the nature of the goods or services; and
(d)     the day the expense was incurred; and
(e)     the day it is made out.
(3)       There are 2 exceptions to these requirements:
(a)     if the document does not show the day the expense was incurred,     you may use a bank statement or other reasonable, independent evidence that shows when it was paid;
(b)     if the document the supplier gave you does not specify the nature     of the goods or services, you may write in the missing details          yourself before you lodge your *income tax return for the income year.
...
Section 900-195 in Subdivision 900-H (Relief from effects of failing to substantiate) of the ITAA 1997 provides a discretion to allow a deduction where there has been a failure to substantiate:
900-195 Commissioner’s discretion to review failure to substantiate
Not doing something necessary to follow the rules in this Division does not affect your right to a deduction if the nature and quality of the evidence you have to substantiate your claim satisfies the Commissioner:
(a)that you incurred the expense; and
(b)that you are entitled to deduct the amount you claim.
In Sanchez and Federal Commissioner of Taxation [2008] AATA 896 at [44]-[45] (Sanchez), Senior Member Dunne provided that in determining whether the discretion in

section 900-195 of the ITAA 1997 should be exercised, each case must be considered on its merits and a common sense approach applied. Senior Member Dunne provided the view that the nature and quality of the evidence a taxpayer has to have to attract the exercise of the discretion should consist of the existence of some evidence that shows that expenditure was incurred and there was an entitlement to a deduction and that such evidence is contemporaneous and certain.
Guidance on the Respondent’s view of the exercise of the substantiation discretion provided by section 900-195 of the ITAA 1997 is set out in Taxation Ruling TR 97/24 Taxation Ruling – Income tax: relief from the effects of failing to substantiate (Taxation Ruling TR97/24).

Taxation Ruling TR 97/24 relevantly provides:
13. It is the Commissioner’s view that relief is not available where there is no supporting documentation or factual material evidencing the expense. It follows that a taxpayer’s estimate of an expense supported only by an assertion that the estimate is reasonable does not constitute evidence of a nature and quality to satisfy the Commissioner to exercise the discretion.
……
38. Section 900-195 of the Act gives the Commissioner discretion to grant relief where the nature and quality of the evidence available to substantiate a taxpayer's claim satisfies the Commissioner that:
(a) the expense was actually incurred by the taxpayer; and
(b) the taxpayer is entitled to deduct the amount claimed.
39. In reaching this decision, the Commissioner is directed to have regard to the nature and quality of the evidence that the taxpayer has available to substantiate the claim. It is consistent with the terms of the law that no relief is available in respect of a claim where there is no supporting documentation or factual material evidencing the expense.
Sufficient evidence
40. The central issue in deciding whether this discretion ought to be exercised is whether the evidence available:
(a) satisfactorily quantifies the amount of the expense; and
(b) establishes the extent to which the taxpayer is entitled to claim a deduction.
41. It is not possible to specify the nature and quality of supporting evidence that satisfies the Commissioner in all circumstances. Each case must be considered on its own merits and a common sense approach applied.
42. When deciding whether to exercise this discretion, the Commissioner is not limited to considering documentary evidence. A wide variety of factual information can be relevant. For example, in deciding whether the Commissioner is satisfied that car expenses have been incurred and are deductible to the extent claimed, a relevant piece of evidence might be that a particular motor vehicle is used in operating a driving school rather than merely occasionally in producing assessable income.
43. A bona fide attempt to comply with the substantiation requirements is likely to assist taxpayers in relation to the nature and quality of the evidence they hold.
44. If a taxpayer has made little or no attempt to comply with the substantiation requirements, the nature and quality of supporting evidence available is likely to be poor. It is the clear intention of the substantiation provisions that deductions are generally not allowed where there is no supporting documentation or factual material evidencing the expense.
45. In cases where there has been a failure to comply with the substantiation requirements, the taxpayer may face practical difficulties in satisfying the Commissioner that the claimed amount of an expense has been incurred and is deductible. Such cases frequently involve estimates by the taxpayer of expenses incurred. An unsupported statement by a taxpayer as to the amount of an expense incurred does not, of itself, constitute evidence of a nature and quality to satisfy the Commissioner that the discretion should be exercised.
CONSIDERATION
At Hearing the Applicant gave evidence under affirmation and although it was evident that the ongoing nature of the matters surrounding his application and health concerns were causing him considerable stress, the Tribunal considers he openly and honestly answered questions asked of him.
Throughout the Hearing it was clear to the Tribunal that while the Applicant submitted his claims for work-related deductions in the 2019 year because he genuinely believed he was entitled to a deduction for such items, the way in which he sought to calculate those deductions and subsequently substantiate them was ill guided. The Applicant readily told the Tribunal that he had been given so many different accounts of what he needed to provide to substantiate his claimed deductions that he was confused and had done the best he could.
To that end at Hearing, the Applicant made many concessions in relation to the deductions in dispute. The Applicant was clear in his evidence that he simply wanted to be allowed to claim the deductions he was entitled to.
The Tribunal’s decision will focus only on the claimed expenses that remained in contention between the parties at the conclusion of the Hearing, noting the burden of proof lies with the Applicant to establish that the 2019 year assessment was excessive or otherwise incorrect and what the correct assessment should have been.
Item D1 – work-related car expenses
The Respondent contended that the Applicant was properly allowed the maximum possible deduction of $3,400.00 under the cents per kilometre method for work-related car expenses.[32] The Respondent submitted that this was the case given the Applicant had not provided any evidence to substantiate his claimed motor vehicle expenses of $17,710.00 nor was the provided journey log an accurate record for the purposes of claiming deductions using the log book method.[33]
[32] Section 28-25 of the ITAA 1997.
[33] Subdivision 28-G of the ITAA 1997.
At Hearing, the Applicant told the Tribunal that he had not been asked for more information in relation to his log book but he did use his car for business as he was working lots of hours. He said if he cannot claim his car expenses, then he accepted that. The Applicant provided evidence that he owned the vehicle,[34] motor vehicle log sheets[35] to which his claimed deductions related and a letter from his employer[36] stating that he did use his car for work purposes. He told the Tribunal that he calculated his claim of $17,710.00 by looking at the number of kilometres he had travelled and multiplying it by the cost of fuel at that time. The Applicant did not provide receipts or a breakdown of costs in relation to his claimed work-related car expenses, which is in keeping with his outlined method of calculation of his claim.
[34]    Exhibit 1, Tribunal Book, Tab 1, Applicant’s Statement of Facts and attachments.
[35]    Exhibit 1, Tribunal Book, Tab 3, T Documents, T37, pages 349-366, Vehicle log sheets received by post.
[36]    Exhibit 1, Tribunal Book, Tab 3, T Documents, T2, page 27, Letter from Applicant’s employer.
The Applicant did not provide any further details about how he arrived at the claimed amount of $17,710.00.
Where a taxpayer has established that they incurred car expenses in the course of gaining or producing their assessable income, Division 28 of Part 2-5 of Chapter 2 of the ITAA 1997 outlines the rules for working out deductions for car expenses if a person owns or leases a car or hires a car under a hire purchase agreement.
Division 28 of the ITAA 1997 provides that deductions for car expenses can be worked out using either the “Cents per km” method or the “log book” method. The Applicant has sought to use the log book method.
Section 28-90 of the ITAA 1997 provides that the deduction is calculated by multiplying the amount of each car expenses by the business use percentage.
Section 28-100 of the ITAA 1997 provides that in order to use the log book method, the taxpayers must substantiate the car expenses under subdivision 900-C of the ITAA 1997.
Section 900-70 of the ITAA 1997 provides that for the log book method of deducting a car expense, the taxpayer needs to substantiate the expense by getting written evidence in accordance with subdivision 900-E, however for fuel or oil expenses no written evidence is required outside of the logbook. Taxation Determination TD 97/19[37] provides that the Respondent accepts a reasonable estimate of average fuel costs and average fuel consumption which together with the kilometres travelled allow the fuel expense to be calculated.
[37] Taxation Determination TD 97/19 Income tax: substantiation: car expenses: how do you calculate the cost of fuel and oil when using the 'one-third of actual expenses' method or the 'log book' method, if you have not kept written evidence of the expense? (Taxation Determination TD 97/19).
The Applicant has not provided sufficient written evidence to support the reasonableness of his claimed work-related car expenses. Whilst the Applicant has provided some receipts or references to bank statements and explanation as to why he claimed a deduction or the amount he did, the Tribunal finds that he did not provide sufficient receipts or other written evidence, which may have included a calculation worksheet setting out how he determined his fuel costs to substantiate that the claimed work-related car expense deduction was in fact deductible.
Consequently, the Tribunal finds that in failing to substantiate the claimed car expenses, the Applicant has not met the requirements of section 28-100 of the ITAA 1997 and that there is no evidence to support that relief from failing to substantiate should be exercised. As such the Tribunal is not required to consider whether the log book requirements set out in Division 28 of the ITAA 1997 were met.
The Tribunal accepts that the Applicant used his car for work purposes in the 2019 year and based on the evidence before it finds that the Applicant has not discharged his burden of proof to establish that if the deduction allowed by the Respondent was incorrect, what the allowable deduction should have otherwise been.
D3 – work-related travel expenses
In the Applicant’s income tax return for the 2019 year, he claimed a work-related travel deduction of $1,678, during the audit process he sought to increase his claimed deduction to $10,989.90.[38]
[38] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, pages 230-233, Applicant’s submissions.
At audit and upheld at objection, the Respondent disallowed in full the Applicant’s claimed work-related travel deductions. The Respondent contended that the Applicant had not substantiated the entirety of the claimed work-related travel expenses or shown that they were incurred in the course of income earning activities.[39] In particular the Respondent contended that:[40]
Expenses for travel that are unexplained or related to auditions or attending shows are not incurred in producing or earning assessable income and are instead preliminary or private expenses.
Even where portions of the claimed expenses appear to relate to income earning activities, the Applicant has not provided clear evidence to substantiate the expenses, or established that they were not otherwise reimbursed by the organisation engaging him.
[39] Exhibit 2, Respondent’s Outline of Submission, page 3-4, paragraphs 15-16.
[40] Exhibit 2, Respondent’s Outline of Submission, page 3-4, paragraphs 15-16.
At Hearing the Applicant told the Tribunal that he had been told that expenses relating to auditions are not deductible and he accepts that. He said that the way he calculated the individual claimed travel expenses was by using amounts that the ATO said can be claimed on the basis of keeping a diary. As such the Applicant submitted that he did not need to have receipts for everything and in reality, the costs he incurred were far more than the amounts he had claimed.
At Hearing the Applicant confirmed that he was no longer disputing the previously claimed work-related travel expenses in relation to auditions, call backs and professional development.
The claimed work-related travel expenses that remained in dispute related to accommodation, meals and incidentals totalling $4,643.20, in relation to:
·4 days spent away from home for his role as a therapeutic care worker;[41]
·5 days spent away from home for an approved professional development course;[42] and
·10 days spent away from home for a paid performing arts role.[43]
[41]    Exhibit 3, Table of Claims at Issue, items 4 and 5.
[42]    Exhibit 3, Table of Claims at Issue, item 8.
[43]    Exhibit 3, Table of Claims at Issue, items 12 and 13.
The Applicant told the Tribunal that on each of these occasions he was required to be away from home in connection with earning his assessable income.
The Applicant told the Tribunal that he did not have receipts for any of the amounts claimed as he used the diary method, all travel related to trips of 5 days or less and therefore did not require receipts to be kept. The Applicant said he worked out the rates of the allowances he claimed in accordance with a Taxation Determination.
In response to questions about whether he was paid travel allowance for any of the claimed travel, the Applicant told the Tribunal that he did not receive any travel allowance. He said the only allowance he received was that in the payslips he provided in relation to his therapeutic care worker role and it was only paid on that occasion and related to fuel costs.
The Tribunal is satisfied that the travel undertaken with regards to the deductions in dispute related to the gaining or producing of his assessable income.
Subdivision 900-D of Part 5-30 of Chapter 5 of the ITAA 1997 provides the rules in relation to claiming deductions for business travel expenses. To deduct business travel expenses, the expenses must qualify as a deduction and must be substantiated by written evidence in accordance with subdivision 900-E.[44] Section 900-85 of the ITAA 1997 provides that travel records must be kept if the claimed expenses are for travel that involves the taxpayer being away from their ordinary residence for 6 or more nights in a row.
[44] Section 900-80 of the ITAA 1997.
Subdivision 900-F of the ITAA 1997 outlines that a travel record is a record of activities undertaken during the travel and includes the nature of the activity, the day and approximate time when it began, how long it lasted and where the taxpayer engaged in the activity. The activity must be recorded before it ends or as soon as possible afterwards.[45]
[45] Section 900-150 of the ITAA 1997.
The purpose of a travel record is to show which of the taxpayer’s activities were undertaken in the course of producing their assessable income, so that their losses or outgoings, or portions of them, can be attributed to income-producing purposes.[46]
[46] Section 900-145 of the ITAA 1997.
The Applicant in his evidence has indicated that as his claimed travel expenses relate to travel occasions of less than 6 consecutive days, he was only required to keep travel records rather than receipts. The Tribunal considers that the Applicant has misinterpreted section 900-85 of the ITAA 1997 which is in fact adding an additional requirement to travel of 6 or more nights in a row by requiring that a travel record is kept in addition to written evidence of the expenses incurred.[47]
[47] This interpretation is consistent with that found in Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses (Taxation Ruling TR 2004/6).
The Tribunal notes that section 900-50 of the ITAA 1997 provides an exemption from the written evidence or travel records requirements if the Respondent considers that the total of the expenses being claimed for travel are reasonable and are covered by the allowance. What constitutes reasonable travel expense amounts for the 2018-19 income year are set out in Taxation Determination TD 2018/11.
The Applicant’s evidence was that he calculated the claimed work-related travel expenses by applying the reasonable accommodation, meal and incidental amounts set out in the Taxation Determination and kept a diary of the travel dates. The Applicant also told the Tribunal that he was not paid a travel allowance for any of the claimed travel. Consequently, the Tribunal finds that the Applicant has incorrectly sought to apply the substantiation exemptions for the travel expenses in question as there was no associated travel allowance received by him.
As such the substantiation requirements set out in subdivision 900E of the ITAA 1997 apply to the Applicant’s work-related travel claims. The Tribunal notes that the Applicant has provided some receipts and references to his bank statements in relation to his claimed travel expenses. However, given the Applicant’s concession in relation to the travel expenses he continued to claim, they are of no assistance.
Based on the evidence before it and in the absence of written evidence in the form required by subdivision 900E of the ITAA 1997, the Tribunal finds that the Applicant has not substantiated his claimed deductions for work-related travel expenses and that there is no evidence to support that relief from failing to substantiate should be exercised.
Consequently, the Tribunal finds that the Applicant has not discharged his burden of proof to establish that the assessment in relation to his claimed work-related travel expenses was incorrect and if it was, what the allowable deduction should have otherwise been.
Item D5 - other work-related expenses
Rental of office space
The Applicant claimed a deduction for $7,770.00 in relation to rented office space.[48] He provided a copy of a sublease agreement that outlined he was subleasing the adjoined office space only and would be required to pay rent of $370.00 per week from 1 July 2018.[49]
[48] Exhibit 1, Tribunal Book, Tab 3, T Documents, T38, page 367, Applicant’s Submissions.
[49] Exhibit 1, Tribunal Book, Tab 3, T Documents, T12, page 209, Sublease Agreement.
The Applicant told the Tribunal at Hearing that he used this space 100% for work however he claimed 80% use. The Applicant provided copies of his diary between 2 July 2018 and 18 November 2018 to show that he was working a lot either in his therapeutic care worker role or in relation to his artistic pursuits. He said he calculated his claimed deduction of $7,770.00 by multiplying the cost of the rent by 80%. The Applicant told the Tribunal that he was willing to only claim 50% of the rent expense if he had to.
The Applicant told the Tribunal he used the office space in relation to his employment as a therapeutic care worker to complete shift notes and reports and formulate fitness and drama lesson plans, as well as for rehearsing and undertaking physical training for his performing art roles.
The Applicant referred to a letter from his employer[50] with regards to his therapeutic care worker role, that provided he was required to and did complete various work tasks from his own home/office space. In reference to the information his employer provided to the Respondent that he had access to a telephone and computer at each of their care home offices, he said that during his shifts he was often dealing with a crisis or was in situations where it was not appropriate to write his reports on site even if the equipment did work. The Applicant told the Tribunal he did a lot of work outside of his paid hours in relation to that role. He told the Tribunal that the employer was not reputable and as such their assertions that he had access to a telephone and computer during his shifts should not be accepted.
[50] Exhibit 1, Tribunal Book, Tab 3, T Documents, T12, page 199, Letter from the Applicant’s employer.
The Applicant told the Tribunal he needed the office space as he was at that time renting a room from a friend and needed somewhere to work on his art and undertake the administrative aspects of his therapeutic care worker role.
The Applicant provided screenshots from his email account to show how many emails he received and was required to attend to in relation to his therapeutic care worker role.[51]
[51] Exhibit 1, Tribunal Book, Tab 1, Applicant’s Statement of Facts and attachments.
The Applicant provided a picture of the office space which supports his evidence that it was an appropriate place for him to undertake rehearsals and preparation for his acting roles.[52] While the photograph does not show a workspace in which to sit at a desk and undertake administrative tasks, the Tribunal has no reason to doubt the Applicant’s evidence that he used the space to undertake such duties in relation to his therapeutic care worker role.
[52] Exhibit 1, Tribunal Book, Tab 2, Applicant’s further submissions and attachments.

When asked about the fact that the bank statements he provided showed that $5,833.00 in rent had been paid, however he stated he paid in excess of $9,000.00 in rent and claimed a deduction of $7,710.00,[53] the Applicant said that outside of the documents provided he did not have any other evidence to provide. He said he did not keep a diary of his office use, but he was there all of the time when he was not performing his onsite duties as part of his therapeutic care worker role.
[53] Exhibit 1, Tribunal Book, Tab 3, T Documents, T38, page 367, Applicant’s submissions.
In response to what the office space was used for, the Applicant said he did not entertain people in the office space, nor did he sleep there. He said that he did not prepare for auditions, he just turned up and read. He said he did use the office space to rehearse for his paid performing art roles. The Applicant said that the fee he was paid for his role in a production/show included him having to rehearse and meet the physical expectations of the role.
The Applicant provided that he used the office space to prepare for the following productions for which he received wages for in the 2019 year, for the durations listed:[54]
·      [Redacted] – 4 weeks
·      [Redacted] – 16 weeks
·      [Redacted] – 4 weeks
·      [Redacted] – 16 weeks
[54]    Exhibit 1, Tribunal Book, Tab 2, Applicant’s further submissions and attachments.
The Applicant’s talent agent provided in a letter dated September 2019:[55]
[The Applicant] has been on [our] books and working as an actor for over the financial year of 2018-2019. We have been happy with [the Applicant’s] commitment and work ethic to his practice.
We have secured [the Applicant] roles such as body double – stand in for actor [redacted], [the Applicant] has worked as a supporting actor in [redacted] and through the past year [the Applicant] has also been a supernumerary for the [redacted] ballet company [redacted] who performed at [redacted]. [The Applicant] either self takes in his office studio or travels for auditions, it I up to the director/production team which is preferable. I must remark [the Applicant] was very close to getting a key role on [redacted] and has had countless auditions for TVC, Screen and Television roles.
[55] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 228, Letter from the Applicant talent agent.
When asked about the amount of rent paid for the office space in comparison with the income generated from his performing art roles, the Applicant said it was a big investment, but he invests everything into his art – everything he has goes into his art.
The Respondent provided the following contentions.[56]
[56] Exhibit 1, Tribunal Book, Tab 4, Respondent’s Statement of Facts, Issues and Contentions, pages 35-37, paragraphs 97-104.
97.The Commissioner acknowledges that the Applicant has adduced bank statements substantiating payment of rent of approximately $5,833 for the office at [redacted] between 24 July 2018 and 8 April 2019.
98.The Commissioner contends that the Applicant has not substantiated that he paid a total of $9,620 in rent over 26 fortnights in the 2019 income year.
99.The Commissioner contends, for the reasons outlined below, that the rental expense was predominantly a private expense and was not incidental and relevant to the gaining of income.
…..
100.The Commissioner acknowledges that:
a. a deduction is not denied merely because a taxpayer’s employer does not oblige them to incur the expense, and
b. In Taxation Ruling IT 2198 , the Commissioner of Taxation accepted that the requirement for deduction will be satisfied where the expenditure would ordinarily be expected to occur in carrying out the duties of employment.
101.Nonetheless, the Commissioner contends that the Applicant’s claimed use of the office studio for his main work as a therapeutic care worker was essentially a private expense, because:
a. renting a separate office space, where an employer already provides facilities, to perform work required as an employee is not “recognised as part and parcel of the duties of employment” or “something that might be ordinarily expected to occur in carrying out the duties of employment”; and
b. Although the Applicant has claimed that he used the office space to complete client reports for [his employer], [his employer] confirmed that the Applicant had access to facilities to complete these tasks.
102.The Commissioner contends that in relation to the Applicant’s claimed use of the office studio for work related to his occasional work as an actor/performer:
a. It appears that the Applicant’s use of the office related to preparing video auditions or similar activities which were preliminary to the gaining of assessable income and/or of a private nature. preliminary to the gaining of income (in use to prepare video auditions),
b. Further, the rental expenditure exceeds the Applicant’s income from performing activities in the 2019 income year and appears to be disproportionate to his income. This suggests that the expense can be explained by an independent pursuit of some private objective other than deriving assessable income. [Referencing Fletcher & Ors v FC of T 91 ATC 4950 at 4958]
103.Further, even if some part of the expense could be said to be attributable to the gaining or producing of assessable income, the Commissioner contends that the office expense should not be allowed as there is no clear evidence to determine the correct apportionment of the expense between private use and use for the purposes of the positive first limb of the general deduction provision section 8-1 of the ITAA97. In the absence of evidence upon which an apportionment between work-related and private use can be based, no deduction is allowable. [Referencing Case M90 80 ATC 648]
104. Accordingly, the Commissioner contends that the Applicant has not established an entitlement to a deduction for the rental expenses.
[Footnotes omitted]
In considering whether the rent expenditure was necessarily incurred, the Tribunal had reference to paragraph 10 of Taxation Ruling IT 2198[57] which provides:
Where an employee taxpayer incurs expenditure voluntarily in carrying out the duties of his employment and it is not disqualified from deduction because it is of a capital, private or domestic nature, what is decisive in determining claims for income tax deductions under sections 51, 53 and 54 is whether the expenditure has been incurred on the plant or articles or property used in gaining or producing assessable income. The requirement for deduction will be satisfied if the occasion of the expenditure or the use of the plant or articles or property is within the scope of the particular duties of employment, i.e., if it can be recognised as part and parcel of the duties of employment. To put it another way, the requirement will be satisfied if the subject of the claim for income tax deduction is something that might ordinarily be expected to occur in carrying out the duties of the employment.
[Emphasis added]
[57] Taxation Ruling IT 2198 Income tax: allowable deductions expenditure voluntarily incurred by employee taxpayer (Taxation Ruling IT 2198).
In relation to circumstances where expenses are disproportionate to income, the High Court in Fletcher & Ors v FC of T (1991) 173 CLR 1 at 18 to 19 (Fletcher) said:
…… Even in a case where some assessable income is derived as a result of the outgoing, the disproportion between the detriment of the outgoing and the benefit of the income may give rise to a need to resolve the problem of characterization of the outgoing for the purposes of the sub-section by a weighing of the various aspects of the whole set of circumstances, including direct and indirect objects and advantages which the taxpayer sought in making the outgoing. Where that is so, it is a "commonsense" or "practical" weighing of all the factors which must provide the ultimate answer. If, upon consideration of all those factors, it appears that, notwithstanding the disproportion between outgoing and income, the whole outgoing is properly to be characterized as genuinely and not colourably incurred in gaining or producing assessable income, the entire outgoing will fall within the first limb of s. 51 (1) unless it is either somehow excluded by the exception of "outgoings of capital, or of a capital, private or domestic nature" or "incurred in relation to the gaining or production of exempt income". If, however, that consideration reveals that the disproportion between outgoing and relevant assessable income is essentially to be explained by reference to the independent pursuit of some other objective and that part only of the outgoing can be characterized by reference to the actual or expected production of assessable income, apportionment of the outgoing between the pursuit of assessable income and the pursuit of that other objective will be necessary.
[Emphasis added]
The Tribunal notes that the sub-lease agreement provides a legal obligation for the Applicant to pay $9,620.00 rent in relation to the office space in the 2019 year. Based on the Applicant’s evidence that this space was mostly used for his artistic pursuits and deriving his performing arts income, this is a large investment. The Tribunal takes on board the Applicant’s evidence in relation to preparation and rehearsals that needed to be undertaken by a performing artist at the outset of their career to establish themselves within the creative arts industry. The Tribunal further notes that in relation to both the rent expenditure and the other expenditure discussed below with regards to his pursuit of a career in performing arts, the Applicant has indicated that he is prepared to, and does, put everything he has into those endeavours.
The issue then becomes whether or not the rental of the office space was incurred as a result of the Applicant’s personal preferences or as a necessity in the gaining or production of his assessable income. The Applicant’s evidence was that during the 2019 year, unless he was on site at his job as a therapeutic care worker, undertaking his paid performance art work or attending related professional development opportunities, he was working at the office space. The Applicant’s evidence indicated that he spent his time in the office space either completing administrative duties associated with his role as a therapeutic care worker or preparing for (for example undertaking exercise regimes to prepare his body and establish the required strength and stamina to undertake upcoming performing arts roles) or rehearsing ahead of his roles in performance art productions.
In relation to the administrative tasks the Applicant was required to undertake as part of his role as a therapeutic care worker, the independent evidence shows that while access to a phone and computer may have been available to some extent by his employer, they also expected that some of this work would be completed by the Applicant outside of his workplace. The Applicant’s evidence in relation to the nature of his role supports the need for a private place away from the relevant work sites to complete often sensitive work reports.
The Tribunal accepts the Applicant’s evidence that he used the office space throughout the 2019 year to complete administrative work in his role as a therapeutic care worker, therefore, using the office space to produce his associated assessable income. It may not be ordinarily expected that an employee in such a role would rent their own office space, however what was expected is that they would be able to complete work from a location not provided by the employer.
In relation to the connection between the Applicant’s performing arts work and the use of the office space, the Tribunal accepts the Applicant’s evidence that he used the space in undertaking his physical preparation and rehearsals for the roles in which he was paid during the 2019 year. Again it may not be ordinarily expected that a performing artist would rent their own office space, however it is common sense to acknowledge that the performing artist would be expected to know their part and be in the required physical condition prior to the commencement of the role. A performance artist may ordinarily use a community space or a space within their home for such preparation for their roles, however it is important to weigh up all of the various aspects of the Applicant’s circumstances in that regard.
Based on the evidence provided by the Applicant, throughout the 2019 year he was:
·      working long and varied hours in his role as a therapeutic care worker;
·      undertaking sensitive administrative work outside of the workplace in relation to that role;
·      renting a room from a friend;
·      limited to his bedroom, in such circumstances to undertake any work endeavours; and
·      continuing to establish himself as a performing artist.
The Applicant’s evidence was that he did not entertain at or sleep in the office space, but that he used it 100 percent of the time for work. There is no evidence before the Tribunal nor was it contended that the Applicant rents out or lends the office space to anyone else when he is not himself using it.
Based on the evidence before it, the Tribunal disagrees with the Respondent’s contentions that the rented office space was not used by the Applicant in connection with gaining or producing his assessable income in the 2019 year. The Tribunal considers that based on the evidence before it and viewing the Applicant’s circumstances as a whole in a common sense manner, such a view is consistent with the principles set out above in Taxation Ruling IT 2198 and the Fletcher case.
The next consideration for the Tribunal is the extent to which the rental outgoing was incurred in the gaining or producing of the Applicant’s assessable income.
The Applicant sought a deduction for 80% of the rental expenses due under the sub-lease to allow for a generally expected amount of personal use, although he disagreed that there was any personal use of the office space.
The Tribunal does not accept that the Applicant did not use the office space to prepare or undertake auditions, noting that such use would not be considered to be incurred in gaining or producing assessable income, but would be seen as a preparatory step. Consequently, the Tribunal considers that the office space was used for purposes other than those that could be considered to be in connection with the gaining or producing of the Applicant’s assessable income.
The Respondent contended that the Applicant had not established the correct apportionment of the expense between private use and use for the purposes of the positive first limb of the general deduction provision section 8-1 of the ITAA97. The Respondent contented that in the absence of evidence upon which an apportionment between work-related and private use can be based, no deduction is allowable.
The Tribunal in finding that the Applicant’s use of the office space includes both private and income generation purposes and considers that, in the absence of a log of the hours the Applicant spent in the office space that outlines exactly what he was doing, it is reasonable to apportion an equal amount of use to both purposes. As such the Tribunal considers that pursuant to the requirements of section 8-1 of the ITAA 1997, the Applicant can reasonably deduct 50 percent of the rental expense of the office space that he incurred in gaining or producing his assessable income during the 2019 year. Such a finding is not inconsistent with the Applicant’s claim at audit.[58]
[58] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 235, Applicant’s submissions.
In order for the decision to be claimed, the Applicant must have substantiated the claim. Subdivision 900-B of Part 5-30 of Chapter 5 of the ITAA 1997 provides the rules in relation to claiming deductions for work expenses. To deduct a work expense, the expense must qualify as a deduction and must be substantiated by written evidence in accordance with subdivision 900-E[59] as set out above.
[59] Section 900-15 of the ITAA 1997.
The sub-lease agreement satisfies in part the substantiation requirements of subdivision 900E of the ITAA 1997, however the Applicant was unable to explain why his bank account only showed rent payments being made under the agreement between 24 July 2019 and

8 April 2019. As such the Tribunal can only be satisfied that the Applicant incurred rent expenses for the office space during that period and considers that the Applicant has only substantiated the expenses for that period.
Based on the evidence before it, the Tribunal finds that the Applicant has substantiated his claimed deduction in relation to the rent expenditure for the office space between

24 July 2019 and 9 April 2019 to the value of $5,833.00. For the reasons previously provided, the Tribunal also finds that 50 percent of the incurred and substantiated expenditure is deductible by the Applicant in the 2019 year.
Consequently, the Tribunal finds that the Applicant has discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to the rent incurred in relation to the office space was incorrect and that a $2,916.50[60] deduction should be allowed.
Mobile Phone Device
[60] Being 50 percent x $5,833.
The Applicant provided a receipt for the purchase of an iPhone[61] and sought to claim an immediate 100 percent deduction in the 2019 year of $1,149.00 as a work-related expense.[62] When asked about his use of the phone and why he was seeking an immediate deduction of the cost of the phone, the Applicant told the Tribunal that:
·     He had to have a phone for his therapeutic care worker role. His shifts were constantly changing and he had to regularly respond to emails. When he was on shift, he was also required to use his own phone and at times needed to let his clients use it.
·     He claimed the cost of the whole phone as he had a phone stolen.
·     He had not considered depreciating the phone however if that was what was acceptable, he would accept that.
[61]    Exhibit 1, Tribunal Book, Tab 3, T Documents, T 12, page 210, Receipt for the purchase of an Apple iPhone.
[62]    Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 235, Applicant’s submissions.
At audit and upheld at objection, the Respondent allowed the Applicant a depreciation deduction of $287.25 in relation to the purchase of the mobile phone. The deduction was calculated on 50% (being the business use estimate) of the phone value divided by two.[63]
[63] Exhibit 1, Tribunal Book, Tab 3, T Documents, T43, page 410, Reasons for Objection Decision.
The cost of the iPhone is a capital expense (as it is considered to be an asset) and as such in circumstances where the cost exceeded $300.00, no immediate deduction is available, rather the cost should be depreciated over the phone’s useful life.[64]
[64] Section 40-80 of the ITAA 1997.
Based on the evidence before it, the Tribunal is satisfied that the Applicant used the iPhone in relation to gaining and producing assessable income in the 2019 year, however in the absence of any corroborating evidence in relation to the Applicant’s use of the iPhone, the Tribunal finds that the Applicant has not substantiated his claimed deductions for the cost of the iPhone.
Consequently, the Tribunal finds that the Applicant has not discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to the deduction for the cost of the iPhone was incorrect and if it was, what the allowable deduction should have otherwise been.
Phone and internet plan
The Applicant claimed a deduction of $1,148.00 in relation to a $99.00 Timeless Extreme Optus plan of which he said represented 80 percent of the cost as he was using his phone for work every day.[65]
[65] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 235, Applicant’s submissions.

The Applicant told the Tribunal that he did not use the phone for private use as he was working a lot and lived in a regional area, he also had a laptop and iPad he used. The Applicant said he did not have any records of use in relation to the phone plan. The Applicant provided the terms and conditions of a $99.00 Timeless Extreme Optus plan[66] and made references to payments in some of his bank statements.
[66] Exhibit 1, Tribunal Book, Tab 3, T Documents, T38, pages 375-378, Optus $99.00 Timeless Extreme Terms and Conditions.
At audit and upheld at objection, the Respondent allowed the Applicant a deduction of $100.00 being $50.00 each in relation to phone and internet usage. The Respondent contended that the Applicant did not provide evidence to substantiate his claimed deduction for the phone and internet plan and had not established it was used in gaining and producing assessable income and/or had not identified what person use was made of the relevant service/data.[67]
[67] Exhibit 1, Tribunal Book, Tab 4, Respondent’s Statement of Facts, Issues and Contentions, pages 38-39, paragraphs 111-120.
The Respondent relied on Practice Statement PSLA 2001/6[68] which at paragraph 6, it is stated that taxpayers “can calculate their device usage expenses by keeping records and written evidence to determine their work-related proportion of actual expense, or claiming up to $50 in total for all device usage charges (being phone calls, text messages and internet use for all devices) with limited documentation”.[69]
[68] Practice Statement PSLA 2001/6: Verification approaches for home office running expenses and electronic device expenses (Practice Statement PSLA 2001/6).
[69] Exhibit 1, Tribunal Book, Tab 4, Respondent’s Statement of Facts, Issues and Contentions, page 38, paragraph 113.
The Tribunal is satisfied that the Applicant used his telephone and data plan in relation to the gaining or producing of his assessable income during the 2019 year.
Subdivision 900-B of Part 5-30 of Chapter 5 of the ITAA 1997 provides the rules in relation to claiming deductions for work expenses. To deduct a work expense, the expense must qualify as a deduction and must be substantiated by written evidence in accordance with subdivision 900-E[70] as set out above.
[70] Section 900-15 of the ITAA 1997.
The Applicant has not provided a copy of his phone/data plan contract or his Optus bills for the 2019 year, as such the Tribunal is unable to ascertain what the actual cost of those services were. The Applicant has also not provided any supporting records or evidence in relation to his claimed 80 percent usage of the plan.
Based on the evidence before it and in the absence of written evidence in the form required by subdivision 900E of the ITAA 1997, the Tribunal finds that the Applicant has not substantiated his claimed deductions for phone/data expenses and that there is no evidence to support that relief from failing to substantiate should be exercised.
Consequently, the Tribunal finds that the Applicant has not discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to his phone/data plan was incorrect and if it was, what the allowable deduction should have otherwise been.
Audio Books
The Applicant told the Tribunal he was only seeking to press his deduction of $35.99 in relation to the Audiobook – Journey to Ixilan: The Lessons of Don Juan. The Applicant told the Tribunal that he incurred this expense as part of his research and preparation to undertake his paid ballet role, that it created a culture for him to revel in for that role.
The Respondent contended that the Applicant has not substantiated the expense claimed or demonstrated an entitlement to a deduction.[71]
[71] Exhibit 2, Respondent’s Outline of Submissions, page 4, paragraph 22.
Having had the benefit of the Applicant’s evidence at Hearing about how he engaged with the audiobook in preparation of his ballet role, the Tribunal accepts his evidence that it formed part of his research and character preparation. As such the Tribunal is satisfied that the Applicant’s purchase and subsequent use of the Journey to Ixilan audiobook can be linked to the gaining or producing of his assessable income during the 2019 year.
Again the issue at hand falls to substantiation of the claimed deduction. Subdivision 900-B of Part 5-30 of Chapter 5 of the ITAA 1997 provides the rules in relation to claiming deductions for work expenses. To deduct a work expense, the expense must qualify as a deduction and must be substantiated by written evidence in accordance with subdivision 900-E[72] as set out above.
[72] Section 900-15 of the ITAA 1997.
The Applicant provided an iTunes Store receipt for the purchase of the audiobook that met the requirements of subdivision 900E of the ITAA 1997.[73]
[73] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 237, Apple iTunes receipt.
Based on the evidence before it, the Tribunal finds that the Applicant has substantiated his claimed deduction for the cost of the Audiobook – Journey to Ixilan: The Lessons of Don Juan.
Consequently, the Tribunal finds that the Applicant has discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to his purchase of the Audiobook – Journey to Ixilan: The Lessons of Don Juan was incorrect and that the claimed deduction should be allowed.
Shoes and socks
The Applicant claimed deductions for the cost of two pairs of shoes and for socks totalling $434.85. He provided the receipts.[74] He told the Tribunal that he needed compression in his feet and he made these purchases for osteopathic reasons. The Applicant said he purchased two pairs of shoes as one set was stolen in performing his role as a therapeutic care worker. The Applicant said that the shoes and socks were required uniform because he needed them and they were recommended by a physiotherapist, however he had not provided any details in relation to that recommendation as he had not been asked to.
[74] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, pages 250-251, Receipts from Athlete’s Foot.
The Applicant told the Tribunal that he did not use the shoes and sock for anything other than work purposes. He said he also used them in relation to fitness and training for his roles as a body double and in the ballet. For his body double role he said he had to be the correct weight and measurements and also for his ballet role he had to have a certain level of strength and conditioning, both of which are industry norms.
The Respondent contended that the Applicant had not established that the expenditure on the shoes and socks was incurred in gaining or producing assessable income, nor has he established that his circumstances provide an exception to the general rule that clothing is essentially a private expense.[75]
[75] Exhibit 1, Tribunal Book, Tab 4, Respondent’s Statement of Facts, Issues and Contentions, page 41, paragraphs 128-129.
Unless clothing expenditure relates to a compulsory work uniform, it is usually considered to be private expenditure and is therefore usually not deductible.[76] Section 34-10(1) of the ITAA 1997 provides that a taxpayer can deduct expenditure they incur in respect of their non-compulsory uniform if, they can deduct it under another provision and the design of the uniform is registered under Division 34 of Part 2.5 of Chapter 2 of the ITAA 1997. Section 34-10(3) of the ITAA 1997 provides however, Division 34 does not stop a taxpayer from deducting expenditure they incur in respect of their occupation specific clothing or protective clothing.
[76] See Mansfield v FC of T 96 ATC 4001; FC of T v Edwards 94 ATC 4255 and Division 34 of part 2.5 of Chapter 2 of the ITAA 97
A uniform is one or more item of clothing which when considered as a set, distinctively identifies a person associated with the employer (or a group consisting of the employer).[77] A uniform is non-compulsory unless the employer consistently enforces a policy that requires the taxpayer and the other employees who do the same type of work to wear the uniform while performing their duties.[78] Occupation specific clothing is clothing that distinctively identifies a person as belonging to a particular profession, trade, vocation, occupation or calling.[79] Protective clothing is clothing of a kind that a person mainly uses to protect themselves or someone else from risk of death, disease, injury, damage to clothing or to an artificial limb or the like.[80]
[77]    Section 34-15(1) of the ITAA 1997.
[78]    Section 34-15(2) of the ITAA 1997.
[79]    Section 34-20(1) of the ITAA 1997.
[80]    Section 34-20(2) of the ITAA 1997.
The Tribunal accepts that the Applicant’s reasons for purchasing of the type of shoes and socks he did, however there is no supporting evidence before the Tribunal that he was medically required to wear those shoes such that they would constitute protective clothing or that such a requirement related only to when he was working.
The Applicant is likely to have worn shoes both whilst performing his role as a therapeutic care worker and in relation to his fitness training whether he had purchased the shoes and socks in question or not.
There is no supporting evidence before the Tribunal that the shoes and socks purchased by the Applicant formed part of a compulsory uniform or occupation specific clothing for the purposes of Division 34 of Part 2.5 of Chapter 2 of the ITAA 1997.
Based on the evidence before it, the Tribunal finds that the expenses incurred by the Applicant in relation to the shoes and socks was of a private or domestic nature and is therefore not deductible in accordance with section 8-1 of the ITAA 1997.
Consequently, the Tribunal finds that the Applicant has not discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to his purchase of shoes and socks was incorrect and if it was, what the allowable deduction should have otherwise been.
Training services – Body double role
The Applicant claimed a deduction of $1,755.00 for training services.[81] He told the Tribunal that these services were provided in the lead up to him undertaking his role as a body double.
[81] Exhibit 1, Tribunal Book, Tab 2, Applicant’s further submissions and attachments.
When asked if the company he was employed by had asked him to undertake the training, he said they had a verbal agreement. The Applicant said that the training was standard in the industry if you are playing a body double, as if you do not meet the measurement and weight requirements, you lose the role.
When asked about the particular role he was preparing for, the Applicant told the Tribunal that the character for which he was a body double was involved in sword fighting, so he had to perform the role to set up the cameras and that the role was 10 to 12 days of work.
At Hearing the Respondent contended during cross-examination of the Applicant, the deduction claimed in relation to these training services was allowed at audit as part of self-education expenses. The Applicant disagreed and said the deduction was not allowed at audit.
In examining the evidence before it the Tribunal notes that on 20 November 2019 the Applicant outlined his claimed expenses in relation to work-related self-education expenses.[82] The list of expenses includes the amount of $1,755.00 for training services. While the total of the work-related self-education expenses provided in this list is $5,878.91, differing slightly from the $5,817.00 that was claimed and allowed in the audit decision and upheld at objection, the Tribunal is satisfied that the Applicant has already been allowed a deduction in relation to the training services.
[82] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 234, Applicant’s submissions.
On 11 March 2022, the Respondent by email provided confirmation to the Tribunal that the audit decision allowed a deduction for the training services in question.
Consequently the Tribunal finds that the Applicant has therefore not discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to his phone/data plan was excessive or otherwise incorrect and if it was, what the allowable deduction should have otherwise been.
Training services – Ballet role
The Applicant sought to claim a deduction for $500.00 in relation to a physical training program.[83] He told the Tribunal that the training related to his ballet role.
[83] Exhibit 1, Tribunal Book, Tab 2, Applicant’s further submissions and attachments.
The Applicant provided a screenshot of his email inbox showing email correspondence between himself and the provider between September and December 2018 and made reference to regular $50 payments could be seen in his supplied bank statements.[84] Although difficult to read the Tribunal was able to identify those payments.[85]
[84] Exhibit 1, Tribunal Book, Tab 2, Applicant’s further submissions and attachments.
[85] Exhibit 1, Tribunal Book, Tab 3, T Documents, T9, pages 125-131, Applicant’s bank statements.
When asked questions in relation to his ballet role, the Applicant told the Tribunal that the show ran for one and a half hours and he was on stage in total for approximately an hour, for each performance. He danced in curtained sections as his role involved dancing and ensemble work. When asked if he was required to undertake the training as part of the role, the Applicant said that the Ballet Company required a certain physique and that there was a standard of strength and stamina required by the industry.
When referred to a letter from his talent agent[86] which referred to his role as being a supernumerary, which means non lead role with minimal movement, the Applicant said that management companies do not understand the roles. He said he sourced his roles and then gives them to his manager to manage and on this occasion the manger made a mistake. The Applicant said he did not get a contract setting out the role and terms and such for that role.
[86] Exhibit 1, Tribunal Book, Tab 3, T Documents, T13, page 228, Letter from the Applicant’s talent agent.
The Respondent contended that the expenditure was not deductible as:[87]
12.The Applicant’s further material raises an additional $2,255 in fitness related expenses for which he is seeking a deduction. These are said to comprise $1,755 for ‘training services’ from [redacted] and $500 for a training program from [redacted]. It is not clear whether these expenses were raised in the Applicant’s income tax return for the 2019 year or the following audit and objection. Regardless, the Commissioner contends that the Applicant has not sufficiently demonstrated that these expenses were incurred in connection with his income earning activities—and distinct from private fitness expenses. The Applicant has only made a bare assertion that these expenses were required for body double work and the [redacted] Ballet. No evidence has been provided in support and it is not clear that the Applicant’s performing roles required a level of fitness well beyond that of a normal worker.
[Footnotes omitted]
[87] Exhibit 1, Tribunal Book Tab 5, Respondent’s Submission in Reply, page 4, paragraph 12.
In closing submissions at Hearing, the Respondent further contended that the Applicant had not established how the expenditure was incurred in relation to gaining or producing his assessable income as exercise is only deductible when extreme fitness is required. The Respondent referred the Tribunal to Taxation Determination 93/114[88] and the decision in Case J3 (1976) 77 ATC 39 (Case J3).
[88] Taxation Determination 93/114 Income tax: is a police officer, who is required to maintain an adequate level of physical fitness in order to undertake police duties, entitled to claim a deduction for fitness related expenditure? (Taxation Determination 93/114).
In reviewing the references referred to by the Respondent, the Tribunal notes that the principle being referred to centres around the fact that expenses incurred due to an employer’s requirement that the employee stays fit, which are not however related to their actual income-producing activity will not generally be deductible. That is unless such expenditure is an essential element of gaining income, for example, where strenuous physical activity is an essential and regular element of performing that person’s duties. Taxation Determination 93/114 made reference to police officers undertaking general duties and those of a police academy PT instructor. Case J3 refers to a football player required to have a higher level of fitness in order to be able to secure positions at higher rate of income and was part of a conditioning programme directed by the taxpayer’s coach and undertaken by him to honour his obligation under his contract.
The Tribunal considers that the Applicant’s circumstances can be likened to the example given in Taxation Determination 93/114 and that of the taxpayer in Case J3. The Applicant gave evidence at Hearing of the requirements imposed upon ballet troop members. He gave evidence that he had secured the role and then had to meet the physique, strength and stamina requirements of his employer.
The Tribunal notes that Taxation Ruling TR95/20[89] provides:
[89]    Taxation Ruling TR 95/20 Income tax: employee performing artists – allowances, reimbursements and work-related expenses (Taxation ruling TR 95/20).
Fitness expenses including chiropractic/massage/physiotherapy
105.     A deduction is not allowable for the costs of maintaining general fitness or body shape. A deduction may be allowable if a performing artist can show that physical fitness and physical activity are essential elements of the income-earning activities and are the means by which the performing artist earns his/her income (see Taxation Determination TD 93/114).
106.     Example: Albin, a circus trapeze artist, regularly attends a gymnasium to maintain fitness and strength to perform his rigorous aerial routines. Albin's fitness costs have the essential character of an income producing expense. The cost of attending the gymnasium has a direct nexus to the earning of assessable income and is an allowable deduction.
The Tribunal understands that the requirements extended well beyond that of fitness and as the Applicant was not a full time or regular member of a ballet troop, it is reasonable to consider his engagement would have come with the understanding that he would be able to be in the required physical condition by the time the ballet commenced.
The Applicant was pressed under cross-examination to explain his position in the ballet. The Tribunal found the Applicant’s evidence in this regard to be credible. In response to a point being raised by the Respondent in relation to the expenses involved in his position compared to his remuneration, he told the Tribunal that he thinks the role paid more than the financial reward given the experience on stage he gained can be taken on board for future roles. The Applicant told the Tribunal that all artists starting out incur extensive costs in order to gain the experience required to succeed in the industry.
Based on the evidence before it the Tribunal finds that the expenses in relation to the training services provided were in fact incurred by the Applicant in relation to gaining or producing his assessable income and as such meet the deductibility test of section 8-1 of the ITAA 1997.
The Tribunal must still however consider whether or not the expenditure has been substantiated. Subdivision 900-B of Part 5-30 of Chapter 5 of the ITAA 1997 provides the rules in relation to claiming deductions for work expenses. To deduct a work expense, the expense must qualify as a deduction and must be substantiated by written evidence in accordance with subdivision 900-E[90] as set out above.
[90] Section 900-15 of the ITAA 1997.

The evidence in relation to this expenditure is not as clear cut as those expenses discussed above. In this instance the Applicant has provided evidence of services received and payments made, however the Tribunal notes that this evidence is not in the form outlined in subdivision 900-E of the ITAA 1997. In such circumstances, it should be noted that subdivision 900-H of the ITAA 1997 provides relief from effects of failing to substantiate. Relevant to the Applicant’s matter, section 900-195 provides the Commissioner (and as such the Tribunal standing in the shoes thereof) discretion to review failure to substantiate and provides:
Not doing something necessary to follow the rules in this Division does not affect your right to a deduction if the nature and quality of the evidence you have to substantiate your claim satisfies the Commissioner:
(a)That you incurred the expenses; and
(b)That you are entitled to deduct the amount you claim.
Having considered Taxation Ruling TR 97/24, as referenced above and based on the documentary evidence before the Tribunal, that provided by the Applicant at Hearing and the Tribunal’s previous finding, the Tribunal is satisfied that the Applicant incurred the claimed expense and is entitled to a corresponding deduction.
Consequently, the Tribunal finds that the Applicant has discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to the expense incurred in relation to training services provided in connection with his ballet role was incorrect and that the deduction should be allowed in full.
Bundle of miscellaneous expenses
The Applicant outlined a number of different miscellaneous expenses totalling approximately $1,175.15 related to office equipment, fitness accessories and study materials.[91] One of the larger expenses in the bundle related to a fridge, which at Hearing the Applicant said he purchased for the office space. However, when asked why the receipt listed the address of where he was living and not the office, the Applicant was unable to provide an explanation. He said he had not considered claiming depreciation for the fridge rather than an instant deduction. The Applicant told the Tribunal that he used the fridge at the office so that he could eat while he was there as he was there so often.
[91] Exhibit 1, Tribunal Book, Tab 3, T Documents, T38, pages 367-368, Applicant’s submissions.
The Applicant told the Tribunal that other expenses that formed part of the bundle of miscellaneous expenses included construction items for the office space and stage equipment. A number of receipts were illegible and when raised with the Applicant he told the Tribunal that he was not pressing those items were deductible.
The Respondent contended that the Applicant had not substantiated the expense claimed or demonstrated an entitlement to a deduction.[92]
[92] Exhibit 3, Respondent’s Outline of Submissions, page 4, paragraph 22.
900-B of Part 5-30 of Chapter 5 of the ITAA 1997 provides the rules in relation to claiming deductions for work expenses. To deduct a work expense, the expense must qualify as a deduction and must be substantiated by written evidence in accordance with subdivision 900-E[93] as set out above.
[93] Section 900-15 of the ITAA 1997.
The supporting evidence in relation to these miscellaneous expenses are scarce, and in most instances the documents provided are illegible. Further it was not clear to the Tribunal which particular expenses the Applicant was no longer pressing, outside of the fridge. In relation to the fridge there is a receipt evidencing that the expenditure was incurred, there is not however any supporting evidence to corroborate that the fridge was delivered to and used at the Applicant’s office studio rather than private address.
Considering the Applicant’s miscellaneous expenses as a whole, the Tribunal is not satisfied based on the evidence before it and in the absence of written evidence in the form required by subdivision 900E of the ITAA 1997 and further evidence in relation to how the expenses are connected to the Applicant’s gaining or producing of assessable income that the claimed deductions were incurred in relation to gaining or producing his accessible income, or that they were substantiated appropriately.
Consequently, the Tribunal finds that the Applicant has not discharged his burden of proof to establish that the assessment in relation to his claimed other work-related expenses as they relate to his miscellaneous expenses was incorrect and if it was, what the allowable deduction should have otherwise been.
Item D4 – work-related self-education expenses
In confirming that the audit decision allowed a deduction in relation to the training services provided in connection with the Applicant’s body double role as part of work-related self-education expenses, the Respondent’s email of 11 March 2022 also set out a list of all self-education deductions that were allowed as part of the audit decision.
The Respondent advised the Tribunal that at audit it had allowed self-education deductions totalling $6,678.91, however the amount claimed in the Applicant’s income tax return for the 2019 year of $5,817 was not altered to reflect the increase in allowed deductions.
The Respondent provided that:
Given that the total of the deductions claimed for self-education expenses increased at audit, the Commissioner accepts that the relevant assessment should be amended to increase the Applicant’s allowable deductions by $861.91 to accurately reflect the claims allowed.
Section 14ZZK of the TAA 1953 provides that the Applicant’s application for review is limited to the grounds stated in the taxation objection to which the decision relates unless the Tribunal orders otherwise.
In this instance the Applicant’s grounds for objection did not include the decision in relation to Item D4 – work-related self-education expenses, however noting the Respondent’s concession in that regard, the Tribunal considers that it is appropriate to order that the Applicant’s application for review can include such grounds.
The Tribunal sought the Applicant’s views in relation to this late issue raised by the Respondent, however no response was received.
Consequently, the Tribunal accepts the Respondent’s submission that the Applicant’s allowable deductions as they relate to Item D4: work-related self-education expenses for the 2019 year should be varied to include $861.91 of deductions allowed at audit however not reflected in his finalised income tax return and subsequent notice of assessment.
CONCLUSION
For the reasons set out above, the Tribunal is not satisfied that the Applicant has discharged his onus to prove that his 2019 assessment was excessive or otherwise incorrect, and if it was what it should have otherwise been in relation to deductions claimed at Items D1 – work-related car expenses and D3 – work-related travel expenses and in part Item D5 – other work-related expenses (being those deductions relating to the mobile phone, phone and internet service, shoes and socks, training services in connection with his body double role and miscellaneous expenses).
For the reasons set out above, the Tribunal is satisfied that the Applicant has discharged his onus to prove that his 2019 assessment was in part excessive or otherwise incorrect, and what it should have otherwise been in relation to deductions claimed at Items D5 – other work-related expenses (being those deductions relating to the rental of office space, purchase of an audiobook and training services received in connection with his ballet role).
Accordingly, the Tribunal varies the objection decision to the extent that the Applicant’s allowable deductions:
(a)at Item D4: work-related self-education expenses for the 2019 year is $6,678.91, to include deductions for all of the expenses allowed by the Respondent at audit, however not reflected in the audit decision and assessment that issued; and
(b)at Item D5: other work-related expenses for the year ended 30 June 2019 is $4,117.49,[94] to include deductions for the follow expenses:
(i)$2,916.50 in relation to the office space rent;
(ii)$35.99 in relation to the purchase of the Audiobook – Journey to Ixilan: The Lessons of Don Juan; and
(iii)$500.00 in relation to the training services received.
[94] Being deductions allowed at audit of $665.00 + rent expense of $2,916.50 + cost of audiobook of $35.99 + cost of training services of $500.00.
The objection decision is otherwise affirmed in relation to all other disallowed deductions for the 2019 year.

I certify that the preceding 176 (one hundred and seventy-six) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

...................[SGD].......................................
Associate
Dated: 29 March 2022

Date of hearing: 16 February 2022

Applicant:

By Microsoft Teams

Solicitors for the Respondent: Mr Preesan Pillay
Australian Taxation Office

[2022] AATA 567

29 March 2022

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Date of hearing:	16 February 2022
Applicant:	By Microsoft Teams
Solicitors for the Respondent:	Mr Preesan Pillay Australian Taxation Office