London v FC of T

Members:
Dr NA Manetta SM

Tribunal:
Administrative Appeals Tribunal, Adelaide

MEDIA NEUTRAL CITATION: [2022] AATA 644

Decision date: 4 April 2022

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Dr NA Manetta (Senior Member)

1. This is an application by Mr Aaron London seeking a review in this Tribunal of a decision of the respondent in connection with a number of deductions he had claimed in his income tax return for the year ending 30 June 2018. The return was prepared and filed by Mr London's tax agent. The deductions in question were initially accepted, but then retrospectively disallowed as the result of an audit conducted by the respondent's officers. An amended notice of assessment was issued and a penalty was also applied. Mr London lodged an objection through his tax agent to the notice of amended assessment. The notice of objection proved for the most part unsuccessful, and Mr London has now brought an application to this Tribunal to have the deductibility of the disallowed items reviewed.

2. Mr London is employed as a dog handler in the so-called "Special Operations Unit" of the South Australian Department of Correctional Services. The deductions that I must consider as part of my review relate to this employment. I shall describe features of that employment in due course.

TRIBUNAL'S TASK

3. Hearing the matter afresh on the evidence adduced before me, I must decide whether the claimed deductions in issue are justified or not, principally under s 8-1 of the Income Tax Assessment Act 1997 ("the Act"), the elements of which are well known. When considering my conclusion, I do not simply review the respondent's decision for error. I must determine the matter afresh, making findings of fact and drawing inferences on the basis of the evidence adduced before me. It follows that I may affirm the decision under review notwithstanding the presence of an error in the respondent's decision-making if that is the correct or preferable decision on the evidence before me; equally, I may set aside the decision under review although there is no discernible error in the process of reasoning used by the respondent's decision-maker if that is the correct or preferable decision. At the hearing before me, Mr London was represented by Mr Birdseye; the respondent, by Mr Besanko.

4. I note by way of background that I issued an interlocutory ruling before the substantive hearing. This ruling determined the scope of my review. I do not need to recapitulate it other than to note that I found that Mr London was eligible to raise before me all deductions that were referred to in his notice of objection. I did not grant permission to Mr London to raise any deductions that were not referred to in his notice of objection.

BACKGROUND FACTS

5. The background facts may be stated as follows, and I note they were not contested for the most part. As I have said, Mr London is a dog handler who works within the South Australian Department of Correctional Services. In the tax year ending 30 June 2018,

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Mr London was responsible for training and maintaining two dogs^[1] A German shepherd and a Labrador. Mr London had two German shepherds in succession in the relevant tax year as well as the Labrador. He was paired with the first shepherd on his Queensland training course but it was eventually put down when it became too aggressive. He then took charge of a second. . He supervises closely their deployment within the prison system. He must also house and maintain the dogs at his home after working hours. A purpose-built enclosure has been erected on a concrete slab in Mr London's back yard for this purpose. While the dogs are at his home, Mr London is responsible for their welfare; that is, he must feed, exercise and groom them, and keep their enclosure clean.

6. Mr London was required in the relevant tax year to be available to assist in emergencies that might arise. An emergency may involve, for example, a prison disturbance or the escape of a prisoner from custody. These emergencies arise rarely, but it is fair to say that Mr London must be prepared for the possibility of an emergency arising at any time. He must also regularly train one of his dogs (a German shepherd) for this purpose; the other (a Labrador) is deployed, as I understand the evidence, for more routine and less stressful tasks such as drug searches (Tr.28). In connection with his work, but more particularly his work involving the German shepherd, it is clear on the evidence before me that Mr London is required to maintain a high degree of anaerobic fitness (that is, a degree of muscle strength sufficient to control a large German shepherd on a lead in a volatile situation) and a high degree of aerobic fitness (that is, a degree of speed and agility sufficient to enable him to move effectively with, and control and direct, his dog in an emergency). He must also be prepared to restrain prisoners himself (Tr.34).

7. As I have said, Mr London is rarely called to an emergency. They could not be said to be a regular feature of his employment. His employment usually involves less strenuous activity. He might use his dogs, for example, in a cell search for drugs or other contraband. The dogs may also be present as part of the normal, day-to-day supervision of prisoners.

8. That said, I accept what appears in the job-and-person specification (Exhibit R1 at p 68); namely, that Mr London is required to be a member of the Emergency Response Group and attend training whilst on duty. I accept also what appears in the same specification (Exhibit R1 at p 69) that Mr London is required to take active responsibility for the general care of the dogs "including feeding, housing, hygiene, [and] exercising and training" them against applicable standards. It is also clear on the evidence before me that a high level of personal fitness may be required, or at least be an advantage, in response to an emergency (depending on what the emergency entails).

CLAIMED DEDUCTIONS

9. I turn now to the deductions claimed by Mr London. In this regard, the evidence before me is that each of the expenditure^[2] There were other deductions; for example, depreciation and travel claims calculated on a per-km basis. deductions in issue (with a few minor exceptions) is conceded by the respondent to have been incurred as a matter of fact. In any event, no cross-examination implying dishonesty or substantial error was pursued. Proof of the expenses having been incurred was led for the most part by reference to bank-account and credit-card statements that were in evidence before me, and the expenditure was further supported by Mr London's sworn evidence. There were a few receipts provided.

10. The respondent's position was that the retention of a receipt (and not merely a bank or credit-card statement) was a legal precondition to Mr London's lawful claiming of a deduction unless I were satisfied that s 900-195 of the Act applied. Mr London gave evidence before me that he lost many of the receipts in two house moves he undertook (Tr.65). He has reconstructed the deductions from his banking records, and he has given sworn evidence before me. It is true that Mr London adverted in his evidence to me that his record-keeping was not particularly good; nevertheless, I accept his evidence that receipts had been kept and were accidentally lost in one or other of the house moves. That evidence is plausible and the loss of the receipts is understandable. I accept also that Mr London gave his evidence honestly before me, and that I can rely on it. I am satisfied under s 900-195 that the claimed expenses were in fact incurred, and I shall proceed on this basis.

11. I now turn to consider the deductibility of the expenses. In this regard, I note that all deductions appear at pages 380ff of Exhibit R1, and I shall refer to these pages in what follows.

12. Under "D1 work-related car expense" (p 380), a claim is made for travel between Mr London's residence and his place of

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work and between his residence and various gyms that he attends. So far as the claim concerns travel to and from the work place, it emerged in evidence that the claim could not be sustained because Mr London was in fact supplied with a vehicle by the Department of Correctional Services. He used this vehicle to travel between his workplace and home with his dogs. To the extent that the claim is sought to be supported by reference to trips Mr London made in his private car between his home and the gyms, I propose to deal with that matter later in my reasons at [47]ff below. I indicate here, however, that my conclusion is that no deduction may be claimed.

13. Under the heading "D3 work-related clothing expenses" (p 380), the cost of purchase in relation to each of a series of items is claimed as a deduction as well as a single washing expense of $150. This latter expense has been allowed by the respondent and I need not consider it further. I also note that the respondent accepted before me at the hearing that the so-called "prick-resistant gloves" were a special piece of equipment applied in body searches of prisoners^[3] They prevent an officer from being pricked by a sharp object in any pat-down search he or she conducts. , and their purchase was, therefore, an allowable deduction. I agree with that concession. As the purchase of the gloves has been bundled up with the purchase of a polar-fleece jumper, their cost is not separately identifiable. The evidence given by Mr London (which was an estimate only) suggested an upper limit of $60 for the gloves, which I am prepared to allow for the sake of convenience.

14. In relation to the remainder of the items, the respondent submitted that they were normal items of clothing or apparel for which no deduction could be claimed. Furthermore, the respondent submitted they were not items of clothing or apparel prescribed or recommended by the employer as a necessary or reasonably appropriate employee purchase, and the purchase should not be found to be deductible for this reason as well. This argument was extended to items of equipment that Mr London purchased.

15. I do not accept this second submission, at least as a general proposition. The prime question the respondent's officers must ask in connection with a voluntary expenditure by an employee, it seems to me, is whether the employee in question has bona fide purchased the clothing, apparel or equipment in question for use in the course of his or her employment. This question may often, but not always, be answered by an examination of the facts without a consideration of the taxpayer's state of mind^[4] See Commissioner of Taxation v. Day [2008] HCA 53 ; 236 CLR 163 at [39] . . The respondent's officers do not need to ask − at least they do not usually need to ask − whether the purchase in question was by some objective measure a necessary or reasonably appropriate one for the employee to make. Of course, the fact that, objectively, a particular item of clothing, apparel or equipment may be judged to be quite unnecessary may lead one to query the bona fides of the purchase in question for work purposes; i.e., the voluntary purchase in question, whilst ostensibly for use in a work setting, may in fact be better explained as one for a private or domestic purpose^[5] Questions of apportioning a purchase between work and private uses might also arise. . But, leaving this situation aside, I do not believe there is a separate question as such requiring that the necessity or reasonable appropriateness of a purchase be examined when deductibility is being assessed by the respondent's officers.

16. A simple illustration may demonstrate my point. To take what I trust is a non-controversial example, a tradesperson may purchase steel-capped boots that he or she finds more appropriate or convenient for use on work-sites than the steel-capped boots supplied by his or her employer. The employee may, in this circumstance, claim the full cost of the boots as they have been purchased for exclusive use at work. When assessing the claimed deduction, the respondent does not have to decide in law whether the purchase was, objectively, a necessary or reasonably appropriate purchase for the employee to make in light of the comfort and functionality of the boots supplied by the employer. Again, if the employer declined to supply steel-capped boots to its employees because the risk of toe-injury was judged to be minor, an employee, bona fide purchasing such boots as a protective measure against such a risk at work, is entitled to a deduction, notwithstanding any view held by the employer of the lack of any real need for such protective clothing. The respondent's officers would not be required, as a general rule, to assess the reasonableness of the employee's choice in this regard when assessing deductibility although, as I

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have said, an apparent lack of reasonableness may bear on the question of the bona fides of the purchase for work purposes^[6] Cf also Fletcher v. Commissioner of Taxation (1991) 173 CLR 1 at 17 . .

17. I do accept, however, the respondent's first submission, namely, that a broad distinction has emerged in the case-law^[7] See Mansfield v FCT (1995) 31 ATR 367 at 375 . between, on the one hand, items of clothing/apparel that may be said to constitute ordinary or normal items (the cost of which is not deductible) and, on the other hand, items that may be said to be unusual (the cost of which is deductible). So far as the first category is concerned, it does not matter that the item in question may have been purchased solely for use at work. The cost of an ordinary business suit that is purchased for work and stays at the workplace and is only ever worn in the workplace is not, for example, a deductible purchase as a general rule. I accept that the dividing line between the two categories is not clear^[8] Ibid. ; but in my opinion, a useful practical test to apply in this case is to ask whether the item of clothing or apparel in question might be worn on other than work occasions or whether it is so unusual or distinctive that it can be said, practically speaking, to have a use limited to the workplace.

18. Applying this "working rule" to the items in question, I have reached the following conclusions on the basis of the evidence before me. There is a claim for a uniform belt (cost $247.45). I accept that this belt is used only in connection with Mr London's uniform: it is an equipment belt that is placed over another belt (Tr.66). I accept that it is an item that cannot have a practical use in conjunction with non-work clothing. I would allow the uniform belt as a work-related clothing expense. A claim has been made for a waterproof jacket and beanie (cost $302.97). The jacket was described in evidence as a so-called "tactical" jacket (Tr.68 and 70) that was not suitable to be worn on other than work occasions and was not in fact so worn. I accept that the waterproof jacket is sufficiently distinctive as a work garment that its purchase cost should be allowed as a deduction. I heard no evidence about the beanie, apart from its cost ($15.99). I accept that the burden is on the taxpayer to establish his or her case^[9] See s 14ZZK of the Taxation Administration Act 1953. , but it seemed to me that the two items were treated as one bundle, "rising or falling" together, so to speak. The amount in question is inconsequential, and, as I have found the cost of the jacket deductible, I shall also allow the cost of the beanie.

19. There is a claim for waterproof boots (cost $279.95). According to Mr London, these were purchased to allow him to run through wet grass with his dog (Tr.73). (The boots are made of Gore-Tex, and are black and of a military style. They are not worn outside work on the evidence before me and I would allow them as a deduction. There is a claimed purchase for dry weather gear ($105.81). This gear comprises a lightweight jacket purchased in Queensland where Mr London was undertaking a dog-training course. I do not regard this expense as deductible since I am not satisfied that the jacket is not a normal piece of clothing that might be used on other occasions. Similarly, I do not regard the polar fleece jumper (purchased in conjunction with the prick resistant gloves) as a deductible item. This is a normal jumper (cf Tr.76) and is, therefore, not deductible.

20. There is a claim for $170 in respect of sunglasses. This is a problematic area because sunglasses are a very common form of apparel worn by very large numbers of people as a fashion accessory or to increase visual comfort in outdoor settings. Generally speaking, they are a normal item of apparel in my opinion, even if they are "polarised". There is federal Court authority for the proposition that the cost of sunglasses may be deductible when they constitute, in effect, a protective form of clothing^[10] See Morris v. FCT [2002] ATC 4404 . purchased by an employee to shield himself or herself against the harmful effects of sunlight. The same authority indicates, however, that there is no automatic deductibility for the cost of sunglasses used at work^[11] Morris at [116]. . In this case, Mr London gave evidence that the pair of sunglasses he owned was broken, and he purchased a polarised pair at the airport (Tr.97-98). There was no detailed^[12] Beyond Mr London saying that he worked “so much in the sun”. evidence given, however, to the effect that Mr London believed the extent or nature of his duties outdoors required him "to take protective steps to avoid harm [from the sun's rays] in the course of carrying out [his] income-producing activities"^[13] Cf Morris at [93] where the Court distinguishes the Commissioner’s example of an employee’s purchase of warm clothes to provide greater comfort in a cold workplace, where the purchase would not be deductible. . In my opinion, in this case, Mr London has failed to persuade me that his sunglasses should not be treated as an item of normal apparel. I do acknowledge, however,

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that, given our increasing understanding of the adverse health effects of Australia's harsh climate in this regard, there may be a strong case now for the deductibility of the cost of polarised sunglasses purchased by an employee who is required to spend non-trivial amounts of time outdoors.

21. Under "D5 other work-related expenses" (pp 380-383) a number of items appear. There is a series of claims in relation to gymnasium fees and fitness equipment and supplements taken by Mr London. I shall return to these in due course. It is convenient to consider first the miscellany of items that appears on p 382.

22. There is a claim for a stopwatch of $44.60. This was purchased for use in connection with dog-training (i.e., as a timing device). This is a piece of equipment for which Mr London said he had no private use (Tr.57). I accept that evidence. In my opinion, it falls to be considered as an employee purchase of equipment used solely for work purposes and is deductible.

23. There are a further three items that relate directly to Mr London's dogs (namely, a dog bed for $466.89, a "dog mister" watering system for $200, and dog treats for $15.90^[14] I have read the entry of “$15.9” as “$15.90” and not “$15.09”. ). The expense is in each case deductible in my opinion. The bed was purchased by Mr London after the employer-supplied beds were damaged by his German shepherd on successive occasions whilst it was confined to its enclosure at Mr London's premises. Mr London purchased his own dog bed when his employer refused to swap to a more suitable scratch-resistant bed. Mr London maintained in evidence, which I accept, that it was a defensible choice for him to make rather than persisting with the unsuitable brand favoured by his employer. In any event, this is an example of an employee choosing bona fide to purchase a preferable piece of equipment to use in direct fulfilment of one of his duties (in this case, the maintenance of the dogs) and it is deductible for this reason. The bed has no other private use. The "dog mister" watering system is a mist-producing apparatus that Mr London uses to keeping the dogs cool on hot summer days. Apparently, Mr London's employer refused to fund it. It is a deductible item for the same reason. The dog treats are "reward" snacks that Mr London gives to the dogs on occasion to keep them motivated and to ensure they understand when their response has been satisfactory. I accept that they do fall outside the diet specified by the employer; but that is not in my opinion conclusive. The relevant question here is whether the purchase was made bona fide in connection with the training and maintenance of the dog, as these were part of Mr London's explicit responsibilities. I have concluded that the purchase was a bona fide one and that it related directly to Mr London's duties as a dog handler.

24. There is a claim for a dog-training video (cost $303.23). This video was purchased by Mr London (on recommendation) when he was in Queensland on a dog-handling course that he was required to undertake as part of his duties. It enhanced his learning and skill development in connection with the particularly aggressive dog with which he was paired at the time (Tr.90). The learnings from the video were intended to be applied by Mr London in execution of his duties as a dog handler. The video directly related, therefore, to Mr London's duties at the time and not to those of any other position. In my opinion, the cost of the dog training video is deductible.

25. There is a claim for a USB Wi-Fi for interstate training of $150. This consisted of what is commonly referred to as a "dongle". Mr London said he used the dongle while he was in Queensland to stream/download the dog-training video to his computer. I accept that this expenditure was incurred by Mr London for this reason, and it is an allowable deduction for the same reason the cost of the dog-training video is deductible.

26. There is a claim of $40 for a work-vehicle car-wash. My understanding is that the vehicle in question was used only for professional purposes and was not available for use by Mr London for private purposes. Paying for work equipment (including a car) to be cleaned so that it is in a fit and proper state to be used is a deductible expense in my opinion.

27. Union/professional association fees of $605 have been claimed and these were accepted at objection stage. A tax-agent fee of $350 (p 383) is claimed and this, too, was allowed at objection stage.

28.

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A donation to the Leukaemia Foundation for $53 is claimed (p 383) and this is allowable in my opinion. I accept the sufficiency of the evidence before me. A further claim for a donation to "Act for Peace" of $67.84 is claimed, but is not substantiated by an entry in a bank statement or other document and I will not allow it in the absence of any evidence to support it. I believe Mr London when he says he made the donation at some point, but the absence of any record at all had led me to disallow it in this tax year.

29. There is a claim for a home office expense of $1,040 (p 383). Normally, a claimable home office expense arises where an identifiable part of the premises is occupied and used exclusively in respect of income-producing activities. I do not believe that the office or study in Mr London's home is on the evidence before me so used. Mr London said in his evidence before me that he had a home office which he used for study purposes in respect of a so-called "Certificate IV in Correctional Practice" (Tr.93). He is undertaking this course to assist him to progress his career, but I am not satisfied that the course was relevant to his income-earning activities during the tax year (Tr.93-94).

30. On the evidence before me, the home-office expense is not deductible for this reason^[15] Cf Ting v. FCT [2015] AATA 166 ; [2015] ATC ¶10-386 . . A stationery expense (cost $496.80) is claimed in connection with the set-up of the home office, but it is not deductible for the reason I have already given.

31. I note the following entry occurs immediately under the claimed home offices expense:

"The client takes two dogs home after work on a daily basis. He needs to spend [a] considerable amount of time training and looking after them at home."

Notwithstanding this somewhat cryptic explanation, the basis of the claim as made at the hearing was as I have explained it, and I do not think the claim gives rise to a deduction.

32. There are a number of claims in respect of telephone, computer and internet expenses. These are gathered together alongside the 11th to 14th bullet points on page 382. I do not think any of these claimed deductions should be allowed. The home internet was used for Certificate IV study purposes, but this is not an allowable deduction for the reason given.

33. So far as the phone is concerned, Mr London gave evidence that he was issued with an analogue mobile phone by his work during the tax year in question. This was the phone on which he would receive any after-hours emergency paging messages requesting him to make contact with his employer (Tr.94). That system is apparently no longer in use, but it was in use during the tax year I must consider. I accept Mr London's evidence that during the tax-year in question, he used his personal phone to check work emails and that work-managers would ring him on his private phone rather than on his analogue mobile.

34. It was not, however, a condition of Mr London's employment that he maintain a mobile phone at his own expense for work purposes. I do not have direct and clear evidence about how often Mr London was contacted by his employer on his personal phone in the year in question^[16] A List of work calls from a later tax year was referred to in evidence. to justify a deduction in this regard nor was the number of times Mr London might check emails after hours from his phone the subject of detailed evidence. The claimed deduction suggests a "fifty-fifty" split between work and private uses, which is not on the face of matters justified, and which I infer is really in the nature of a "broad-axe" estimate.

35. In my opinion, the fact that an employer might occasionally ring an employee on his or her personal phone (whether a landline or a mobile) does not make the expense associated with operating the phone in question deductible when, as is the case here, the employer does not require the employee to maintain a phone at the employee's expense for work purposes. Similarly, the fact that an employee might occasionally check his or her emails via a personal mobile phone does not provide a justification for a deduction. Where it is asserted that a personal phone is used more than occasionally for work purposes, a taxpayer should provide detail in respect of how often the phone in question was used before a deduction of 50% is claimed. For the same reason I reject the claimed depreciation expense for the new mobile phone of $95.34. I bear in mind again that the burden is on the

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taxpayer in proceedings to justify his or her claim before the Tribunal^[17] See s 14ZZK of the Taxation Administration Act 1953. .

36. So far as the depreciation expense associated with the computer is concerned, I do not believe the computer was used for income-earning activities as it was used in connection with the non-deductible Certificate IV course.

37. Deductions have been claimed in respect of a number of gym memberships: F45 ($800); Anytime Fitness ($754.51); Jetts Fitness ($147.60); and Lakes Fitness ($305). Mr London attended these gyms and did so on a highly regular basis. Mr London said, and I accept, that he maintained a number of gym memberships to assist him to sustain interest, or "mix it up" as he said, and because the gyms had different equipment. The answers given in examination in chief (Tr.80) support, in my opinion, a finding that Mr London has always used gyms since 17. He was first in the army and then became an Adelaide Remand Centre Officer (where he was part of an Emergency Response Group). There was no cross-examination, however, suggesting that Mr London liked gyms particularly or used them for personal health or private purposes as opposed to bona fide resorting to them to maintain a level of fitness that he thought would enable him to perform his duties well. On the evidence before me, I find that the gym memberships in the tax year in question have all been taken out with a view to Mr London maintaining a high level of fitness for his work.

38. I accept the respondent's submission that the level of gym attendance cannot be explained solely by reference to the need for Mr London to pass an annual fitness test, a so-called "beep" test. This test requires Mr London to perform a number of exercises within a given time period (the end of which is sounded by a "beep"). Passing this minimum test was an essential part of Mr London's work duties.

39. In my opinion, however, there is a plausible and demonstrable link between Mr London's gym regimes and his desire to maintain himself in peak physical condition as a member of the Emergency Response Group. Mr London's employer did not specify as such any particular level of fitness, but a superior level of fitness was implicitly demanded by his role. I bear in mind that Mr London could be faced with situations (in a prison disturbance or when tracking an escapee for example) where it would be a distinct advantage to him to have high levels of agility, speed, and strength. I do not think there was anything unreasonable in his approach, and as I say, there was no cross-examination suggesting to Mr London that there was some other purpose for his attendance at the gyms.

40. The question then becomes whether the gym membership fees are deductible. I believe I ought to apply in my review any Taxation Ruling that favours Mr London in this regard. Taxation Ruling 95/113^[18] “Taxation Ruling: Income Tax: employee police officers – allowance, reimbursements and work-related deductions”. at [109] to [110] permits a deduction for a police officer's fitness expenses if the officer's income-earning activities "involve strenuous physical activities on a regular basis". The Ruling goes on to state that "members of special emergency squads, diving squads, and police officers who work regularly with police dogs and train them, may be able to demonstrate that their income-producing activities demand a high level of physical fitness."

41. I see no reason why the same logic should not be applied to those correctional-services officers who are members of Emergency Response Groups and train and control dogs. In participating in emergency situations involving prisoners, correctional services officers perform what is in effect a policing role. That the Ruling covers only police officers who work with and train dogs does not seem to me to be a reason for not applying it to correctional-services officers who train and work with dogs.

42. I accept that the Ruling refers (in para [109]) to "strenuous physical activities" on a "regular basis". This was in fact the reason given for rejecting Mr London's claims: see Ex R1 at p 10 at [32]. I do not believe this paragraph in the Ruling was intended to exclude a deduction for police officers who may very rarely be called upon to exert themselves strenuously in an emergency, but who are nevertheless required to train dogs for such an emergency and be ready themselves to respond to any emergency that may eventuate. Mr London falls into this category. Given his membership of the Emergency Response Group, he may be called upon at any time to assist in an emergency. Whilst he may be called upon very rarely as a matter of fact, he must be

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continually ready to respond, and, of course, he must regularly train his German shepherd dog so that it too is ready to respond.

43. Of course, any police or correctional-services officer may have to respond with physical force and speed in a given situation. I accept that the Ruling does not seem to cover their situation (unless emergency situations regularly arise). But a police or correctional-services officer who is a member of an Emergency Response Group is in a position that differs somewhat from a regular police or correctional-services officer. He or she belongs to a group that are required to be ready to respond in an emergency and must therefore train and maintain a high level of fitness and preparedness to meet unanticipated situations as and when they arise. The deductibility of the fitness expense made possible under the Ruling cannot logically depend, in my opinion, on how frequently in actual fact such an employee is called upon to respond. If it is part of an employee's duties to serve as a responder whenever emergencies arise, any fitness expenses he or she incurs bona fide to maintain fitness on an ongoing basis must be, in principle, either deductible or not.

44. All in all, I believe Mr London is entitled to the gym membership fees as a deduction in accordance with the Ruling. I do not believe that the evidence before me establishes a basis for apportionment between a work and private use. The evidence did not suggest to Mr London that at least part of his regular attendance at gyms reflected a personal desire to be extremely fit (apart from any work-related purpose). I do not believe I should make any apportionment.

45. At pp 381-382 of Ex R1, there is a table comprising a number of deductions under the heading "fitness equipment and supplement (sic) $1,255.13". The first item in the table (for $77.90) represents the purchase of gym clothing. It has not been established to my satisfaction that this clothing is in any way particularly distinctive or unusual. Accordingly, I do not allow its purchase as a deduction. All the remaining items represent supplements (vitamins, protein shakes and the like). I accept that these items consist of or include concentrated forms of protein, vitamins, and minerals that Mr London said he consumes in connection with his gym regimes (to aid, for example, recovery (Tr.79)). I have already decided that the gym membership fees are deductible; but I do not believe the cost of the supplements that Mr London elects to consume as part of what is in effect a special diet he has set for himself is deductible (even though he consumes them as a result of his participation in gym sessions).

46. This is not an area of the law where a logical rule can be stated with precision. I accept that the supplements are consumed only because of the exercise activity. Whilst it might be said that maintaining a high level of fitness is part and parcel of Mr London's job requirements, I note that Mr London is not required to attend a gym. I think that any special supplements, Mr London elects to include in his diet are of a private nature and not deductible. I think the case of
Commissioner of Taxation v. Cooper (1991) 29 FCR 177 is analogous, where the Federal Court held that the additional food a professional footballer was instructed to consume was not deductible. This was a case involving, in effect, a special diet, with the added feature that the employer had in fact directed that the additional food be consumed.

47. This leaves the question of travel expenses between the gym and Mr London's place of residence. I accept the respondent's submission that this claim is not deductible. As I have said, Mr London is not required by his employer to attend any of the gyms he chooses to attend. Mr London has elected to maintain a high level of fitness by joining various gyms. As I have also indicated, the various membership fees are, in my opinion, deductible under the applicable Ruling. It does not follow from this finding, however, that the cost of transport to and from the gyms from home is also deductible. The travel undertaken by Mr London in this regard is not undertaken for the purposes of earning income or in fulfilment of any of Mr London's prescribed duties.

48. I should add that I do not accept that this is a situation of travel between workplaces, which is the argument I understood Mr Birdseye to have advanced^[19] In any event, s 25-100(3) makes it clear that “travel between workplaces” cannot include travel to or from a place at which the taxpayer resides. . The evidence given by Mr London is that the dogs were always in their enclosure at home when he would drive his private car to the gym from

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home. I note again that his attendance at the gym was not required of him by his employer.

49. My decision that the travel costs are not deductible under s 8-1 of the Act is consistent with the well-established legal position that, as a general rule, the cost of travel between home and a workplace is not a deductible expense^[20] See Commissioner of Taxation v. Payne [2001] HCA 3 ; 202 CLR 93 . . It would be strange if travel from home to a gym an employee chooses to attend (but is not required to attend) were deductible when travel from home to the workplace (which the employee is required to attend) is generally not deductible.

SUMMARY

50. I return now to pp 380-384 of Ex R1 and recapitulate the deductibility or non-deductibility of claimed expenses as follows:-

D1 - work-related car expense, $3,300, not deductible.

D3 - Uniform belt, $247.45, deductible; washing expense, $150, deductible; waterproof jacket, $302.97, deductible; waterproof boots, $279.95, deductible; dry weather gear, $105.81, not deductible; prick resistant gloves, (estimate) $60, deductible; polar fleece jumper, $112.96^[21] After a deduction of $60 for the prick-resistant gloves is made from the total of $172.96. , not deductible; sunglasses, $170, not deductible.

D5 - F45 fitness expense, $800, deductible; Anytime fitness, $754.51, deductible; Jets Fitness, $147.60, deductible; Lakes Fitness, $305, deductible; Fitness equipment and Supplements totalling $1,255.13 not deductible; stop watch, $44.60, deductible; dog bed, $166.89, deductible; dog mister watering system, $200, deductible; dog treats, $15.90, deductible; dog training video, $303.23, deductible; USB wi-fi for interstate training, $150, deductible; stationery, $496.80, not deductible; work car wash, $40, deductible; union/professional association fees, $605, deductible; home office expense, $1,040, not deductible; internet, $420, not deductible; Telephone, $1,130.06, not deductible; Mobile phone depreciation, $95.34, not deductible; computer depreciation, $300, not deductible; Leukaemia Foundation of Australia donation, $53, deductible; Act for Peace donation, $67.84, not deductible; tax agent fee, $350, deductible.

PENALTY

51. I was not addressed separately on penalty; but I do not think the evidence establishes a case for remission of any penalty in respect of a tax shortfall due to the disallowing of deductions where I have concurred with the respondent's view of the matter (with the exception of the sunglasses). I note that the return was prepared by Mr London's tax agent. I think the legal position in relation to the items where I have agreed with the Commissioner's position is not controversial (expect in the case of the sunglasses). I would recommend that penalty not be imposed in respect of the tax shortfall attributable to disallowance of the cost of the sunglasses, but it is likely to be very small amount.

FORMAL DECISION

52. My formal decision will be to set aside the decision under review and remit the matter to the respondent for reconsideration of tax owing and penalty in accordance with these reasons.