Federal Court of Australia

Commissioner of Taxation v Shaw [2026] FCA 197

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    Mr Daniel Shaw is a long-haul truck driver. In his tax return for the 2020-2021 income year, he claimed a deduction for meal expenses. Following an audit, the claimed deduction was reduced by the Commissioner to zero. Mr Shaw objected and a small part of the amount claimed was allowed. Mr Shaw then sought review in the Administrative Review Tribunal. The Tribunal set aside the decision on the objection and instead allowed the objection upholding the full amount of the claimed deduction. The Minister then exercised the statutory right to appeal the Tribunal's decision 'on a question of law': s 172 of the Administrative Review Tribunal Act 2024 (Cth).

2    It was common ground that Mr Shaw had been paid travel allowances by his employer in respect of the amounts claimed for meal expenses. Also, it was not in dispute that Mr Shaw had the burden of demonstrating that the relevant amended assessments that had issued based upon the Commissioner's approach on the objection were excessive: as to which, see s 14ZZK of the Taxation Administration Act 1953 (Cth).

3    The grounds relied upon by the Commissioner rest upon contentions as to (a) the operation of the substantiation provisions in Division 900 of the Income Tax Assessment Act 1997 (Cth) (ITAA97); and (b) the reasoning pathway adopted by the Tribunal. Therefore, before dealing with the grounds I will first address the terms of Division 900 and then explain the reasoning pathway of the Tribunal. I will then explain and address the specific issues raised by the Commissioner's grounds of appeal.

Substantiation of certain deductions

4    Any loss or outgoing incurred in gaining or producing assessable income can be deducted: s 8-1(1) of the ITAA97. Substantiation requirements apply to the deduction of certain types of losses or outgoings: s 900-10. One such type is 'work expenses': s 900-10.

The significance of the distinction between substantiation and qualification for deduction

5    As to substantiation, it is important to note the terms of s 900-15(1) which states:

To deduct a *work expense:

(a)    it must qualify as a deduction under some provision of this 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.

6    Accordingly, when it comes to the deduction of work expenses, there is a difference between qualification and substantiation. Both requirements must be met. To qualify for deduction, the work expense must come within a provision of the Act 'outside' Division 900. In addition, it must be substantiated by written evidence as provided for in Subdivision 900-E. As will emerge, the distinction has significance for present purposes. A number of provisions in Division 900 are expressed in terms of what may be deducted by a taxpayer. However, as will be explained, those provisions are dealing with the substantiation that is required in order to be able to deduct an amount. Division 900 does not state the qualification for a deduction. That must be found outside Division 900.

7    There is a provision that is similar to s 900-15(1) that applies for business travel expenses, being travel expenses incurred in producing assessable income other than salary or wages. As to those expenses, s 900-80(1) provides:

To deduct a *business travel expense:

(a)    it must qualify as a deduction under some provision of this 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.

8    Relevant aspects of Subdivision 900-E are considered below. At this point it is sufficient to note the terms of s 900-105 (being the first provision in the Subdivision dealing with the written evidence that the taxpayer must get to support a claim for a deduction). It provides:

Each of the following sections has a set of rules for a particular way of getting written evidence to substantiate a deduction. Which ones you can use depends on the type of expense. You only need to use one set of rules to support an expense.

9    Of significance for present purposes is the reference to 'substantiate a deduction'. Again, that language indicates that the rules are concerned with substantiating something which is deductible under some other provision.

10    One of the matters in issue in the present appeal concerns whether the Tribunal proceeded on a misunderstanding as to the operation of the substantiation provisions that apply to claims by employees for deductions for work expenses where a travel allowance had been paid by the employer in respect of the expense. As to those provisions, it is first necessary to consider the relevant terminology used in Division 900.

11    The term 'work expense', is defined in s 900-30(1) which provides:

A work expense is a loss or outgoing you incur in producing your salary or wages.

12    Significantly, the language used in the definition of work expense reflects the terms of s 8-1(1). Consequently, a work expense is an expense that meets the requirements for deduction under s 8-1(1) in respect of the earning of assessable income in the form of salary or wages. It is a sub-category of that which may be deducted under s 8-1(1). Therefore, consistently with the terms of s 900-15 (quoted above), it is an expense of a kind that would qualify as a deduction under a provision outside Division 900. Put another way, in order to be a 'work expense' for the purposes of Division 900, the expense must meet the requirements for deduction under s 8-1(1). Therefore, the terms of the definition of 'work expense' when considered in the context of s 8-1(1) are consistent with Division 900 applying to something that is deductible under a provision of ITAA97 that is 'outside' Division 900.

13    The provisions of Subdivision 900-E do not provide for written evidence of all matters that would prove that a particular expense was deductible under s 8-1(1). In particular, those provisions do not require any evidence as to whether the expense was 'incurred in gaining or producing assessable income'. For example, one rule that can be used only requires written evidence from a supplier of the fact that an expense was incurred in a particular amount on a particular date for the supply to the taxpayer of particular goods or services: see s 900-115. Compliance with that rule would not provide evidence that the expense was incurred in gaining or producing assessable income.

14    There are also provisions in Division 900 that provide exceptions to the requirement that written evidence be provided for work expenses. The absence of any substantiation is unlikely to have been intended to be a sufficient basis upon which to claim a deduction. Such an outcome would produce the non-sensical result that in the absence of any form of substantiation, an amount would be deductible based upon the assertion that it is deductible. In those instances where the substantiation provisions do not apply, logic would suggest that the taxpayer would still be required to demonstrate that the amount claimed qualifies for deduction. Coming within the exception simply means that there is no additional substantiation requirement.

15    These three contextual matters, namely (a) the express emphasis upon the need to demonstrate both qualification and substantiation; (b) the absence of provisions requiring substantiation that the expense was incurred in gaining or producing assessable income; and (c) the inclusion of exceptions from the substantiation requirements; when taken together, support the conclusion, as a matter of construction, that substantiation under Division 900 is not sufficient to demonstrate deductibility.

16    For further support of this analysis, I note that there are other provisions in Division 900 that differentiate between substantiation and deductibility in a way that indicates that compliance with the substantiation requirements is not sufficient to establish deductibility: see, for example, s 900-195 and s 900-215(1)(c) (each of which relieves the taxpayer from aspects of the substantiation requirements and also expressly requires separate demonstration that the taxpayer is entitled to deduct the amount claimed).

17    For those reasons, in order to demonstrate that an amount spent by an employee on food or drink while travelling for work purposes is deductible it is necessary for the employee to establish that the expense was incurred in producing the employee's salary or wages and so qualifies as a deduction under s 8-1(1). If that is demonstrated, then by operation of s 900-15(1)(b) it is also necessary to substantiate the expense by getting written evidence that meets the terms of Division 900.

18    Compliance with the substantiation requirements of Division 900 as they apply to the alleged work expense will not be sufficient to demonstrate deductibility. What Division 900 imposes is an additional requirement that must be met to deduct the work expense, namely written evidence as provided in Subdivision 900-E.

Travel allowances count as work expenses

19    As to travel allowances paid by employers to employees, s 900-30(2) provides:

Travel allowance expenses count as *work expenses. A travel allowance expense is a loss or outgoing you incur for travel that is covered by a *travel allowance. The loss or outgoing must:

(a)    be for accommodation or for food or drink; or

(b)    be incidental to the travel.

20    As to a 'travel allowance', it is defined in s 900-30(3) as:

an allowance your employer pays or is to pay to you to cover losses or outgoings:

(a)    that you incur for travel away from your ordinary residence that you undertake in the course of your duties as an employee; and

(b)    that are losses or outgoings for accommodation or for food or drink, or are incidental to the travel.

The travel may be within or outside Australia

21    Taking these nested provisions together, they provide that the incurring of a loss or outgoing that is covered by a travel allowance of the kind described that is paid by an employer to an employee counts as a work expense.

22    There appear to be two possibilities as to what is meant by providing that travel allowance expenses 'count as' work expenses. The first possibility is that the terminology 'count as' is to ensure that the substantiation requirements of Division 900 in respect of work expenses also apply where a deduction is claimed for expending a travel allowance. The second possibility is that the terminology 'count as' provides, in effect, that a travel allowance expense is to be adjudged as being a work expense with the consequence that it would be taken to be 'a loss or outgoing you incur in producing your salary or wages'.

23    Given the context that I have already described, I conclude that it is clearly the first possibility that is intended. In consequence, the substantiation provisions apply where the employee has been paid a travel allowance in respect of a travel expense which has been shown to have been incurred in producing the employee's salary or wages. Even if the relevant amount is substantiated by an employee as required by Division 900, the substantiation does not prove that the amount was a loss or outgoing that was incurred in producing the employee's salary or wages. That would be to reverse the operation of Division 900. It is not concerned with describing what may be deducted. It is concerned with stating the form of substantiation that must be provided in order for certain expenses that are otherwise demonstrated to be deductible to be claimed as deductions.

24    Accordingly, the fact that an employee receives an allowance to cover an incurred travel expense of the kind described does not mean that it falls outside the validation requirements for work expenses.

An exception for domestic travel allowance expenses

25    Of particular relevance in the present case is the exception expressed in s 900-50. It provides:

Exception for domestic travel allowance expenses

(1)    You can deduct a *travel allowance expense for travel within Australia without getting written evidence or keeping travel records if the Commissioner considers reasonable the total of the losses or outgoings you claim for travel covered by the allowance.

(2)    In deciding whether the total of the losses or outgoings you claim is reasonable, the Commissioner must take into account the total of the losses or outgoings of the following kinds that it would be reasonable for you to incur for the travel:

(a)    accommodation;

(b)    food or drink;

(c)    losses or outgoings incidental to the travel.

(emphasis added)

26    For reasons that have already been given, the opening words 'You can deduct' do not have the effect that an amount that the Commissioner considers reasonable can be claimed as a deduction. Considered in context, those words mean that an amount that has been incurred that is deductible under some provision of ITAA97 that is outside Division 900 may be deducted.

TD 2020/5

27    Relevantly for present purposes, the Commissioner published a Taxation Determination (being TD 2020/5) that was headed 'Income tax: what are the reasonable travel and overtime allowance expense amounts for the 2020-21 income year?'.

28    The Determination began by stating:

This Determination sets out the amounts that the Commissioner considers are reasonable (reasonable amounts) for the substantiation exception in Subdivision 900-B of … ITAA 1997 for the 2020-21 income year in relation to claims made by employees for:

•    …

•    domestic travel expenses - for accommodation, food and drink, and incidentals when travelling away from home overnight for work (particular reasonable amounts are given for employee truck drivers, office holders covered by the Remuneration Tribunal and Federal Members of Parliament) and

•    …

29    The Determination then stated that the reasonable amounts 'only provide the maximum amount you can claim without being required to substantiate your expenditure'. It listed matters that 'you will still be required to show'. They were as follows:

•    you spent the money in performing your work duties (for example, in travelling away from home overnight on a work trip)

•    how you worked out your claim (for example, you kept a diary)

•    you spent the money yourself (for example, using your credit card statement or other banking records) and were not reimbursed (for example, a letter from your employer), and

•    you correctly declared your allowance as income in your tax return.

30    The requirements to show the above matters were consistent with the need to demonstrate that the amount claimed was deductible under s 8-1(1).

31    The Determination went on to specify the relevant reasonable amounts (being the maximum that could be claimed without substantiation). Consistently with the structure of Division 900 (as I have described), the Determination made clear that the publication of the reasonable amounts in the Determination did not relieve the taxpayer of the obligation to demonstrate that the amount claimed qualified as a deduction. It remained necessary for the taxpayer to prove that the amounts claimed as a deduction had been incurred and were for the purpose of earning gaining or producing assessable income, that is that the amounts were for work expenses. If those amounts were established in respect of an amount claimed then provided the amount was at or below the maximum it was 'reasonable' for the purposes of the exception in s 900-50.

Relief from substantiation

32    Division 900 includes provisions that allow for a taxpayer to be relieved from the substantiation obligation imposed by Division 900.

33    Of present relevance are two provisions. First, is s 900-195 which is as follows:

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.

34    In effect, s 900-195 allows a deduction to be claimed if the taxpayer has evidence that satisfies the Commissioner that the amount claimed is deductible even if the substantiation required by Division 900 is not available.

35    The second provision is s 900-200 which is as follows:

Not doing something necessary to follow the rules in this Division does not affect your right to deduct an amount if the only reason was that you had a reasonable expectation that you would not need to do it in order to be able to deduct that amount.

36    Consistently with the explanation I have given about Division 900, even with the application of s 900-200 there would still be a need for the taxpayer to demonstrate the basis for the deduction. If the requirements of s 900-200 are met they do not provide a basis for a right to deduct the amount. They only relieve from the requirement to substantiate in the manner provided for in Division 900.

Effect of compliance with substantiation upon qualification for deduction

37    I have described substantiation as a requirement to be met that is additional to demonstrating qualification for deduction. However, as has been explained, certain substantiation requirements, if met, will provide evidence about the incurring of an expense. If the substantiation required by Division 900 has been provided, then the substantiation might be expected to be a sufficient basis to conclude that the expense has been incurred for the purposes of demonstrating that the expense qualifies for a deduction under a provision that is outside Division 900. Other types of substantiation may establish other matters necessary to claim the deduction. For example, in the case of certain types of travel expenses, it appears that if records of the required kind are kept then they will establish that a travel activity was undertaken in the course of producing assessable income: see Subdivision 900-F.

38    Therefore, compliance with the substantiation requirements may have significance when it comes to considering whether there is evidence to establish particular aspects of what is required in order to show that an expense qualifies as a deduction. This aspect of the substantiation provisions in Division 900 does not arise in the present case because Mr Shaw's case proceeded on the basis that the substantiation requirements had not been met.

39    However, the interaction between the substantiation and deductibility aspects did assume significance before the Tribunal. Mr Shaw gave evidence to the effect that he thought he did not need to maintain records if he did not claim more than the maximum daily meal amount specified in the Determination because that is what he had been told by his tax agent. As has been explained, that position was not correct. It was still necessary for Mr Shaw to be able to demonstrate that he incurred the meal amounts claimed even if he was exempt for complying with Division 900.

40    It must be said that the exception provided for by s 900-50 - and operating through the publication of the Determination in setting a maximum reasonable amount for meal expenses - gives rise to possible confusion. On the one hand, amounts at or below the maximum reasonable amount published by the Commissioner may be claimed without substantiation of the kind that would otherwise be required by Division 900 (namely the keeping of receipts with required details of all the actual expenses). On the other hand, amounts under the maximum reasonable amount must still be 'substantiated' in the sense that the taxpayer will still need to show that the money was spent by the taxpayer and was spent on meal costs incurred while on a work trip. Essentially, for claims under the maximum, there is no need to meet the specific substantiation requirements in Division 900, but there remains a need to substantiate deductibility.

41    Further, the existence of the substantiation rules and the exception provisions in Division 900 may have significance for what is required to demonstrate deductibility. It would appear to be illogical if there was an operative exception or relief from compliance with the substantiation rules in Division 900 but nevertheless there was required to be the same or a similar level of 'substantiation' by documentary records to demonstrate deductibility. In that sense, exemption from compliance with Division 900 may be contextually important when it comes to considering the nature of the proof that may be required to 'substantiate' deductibility in cases where there is an operative exception or relief from compliance with Division 900. In such cases, a taxpayer would not be expected to keep detailed records of the kind that would otherwise be required to meet the substantiation requirements. An obligation of that kind would defeat the operation of the exceptions and relief provisions in Division 900.

The main provisions of relevance in the present case

42    As will become evident from the consideration of the Tribunal's reasoning pathway (see below), the main provisions that were of relevance in the present case were as follows:

(1)    section 8-1(1), being the qualifying provision for the deduction; and

(2)    section 900-50, which provided an exception from substantiation if the Commissioner consider reasonable the total claim for travel covered by an allowance.

43    The Tribunal also considered whether s 900-200 would apply on the basis that Mr Shaw had a 'reasonable expectation' that he did not need to follow the rules in Division 900 to claim the deduction. The reasonable expectation was said to be due to the advice that Mr Shaw received from his tax agent. It was perhaps unclear whether that alternative conclusion by the Tribunal based on s 900-200 was said to mean that Mr Shaw did not have to provide any substantiation at all to be able to deduct the meal expenses. This is a matter addressed below when dealing with the Commissioner appeal grounds.

The Tribunal's reasoning pathway

44    After dealing with the background to Mr Shaw's claimed deduction in a manner that is not controversial for present purposes (paras 1-19), the Tribunal then considered Mr Shaw's evidence before the Tribunal. It introduced that part of the reasons by recording a finding that Mr Shaw was 'a credible and honest witness'. The Tribunal put the reason for that finding in the following terms (para 20): 'Put simply, I believed him, and this was because his evidence made practical sense'.

Findings based upon the credibility of Mr Shaw's account

45    The Tribunal then summarised Mr Shaw's evidence (para 21). Having regard to the finding of credibility, the summary must be taken to record respects in which the evidence of Mr Shaw was accepted by the Tribunal (noting that at times it also engages with aspects of the Commissioner's submissions). The summary included the following:

(1)    Mr Shaw is generally away from home for six days every week and he sleeps in his truck;

(2)    Mr Shaw does spend some amounts on food at roadhouses and supermarkets during his trips;

(3)    Mr Shaw uses cash to pay for that food;

(4)    to ensure that he does not have to rely on food outlets given the remote areas he drives through, Mr Shaw and his wife, Ms Fisher, ensure that he has sufficient food in his truck to meet his needs;

(5)    the habit is for a 'big shop' to be done on a Monday or sometimes on a Sunday to ensure his truck is fully stocked each week before he goes on the road on a Monday;

(6)    generally, Mr Shaw buys the food or he transfers funds to Ms Fisher and she buys the food;

(7)    sometimes, Ms Fisher acquires additional food as part of the big shop or during the week when Mr Shaw is away. This is stored in the freezer at home so Mr Shaw can load it in his truck for the next week;

(8)    'Mr Shaw candidly acknowledged … that he does not ask, and it is possible that Ms Fisher uses some of the funds he transfers to her for herself or the household'. This acknowledgement was to his credit. Mr Shaw described this as potentially $50 here and there but he was not certain. He also said Ms Fisher knows that the funds he transfers to her are for the big shop and for his meals while on the road as he told her as much';

(9)    'Mr Shaw cannot recall specific shops from five years ago. He also thought he would not have to substantiate specifically what was purchased, as a result of [the Determination]'; and

(10)    'Mr Shaw said he spends more than $105.75 (the maximum reasonable daily amount) on food during his trips away, but only claims that capped amount. His tax agent told him that he did not need to substantiate his expenses if he claimed the lower figure in [the Determination], which was lower than his actual expenditure'.

46    In the course of recording the summary, certain matters raised by the Commissioner in questioning Mr Shaw were considered by the Tribunal and rejected as a basis for not accepting Mr Shaw's account.

47    The findings about Mr Shaw being on the road and sleeping in his truck involve an acceptance that Mr Shaw needed to buy meals when travelling for work for six days every week. That is to say, he did travel and he did buy meals.

48    The Tribunal's summary of Mr Shaw's evidence that was believed by the Tribunal included his evidence as to the steps he took to buy meals and groceries on the road. It included acceptance of Mr Shaw's evidence that generally he bought food for his long-haul trips at the big shop or that he transferred funds to Ms Fisher and she bought the food. Finally, the evidence of Mr Shaw that was accepted included his evidence that he spent more than $105.75 on food each day during his trips away (being the amount that he claimed by way of deduction). It also included his evidence that his tax agent told him that he did not need to substantiate the meal amounts if he claimed the figure in the Determination 'which was lower than his actual expenditure'.

49    I observe that although the Tribunal recorded Mr Shaw's acknowledgement that it is possible that Ms Fisher used some of the funds he transferred for the big shop for herself or the household, it was not the case that the evidence of Mr Shaw that supported his case was based only upon the amounts shown in the banks statements that he said were transferred to Ms Fisher for the big shop. Nor was it based solely upon the bank statements. There were a number of other aspects of his evidence that supported his case that he had incurred the amounts claimed.

The statutory context

50    The Tribunal then considered the statutory provisions and relevant rulings (paras 22-28). The Tribunal broadly adopted the analysis in two previous Tribunal decisions. No submission was advanced for the Commissioner questioning that approach. The Tribunal then 'set out the statutory framework in brief summary'.

51    Significantly for present purposes, the Tribunal began by referring to the terms of s 8-1(1) in terms that were not criticised by the Commissioner in the appeal. The Tribunal then said (para 23):

In this case, the Commissioner accepts that food and drink expenses incurred by Mr Shaw while away from home on a work journey would be deductible. However, paragraph 8-1(2)(b) of the ITAA 1997 provides that a loss or outgoing of a private or domestic nature cannot be deducted. This is the Commissioner's complaint in this case.

52    The Tribunal then set out a short summary of the 'substantiation requirements for work expenses' (para 24). It described the travel allowance provisions and recorded: 'There is no dispute in this case that there is a travel allowance paid to Mr Shaw by his employer'.

53    Reference was made to s 900-50(1) (exception from substantiation where Commissioner considers reasonable the total of the losses or outgoings claimed for travel covered by a travel allowance) and to s 900-200 (relief from substantiation where the taxpayer had a reasonable expectation that they would not need to comply with substantiation requirements).

54    Reference was made to Taxation Ruling TR2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses. Ruling TR2004/6 concerns the application of the substantiation exception to travel expenses and meal expenses covered by allowances paid by an employer. Reference was also made to the Determination as providing 'the reasonable travel and meal expense amounts for the Relevant Year' (para 26).

55    Reference was also made to Taxation Ruling 95/18 Income tax: employee truck drivers allowances, reimbursements and work-related deductions as also being relevant (para 27). The Tribunal recorded the following as being extracted from the Ruling:

… the Commissioner says that if a travel allowance is received, expenses must be incurred and if the claim is no more than the reasonable amount no substantiation is required.

The Tribunal's excursus concerning unattractive aspects of the case

56    The Tribunal then began a section of its reasons headed 'Reasons for Decision'. It commenced with a section with the sub-heading 'Unattractive aspects of this case'. The precise role of this part of the reasons is somewhat contentious. Broadly, it took the form of criticisms by the Tribunal of the positions adopted by each of the Commissioner and Mr Shaw in relation to the meal expense claims.

57    The section under the sub-heading about unattractive aspects commenced:

Before commencing with legal analysis, the Tribunal records that both parties in this matter presented aspects of their respective cases in an unattractive manner. I comment on those features below.

(emphasis added)

58    The opening words suggest that the section about unattractive aspects of the case was not part of the Tribunal's legal analysis. That was to come later. However, as we will see, implicit in the reasons in this part were firm views on the part of the Tribunal about the way that the case should be approached.

59    The Tribunal began the part of its reasons about unattractive aspects by referring to the Commissioner's objection decision as allowing the 'absurdly inadequate amount' of $19 per day (para 30). Later, the Tribunal said that it was 'not sure how the Commissioner thinks anyone would fund three meals a day for $19 in the Relevant Year, let alone for an individual of Mr Shaw's stature' (para 31). Plainly, the Tribunal had formed the view that, in circumstances where there was no dispute that Mr Shaw had been on the road for six days a week and required meals for each of those days, the suggestion that $19 was sufficient to feed Mr Shaw each day was not sustainable.

60    The Tribunal also recorded the Commissioner's position as being that the Commissioner would reconsider 'if substantiation could be provided' (para 30). The Tribunal expressed the view that the Commissioner 'has a lot of data available (for example average grocery spends) and there were available areas for investigation'. The view was expressed that the Commissioner 'could also have found credible submissions made to it accompanied by bank statements and other evidence, particularly where to do otherwise is to act so unrealistically'. These statements (at paras 30-31) were supported by references to footnotes 44 and 45 in this part of the reasons.

61    Footnote 44 was as follows:

The Commissioner considers issues like living expenses (including grocery expenditure) in an array of different contexts, and there is available data of average spends: for example 2 September 2024 Average Grocery Bill | Australian Living Costs - Canstar Blue . The Commissioner could have investigated and considered costs at the outlets on Mr Shaw's route in the Relevant Year.

62    Footnote 45 was as follows:

Alongside the areas of investigation noted above, taking into account the evidence of Mr Shaw, the Commissioner could have taken the payments made to Ms Fisher on Saturdays, Sundays and Mondays as for the purchase of food for the truck, ignored the rest of the transfers made by Mr Shaw to Ms Fisher, and reduced each of those payments received by Ms Fisher by $50 to allow for potential private expenditure. That would overstate that potential private expenditure in all likelihood and understate food expenditure (particularly by ignoring all other transfers to Ms Fisher). An estimated amount of expenditure using the cash in the truck could have been considered - for example $300-$500. Then all small expenditure at service stations, roadhouses and food outlets on the bank statements added up for each trip away. When that sort of method is followed it can be seen that Mr Shaw spends above the maximum reasonable daily allowance. The Commissioner may have considered requesting (formally if necessary) a short period of full substantiation currently to cross check before determining the question.

63    It is difficult to know what to make of these reasons, especially the detailed matters included in Footnotes 44 and 45. Plainly, the Tribunal was expressing dissatisfaction with the Commissioner's overall approach to Mr Shaw's claimed deduction. In some respects, the reasons appear to be a complaint about the way the Commissioner had approached the objection process. The Tribunal appears to be expressing views as to the areas of investigation that could have been pursued by the Commissioner in determining Mr Shaw's objection. Of course, the case before the Tribunal did not require or involve any form of scrutiny of the objection decision. The Tribunal was required to make its own decision standing in the shoes of the Commissioner. In doing so, it was required to be persuaded of the matters set out in s 14ZZK of the Tax Administration Act being the source of its decision-making authority.

64    In other respects, the reasons in this part appear to be directed to the contentions advanced by the Commissioner before the Tribunal. In that regard, the Tribunal recorded a submission for the Commissioner 'that Mr Shaw did not provide a methodology to apportion or estimate the expenditure he incurred' (para 30). As to that submission, the Tribunal said:

The Tribunal believes the Commissioner could have determined a methodology from the evidence provided. The Tribunal appreciates that the difficulty for Mr Shaw is that without full substantiation, which he thought was not required, it seemed difficult to convince the Commissioner as to an apportionment methodology.

(footnotes omitted)

65    The first sentence from the quote above is footnoted by way of cross-reference to Footnotes 44 and 45. Significantly, the Tribunal deals with the submission about the lack of an apportionment methodology by pointing to Footnotes 44 and 45 as examples of what the Commissioner could have done. Of course, before the Tribunal, the onus was not on the Commissioner. The Tribunal then referred to the difficulties faced by Mr Shaw in convincing the Commissioner as to an apportionment methodology (a proposition cross-referenced to the Commissioner's closing submissions to the Tribunal). The Tribunal stated that it 'appreciates' the difficulty for Mr Shaw, an observation that appears to be linked to Mr Shaw's erroneous view that he did not need to substantiate his meal expenses in any way if they were not above the maximum published in the Determination.

66    All these aspects of the Tribunal's reasons at this point indicate that it was expressing views that extended to the case before the Tribunal. In addition, Footnote 45 referred to aspects of the evidence before the Tribunal, in particular evidence about amounts that might have been allowed for 'potential private expenditure' from the amounts transferred to Ms Fisher when she undertook the big shop. This reference assumes some significance for a number of aspects of the Commissioner's case in the present appeal.

67    Having regard to the above matters, it appears that the language used in this part of the Tribunal's reasons is to the effect that there were areas of investigation that the Commissioner could have undertaken or methodologies that the Commissioner could have formulated in order to deal with the apportionment issue as it arose in the case before the Tribunal.

68    The explanation for the form in which this part of the reasons was expressed, namely as things the Commissioner could have done, may be because it was recorded as part of a general expression of frustration on the part of the Tribunal as to whether the Commissioner's approach was realistic. In dealing with the Commissioner's grounds it will be necessary to consider the purport of these aspects of the Tribunal's reasons.

69    There was then a statement that the Commissioner should also have considered the impact of s 900-200 (para 31). As has been explained, that provision relieves a taxpayer from compliance with the substantiation requirements in Division 900 if the only reason for not following the substantiation rules was a reasonable expectation on the part of the taxpayer that they did not need to follow those rules to be able to deduct the amount. In context, the statement by the Tribunal that the Commissioner should have considered the impact of s 900-200 manifests a view on the part of the Tribunal that s 900-200 was of significance when it came to whether Mr Shaw proving that he had incurred the meal expense amounts. This too is a passage that has significance for the appeal grounds.

70    Further references were made to Footnotes 44 and 45 in a later part of the Tribunal's reasons. Those parts of the reasons are considered below.

71    Continuing with the section on unattractive aspects of the case, the Tribunal then dealt with a submission from the Commissioner which was recorded by the Tribunal as being 'that where the maximum reasonable daily allowance in [the Determination] is claimed as the expense, but more is said to have been spent (as is the case for Mr Shaw), the taxpayer must provide substantiation for all expenses' (original emphasis). The Tribunal rejected that submission based on aspects of Ruling 2004/6 relied upon by the Commissioner (para 32). The Tribunal then expressed the view that there must be regard to the whole of the Ruling 2004/6, otherwise the Commissioner's position would be contrary to the following passage from the Ruling 2004/6 (quoted by the Tribunal at para 33):

Each taxpayer can decide between maintaining fewer records and limiting a claim to the reasonable amount, which in some cases may be lower than the amount actually incurred or keeping written evidence and claiming the full amount of deductible expenses incurred, which may be higher than the reasonable amount.

72    The Tribunal described the Commissioner's claim that Mr Shaw had to substantiate all expenses even though he had limited his claim to the maximum as 'an unfortunate inconsistency' with the Commissioner's position as stated in the Ruling. The Tribunal then concluded this part of its reasons by saying (para 33):

It is what is claimed that is important when determining issues of substantiation, not what could be claimed. It is perfectly legitimate to limit the claim, to limit the paperwork.

(original emphasis, footnotes omitted)

73    It is important to note that this part of the Tribunal's reasoning is expressly dealing with substantiation not the basis identified for deductibility. This is made abundantly clear by the reference to 'determining issues of substantiation'. As has been explained, the Tribunal explained the statutory provisions by first referring to the Commissioner's complaint that the amount was not deductible under s 8-1(1) and then setting out the 'substantiation requirements'. Further, as is explained below, the Tribunal went on to separately address (a) the question whether Mr Shaw had incurred the expense claimed; and (b) whether Mr Shaw was required to substantiate or he was entitled to rely on the exception in s 900-50. Accordingly, the overall structure of the Tribunal's reasons differentiates between deductibility and substantiation.

74    Then the Tribunal proceeded to express concerns about the approach that had been taken for Mr Shaw. It criticised the approach by Mr Shaw's tax agent which it described as approaching the matter on the basis that there was 'a standard deduction for truck drivers'. The Tribunal was moved to record the following (at para 34):

My assessment of those submissions [by the tax agent for Mr Shaw] was that he was saying that while Mr Shaw did incur the expenditure, [the Determination] provided authorisation for the standard deduction approach that had been adopted. [The Determination] is about substantiation, and it does not provide a one-off set deduction for truck drivers and there is no statutory provision providing for that. [The Determination] also says as much.

75    Again, the Tribunal was differentiating between deductibility and substantiation. It was criticising Mr Shaw for eliding the two and for suggesting, wrongly, that a claim for meal expenses by a truck driver paid an allowance that is at the maximum reasonable amount is deductible. Quite correctly, it is making clear that the Determination is about substantiation not about deductibility.

76    The reasons then included the following (para 36):

I also comment on [the tax agent for Mr Shaw's] submission that “[i]t is not open to an officer of the Australian Tax[ation] Office to determine a reasonable amount different to the published yearly Taxation Determinations.” This is a fundamental misunderstanding of what the Commissioner has done in this case. The Commissioner is assessing what it believes can be demonstrated as having been incurred; it is not changing its Taxation Determination, nor the reasonable amount set in [the Determination]. This kind of submission is reflective of an idea that there was some sort of automatic deduction available to truck drivers which is not the position.

(footnote omitted)

77    All of this reflects a proper understanding of the statutory provisions and is properly critical of the case put by the tax agent for Mr Shaw.

78    Significantly, the Tribunal then went on to describe 'the Commissioner's job in this space' in the following terms (para 38):

The Commissioner is required to do two things. The Commissioner is required to both say what a reasonable amount is and determine whether the expenditure has really been incurred. As is described below, the Commissioner tried to signal that balance in [the Determination]. I suspect the Commissioner will particularly want to consider whether the expenditure has been actually incurred by a truck driver if the maximum reasonable daily amount in [the Determination] (or the equivalent annual determination) is consistently claimed by a taxpayer. In testing that issue, the Commissioner needs to act sensibly, and consider the substantiation provided by the taxpayer taking into account what was said in [the Determination] and section 900-200 of ITAA 1997 - it is a balancing exercise for the Commissioner.

79    The Tribunal's reference to 'testing that issue' appears to be a reference to testing whether the maximum reasonable amount was actually incurred. The Tribunal said that, in testing whether the amount was incurred, the Commissioner must consider the substantiation provided and the application of s 900-200. In effect, in testing whether the expenditure has been actually incurred, the Commissioner must take account of the relief from substantiation where the amounts claimed are at the maximum and there is also the possible application of s 900-200 as a basis for relief from those substantiation obligations. This seems to be referring to 'substantiation' in the sense of the evidence to be advanced to demonstrate that the maximum amount was 'actually incurred' not substantiation in the sense of meeting the rules in Division 900. I regard the Tribunal at this point in its reasons to be saying no more than the Commissioner cannot expect 'substantiation' of the fact that the amounts claimed were actually incurred to require the same amount of detail that would be required under the substantiation rules which do not apply. This is what the Tribunal means by the need for the Commissioner to act 'sensibly'.

80    The Tribunal then expressed a view (para 39) as to what 'a well-advised truck driver claiming the maximum reasonable daily amount (or in fact any amount)' would do from 'a practical perspective'. It suggested maintaining a 'full substantiation of meal expenses for a short period in each year when relying on [the Determination]' (italics in original) to demonstrate a regular spend at or more than the maximum reasonable daily amount in the Determination. It further suggested that would enable a tax agent to be 'confident' that the claim amount had been incurred. The Tribunal indicated that other truck drivers should not take Mr Shaw's case as meaning they 'would also succeed where Mr Shaw has'. The Tribunal also encouraged Mr Shaw to adopt the full substantiation for a short period approach for future years and observed that if he did not do so 'the outcome of this decision may not be repeated for future years'. The Commissioner takes issue with the validity of that approach. However, it is not a matter that is brought to account in upholding Mr Shaw's claim because it is not an approach that he claimed to have adopted.

81    Respectfully, the formulation of ongoing policies that might be applied in the administration of the taxation legislation is not part of the Tribunal's function. When the Tribunal's predecessor was established, it was soon recognised that it was appropriate and desirable for those responsible for administering particular legislation to establish policies as to its administration that were consistent with the legislation and that it would be manifestly imprudent for the Tribunal to override such policies and adopt general ministerial policies of its own: Drake and Minister for Immigration and Ethnic Affairs [1979] AATA 179. There may be reasons why the Tribunal may consider it appropriate to depart from a policy in a particular case and no policy can lawfully be formulated in terms that would deprive the Tribunal of that independence. However, the formulation of policies is a matter for those administering the legislation. The Tribunal takes executive policy as the context for its independent decision-making.

82    Therefore, the suggestion by the Tribunal as to an approach that Mr Shaw (and those like him) may adopt in the future in order to be able to obtain a deduction (para 40) does not form part of the reasons disposing of the case before the Tribunal. Further, the indication from the Tribunal that if Mr Shaw does not adopt the approach suggested by the Tribunal of keeping a full record for a short period 'the outcome of this decision may not be repeated for future years' has no significance as a matter of precedent. However, it does make clear that the Tribunal was not applying its suggested approach of keeping detailed records for a short period of time to the case at hand. Further, it possibly suggests that the Tribunal considered that the basis for the favourable outcome for Mr Shaw in the present case would not apply in the future. It is perhaps an indication that the Tribunal considered Mr Shaw's belief at the time to be of significance, a position that would change once the reasons for decision were provided. However, it is not part of the reasoning as to why Mr Shaw's claim was upheld.

Deductibility

83    After that passage of reasoning dealing with what the Tribunal regarded as 'unattractive' aspects of the way both parties had dealt with Mr Shaw's claimed deduction, the Tribunal then turned to deal with what it had earlier described as its 'legal analysis'. It began by posing the following question:

Whether Mr Shaw incurred the expenses claimed in the Relevant Year in gaining or producing his assessable income

(original emphasis)

84    In my view, that question properly encapsulates the requirements that must be established for a deduction to be claimed under s 8-1(1). In what followed, the Tribunal was focussed upon whether Mr Shaw had demonstrated that he had incurred the claimed amount on meals when he was away for work. That approach reflects the fact that the separate requirement that the expenses be incurred in gaining or producing assessable income was not in issue in Mr Shaw's case.

85    The Tribunal began by identifying three matters that were accepted by the Commissioner (paras 42-43), namely (a) food and drink expenses incurred by Mr Shaw while away from home on a work journey would be deductible; (b) Mr Shaw was away for 310 nights in the 2021 tax year; and (c) travel allowance was paid to Mr Shaw.

86    Next, the Tribunal posed the matter for decision in the following way (para 44):

The Commissioner is correct that amounts must be incurred in gaining or producing his assessable income before an expense can be claimed under section 8-1 of the ITAA 1997. The Commissioner's complaint is that Mr Shaw has not been able to demonstrate that his claim is for entirely work-related expenses, as opposed to food acquired for private purposes.

87    No issue is taken with these aspects of the reasoning by the Commissioner. The issue whether the substantiation requirements of Division 900 applied was addressed by the Tribunal in a separate section of its reasons (see below).

88    The Tribunal then summarised the competing contentions as to whether Mr Shaw had demonstrated that he had incurred the claimed expenditure (paras 45-46). The Commissioner's case was described in terms that the bank statements provided by Mr Shaw were not specific enough and that the inference could be drawn that the big shops had been undertaken for private purposes. Mr Shaw's case was described as based on the evidence of his food habits, the withdrawals from his bank account and Ms Fisher's role in purchasing food.

89    It may be noted that the Tribunal explained Mr Shaw's case as bringing together the evidence of Mr Shaw as to what he ate (including his roadhouse and grocery purchases while on long-haul trips) as well as the evidence about the bank account withdrawals and 'the big shops'. The Commissioner's case was described in terms that focus on the bank statements and what the evidence was about the 'shops'.

90    Then, the Tribunal recorded the following (para 46):

[The tax agent for Mr Shaw] suggested that what the Commissioner was really seeking to do was walk back [the Determination]. I agree with aspects of [the tax agent's] submissions. I do not believe the Commissioner has the balance right in this case, taking [the Determination] and section 900-200 of the ITAA 1997 into account. Mr Shaw had a reasonable expectation that [the Determination] would be applicable.

91    The purport of this passage of reasoning is contentious and is considered below when addressing the Commissioner's ground 7. At this point, I note that it appears to be a repetition or restatement of the view expressed at para 38 of the reasons. That view was to the effect that the Commissioner needs to act sensibly when it comes to 'substantiation' that the amounts claimed were incurred. Effectively, the Tribunal was of the view that it was not sensible to accept that the substantiation provisions of Division 900 do not apply and then require the same kind of substantiation. Hence, the Tribunal's reference at para 38 to the Determination and to s 900-200, the latter, in the Tribunal's view, operating to relieve Mr Shaw from compliance with the substantiation rules in Division 900 (by reason of his reasonable expectation that the Determination would apply).

92    Significantly, immediately after the passage quoted above (which is taken from para 46), the Tribunal then turned to considering the evidence in the present case as to what had been incurred by Mr Shaw when it came to his meals when away for work (para 47). It did so by comparing the present case with a previous case in the Tribunal (Duncan) which the Tribunal characterised as an instance where no evidence had been given at all to demonstrate what had been incurred. The Tribunal then distinguished Duncan by saying:

The Tribunal [in Duncan] found there was no reliable way to estimate what was private expenditure and what was not. The difference in this case is we do have a way to estimate what is private expenditure and what is not, because of Mr Shaw's sworn evidence.

93    The reference to differentiating between private expenditure and what was not (being the amount of the claimed deduction) provides context for what follows. It indicates a focus by the Tribunal on the need to have a basis to reach a conclusion as to what was private expenditure and what was not (that is, what was spent on meals during Mr Shaw's work travel).

94    Next, the Tribunal referred to another case (Gleeson) which it described as a case where a truck driver gave sworn evidence that was found to be credible and the expenditure was found to be incurred.

95    The Tribunal then reasoned as follows as to the incurring of the expenditure (paras 49-50):

The Tribunal has determined that Mr Shaw incurred the disputed expenses in gaining or producing his assessable income. The Tribunal does not agree with the Commissioner that there is an insufficient linkage between the expenditure on bank statements and Mr Shaw's work. Mr Shaw's evidence was credible and provided that link. Mr Shaw's evidence also gave a broad mechanism for apportionment and that basis could have covered many of the Commissioner's concerns. To that extent, the Tribunal agrees with [the tax agent for Mr Shaw].

I find on the balance of probabilities that Mr Shaw incurred the claimed expenditure, and I find that Mr Shaw has met his burden of proof.

(footnote omitted)

96    Significantly, this compressed part of the Tribunal's reasons addressed the requirements for a deduction under s 8-1(1) and reached a conclusion that the evidence demonstrates that the disputed expenses were incurred in gaining or producing assessable income. There was no reference to whether the Commissioner's position was 'reasonable' having regard to the terms of the Determination. Nor was there any indication that the reasoning was based upon some failure by the Commissioner to prove some matter. The conclusion rested upon the Tribunal's view that Mr Shaw's evidence was credible.

97    It may be inferred that the conclusion expressed in the first sentence was supported by what follows. It dealt with the issue raised by the Commissioner as to whether linkage between the amounts in the bank statements and Mr Shaw's work has been demonstrated, being the question raised by the Commissioner as to whether the amounts shown related to private or domestic expenditure. The Tribunal said it did not agree with the Commissioner's case that there was insufficient linkage. The Tribunal then explained the basis for that conclusion in the next sentence when it said that Mr Shaw's evidence was credible and provided the required link. That was a conclusion to the effect that the factual findings as to the credibility of Mr Shaw's account were sufficient to establish his case.

98    The Tribunal then expressed the conclusion that: 'Mr Shaw's evidence also gave a broad mechanism for apportionment and that basis could have covered many of the Commissioner's concerns'. This sentence assumes significance for aspects of the Commissioner's appeal. The sentence is footnoted by the Tribunal. The footnote (Footnote 73) is expressed in the following terms:

See footnotes 44 and 45 above. As an example of how the Commissioner's concerns could have been covered, monetary transfers to Ms Fisher could have been disregarded unless they were made close to the day of the 'big shop' (a Sunday or Monday).

99    Reference has already been made to Footnotes 44 and 45 (as quoted above). An issue arises as to whether Footnote 73, in referring back to Footnotes 44 and 45, was bringing forward the reasoning in those footnotes in some way to support the finding in the sentence footnoted with Footnote 73. That aspect is considered below in dealing with the relevant ground of appeal.

100    Accordingly, it appears that the Tribunal reached its conclusion on the basis that its acceptance of Mr Shaw as a credible witness was a sufficient basis to conclude that he had incurred the claimed amounts on meals when he was travelling for work even though some of the bank account entries relied upon related to private expenditure to some extent. This aspect is addressed further below in dealing with the grounds of appeal.

Exception from substantiation

101    The Tribunal then considered a further question which it poses in the following terms:

Whether Mr Shaw is required to substantiate his expenses or is entitled to rely upon an exception from substantiation under section 900-50 of the ITAA 1997.

102    Posed in those terms, the question is directed to the substantiation issue and reinforces my conclusion that the preceding section is concerned with identifying whether the amounts claimed are deductible under s 8-1(1).

103    The Tribunal proceeded on the basis that there had not been substantiation. It began by quoting the exception provided for by s 900-50. As has been mentioned, it applies if the Commissioner 'considers reasonable the total of the losses or outgoings' claimed for travel covered by an allowance (para 51).

104    Essentially, the Tribunal then reasoned from its finding (in the previous section of reasoning) that the claimed expenditure was incurred in gaining or producing assessable income and the fact that the expenditure 'falls within the limits' of the Determination (which applies because of the travel allowance paid to Mr Shaw) that s 900-50 applies (para 52). In effect, the Tribunal concluded that the total amount claimed is reasonable because it is no more than the maximum amount specified in the Determination as being reasonable.

105    The Tribunal then provided the following alternative reasoning as to substantiation (para 54):

Even if I am wrong about any aspect of the analysis in paragraph 52, I also find that Mr Shaw had a reasonable expectation that [the Determination] would apply due to the advice received from his tax agent. I find that section 900-200 of the ITAA 1997 would have applied to relieve Mr Shaw from the obligation to substantiate his meal expenses in any event.

The issues raised by the Commissioner's grounds of appeal

106    Taking account of the way in which the appeal was argued, the following issues arise for determination in the appeal:

(1)    In concluding that Mr Shaw had incurred the claimed expenditure, how did the Tribunal approach the issue of apportionment, especially having regard to Mr Shaw's evidence about the possibility that, when Ms Fisher did the big shop, she used some of the funds Mr Shaw transferred to her for the big shop for herself or the household (and therefore not on food for Mr Shaw's meals when travelling)?

(2)    In its reasoning concerning Footnotes 44 and 45, did the Tribunal, in effect, reverse the onus of proof and require the Commissioner to prove that the meal expenses were not deductible by pursuing the 'areas of investigation' in Footnotes 44 and 45 (Ground 1)?

(3)    Properly construed, does the test for deductibility in s 8-1(1) of the ITAA97 involve the application of a general 'reasonableness' standard and, if not, did the Tribunal apply a general 'reasonableness' standard in reaching its conclusion that the meal expenses were deductible (Ground 2)?

(4)    Did the Tribunal find that, for the purpose of apportioning private expenditure under s 8-1(2)(b) of the ITAA97, the potential private expenditure by Ms Fisher from the big shop transfers was limited to $50 per transfer and, if so, was the finding made in the absence of evidence or by drawing an inference that was not open on the facts found (Ground 3)?

(5)    Did the Tribunal find that that Mr Shaw had established a broad mechanism for apportionment and, if so, was the finding made in the absence of evidence or by drawing an inference that was not open on the facts found (Ground 4)?

(6)    Did the Tribunal find that a 'reasonable expectation' within the meaning of s 900-200 of the ITAA97 relieved Mr Shaw of the obligation to establish that the meal expenses were incurred within the meaning of s 8-1(1) and, if so, was that a misconstruction of s 8-1(1) and did the Tribunal act on that misconstruction in concluding that Mr Shaw incurred the meal expenses (Ground 6)?

(7)    Did the Tribunal misconstrue s 900-200 in making the alternative finding that s 900-200 applied to relieve Mr Shaw of his obligation to substantiate his meal expenses on the basis of advice provided by his tax agent that the Tribunal found to be 'not supportable at law' (Ground 5)?

(8)    Did the Tribunal incorporate its views as to s 900-200, incurred within the meaning of s 8-1(1) of the ITAA97 and, if so, were those views informed by a misconstruction of s 900-200 to the effect that there could be a 'reasonable expectation' based on the views of a tax agent that the Tribunal found to be 'not supportable at law' (Ground 7)?

107    Mr Shaw did file a notice of contention, but it was not pressed. However, the parties relied upon written submissions put in respect of the notice of contention to the extent that they were relevant to the issues raised by the grounds of appeal.

Issue (1): How did the Tribunal approach the issue of apportionment?

Specifically, in concluding that Mr Shaw had incurred the claimed expenditure, how did the Tribunal approach the issue of apportionment, especially having regard to Mr Shaw's evidence about the possibility that, when Ms Fisher did the big shop, she used some of the funds Mr Shaw transferred to her for the big shop for herself or the household (and therefore not on food for Mr Shaw's meals when travelling)?

108    At the heart of much of the Commissioner's appeal case was a view as to the Tribunal's reasoning pathway when it came to the evidence of Mr Shaw that it was possible that Ms Fisher used some of the funds that he transferred to her for the big shop 'for herself or the household'. As has been mentioned, part of the evidence given by Mr Shaw that the Tribunal accepted was Mr Shaw's description of the amount spent by Ms Fisher for herself or the household. The Tribunal found that Mr Shaw's evidence was to the effect that those amounts were 'potentially $50 here and there but he was not certain'. The Commissioner contends that the Tribunal reached its conclusion that Mr Shaw incurred the amounts that he claimed for meals when travelling for work on the basis of a finding that Ms Fisher's use of the big shop funds for herself or the household was no more than $50 for each transfer made by Mr Shaw to Ms Fisher for the big shop. That is, it used that evidence to reach a conclusion about apportionment.

109    In his written submissions in support of the present appeal, the Commissioner asserted that discharge by Mr Shaw of his onus of proof required him to establish that the big shop amounts including the amounts transferred to Ms Fisher to do the big shop were not of a private nature. The Commissioner then submitted that the Tribunal's approach to the 'question of apportionment' was infected with various legal errors. Elsewhere, the Commissioner advanced submissions on the basis that the determination of Mr Shaw's appeal to the Tribunal required the Tribunal to reach a conclusion as to the extent to which amounts shown in the bank account of Mr Shaw actually related to personal or household expenditure.

110    Necessarily implicit in these submissions by the Commissioner is a view that Mr Shaw could only succeed if the Tribunal undertook some form of analysis of the bank statement amounts and reached a conclusion as to how much of those amounts were for private expenditure. The Commissioner also maintains that the Tribunal based its decision on findings of that kind.

111    I do not accept this aspect of the Commissioner's case. As I will explain, in the face of uncertainty as to how much of each of the bank statement amounts were for the big shop, the Tribunal could (and did) rely upon other evidence in being persuaded that the claimed amounts for meals had been incurred by Mr Shaw. It did not need to make findings as to precise apportionment of the specific kind pressed for by the Commissioner. In particular, it did not need to find (and did not find) that the figure of $50 per shop could be used to apportion the bank statement amounts recording transfers to Ms Fisher for the big shop.

112    The key issue for the Tribunal was whether the amounts claimed by Mr Shaw for meals had been incurred. If Mr Shaw had simply pointed to his bank statements and identified amounts spent on groceries (as was the case in Duncan) then he would need to persuade the Tribunal that there was some appropriate way to apportion those amounts between meals for travel and other household requirements. However, that was not the nature of the case advanced by Mr Shaw. He gave other evidence to support his case, including as to cash expenditure on meals and groceries when he was on the road. He gave evidence to the effect that sometimes he did the big shop himself. He also gave evidence in general terms that he did spend more than the amount claimed. So, the evidence about bank transfers to Ms Fisher for the big shop was only part of Mr Shaw's evidence.

113    Significantly, the Tribunal accepted all of Mr Shaw's evidence. It took the trouble of recording the detail of the evidence that was accepted. It was the whole of Mr Shaw's account that was found to be credible and was also found to provide the link between the expenditure on bank statements and Mr Shaw's work.

114    The issue for the Tribunal when it came to deductibility was whether it was persuaded on the balance of probabilities that Mr Shaw incurred the claimed expenditure on meals while away on work even allowing for his concession that certain of the amounts on his bank statements included personal expenditure by Ms Fisher. The Tribunal could reach that conclusion based upon other evidence which satisfied the Tribunal that the expenditure had been incurred. It did not need to reach a firm conclusion about apportionment of specific bank statement amounts.

115    For the following reasons, I am not persuaded that the Tribunal reasoned by making an apportionment finding of the kind relied upon by the Commissioner.

116    First, the Tribunal began by making an unqualified finding as to the credibility of Mr Shaw. It believed his evidence. As I have explained, the evidence about the amounts that Mr Shaw spent on his meals that was believed by the Tribunal (and included in its reasons) was not confined to the evidence about the bank statement amounts and the transfer of funds to Ms Fisher so that she could undertake the big shop on those occasions when Mr Shaw did not undertake the big shop. It included the rest of Mr Shaw's evidence.

117    Second, the Tribunal rejected a submission by the Commissioner that there was 'insufficient linkage' between the expenditure on Bank statements and Mr Shaw's work. In context, that reasoning was addressing the Commissioner's case to the effect that Mr Shaw had not demonstrated that the claimed amounts had been incurred on meals for when Mr Shaw was travelling for work. It was common ground that if the amounts shown on the bank statements could be linked to the meals then the expenses were incurred for earning income. The issue was whether there was sufficient evidence to link the amounts claimed with the expenditure shown on bank statements. In terms of the Tribunal's analysis, was Mr Shaw's case like Duncan or was it like Gleeson? The Tribunal found that Mr Shaw's evidence provided the required link (para 49). That was enough for Mr Shaw to succeed. As I have explained, there were aspects of the evidence of Mr Shaw, as accepted by the Tribunal, that could have been relied upon by the Tribunal to reach the conclusion that amounts from the bank statements were linked to buying food as part of a big shop for groceries for Mr Shaw's meals when travelling for work.

118    Third, it follows that the Tribunal did not need to undertake an apportionment of the kind pressed for by the Commissioner. It had already found that the required linkage had been demonstrated. That was sufficient for Mr Shaw to succeed. In my view, in what followed, the Tribunal recorded a supplementary finding in para 49:

Mr Shaw's evidence also gave a broad mechanism for apportionment and that basis could have covered many of the Commissioner's concerns.

119    Having regard to the conclusion that the Tribunal had reached in the previous sentence that the required link between the bank statements and Mr Shaw's work (that is, meals for his work when travelling), the use of the word 'also' is significant. It reflects the supplementary nature of the finding.

120    However, the supplementary nature of the reasoning is made apparent by the context. Of course, the Tribunal had already been highly critical of the Commissioner's insistence on the degree of substantiation required to establish that Mr Shaw had incurred the claim meal expenses and had expressed the view that there were methodologies that the Commissioner could have determined to meet its concerns. This is an important contextual aspect to understanding the nature of the Tribunal's reasoning at this point concerning 'a broad mechanism for apportionment'. The Tribunal had also connected its criticism to a view about the need for balancing between the relief given from the substantiation requirements by setting a reasonable amount that could be claimed without having the evidence required by Division 900 (on the one hand) and determining whether that reasonable amount 'has really been incurred' (on the other hand) (para 38). The Tribunal also found that in testing that issue the commissioner 'needs to act sensibly' and consider the substantiation provided by the taxpayer taking into account what was said in the Determination about maintaining fewer records and the terms of s 900-200 (which provided for relief from the obligations in Division 900 if there was a 'reasonable expectation' that the rules in the Division did not need to be followed) (para 38). As I have explained, I regard this reasoning as being critical of the Commissioner, in effect, imposing compliance with the terms of the substantiation rules in Division 900 even though there was a basis to conclude that there was an exception or relief from such compliance. It is reflective of the limited extent to which the Tribunal had agreed with Mr Shaw's tax agent and the Tribunal said as much at the end of para 49.

121    Significantly, the conclusion that Mr Shaw's evidence gave 'a broad mechanism for apportionment' is not directly referenced to Mr Shaw's evidence about amounts possibly spent by Ms Fisher on personal items. Rather, as is explained below, it is referenced by way of footnotes to a number of different examples of the way Mr Shaw's evidence could be used to reach a broad-brush conclusion that the requisite part of the bank statements was used to purchase meals for Mr Shaw's trips. The Tribunal did not find that all of the Commissioner's concerns were covered. It found that 'many' of those concerns were 'covered'. That is to say, the Tribunal did not fully embrace the Commissioner's apportionment premise which required precise identification of the part of the amounts shown on the bank statements said to have been used for the big shop that were private in nature.

122    Reading without an eye attuned to error, I consider this critical sentence, read in context, to be stating that that Tribunal was not persuaded by the Commissioner's submissions as to apportionment because it was akin to insisting upon compliance with the substantiation rules. It was of the view that there were ways of evaluating the evidence that were consistent with Mr Shaw's evidence that he spent more than the amount claimed on meals. A finding of that kind is evaluative. It rests on an assessment of all the evidence.

123    As I have explained, that evidence included a considerable amount of evidence about the way in which the meal costs were incurred, the fact that there were times when Mr Shaw himself did the big shop, evidence that some meals and groceries were bought for cash on the road, evidence about the remote places where he travelled, an explanation as to why Mr Shaw did not have detailed records and evidence that the daily expenditure was more than $105.75 per day. In those circumstances, there was considerable evidence, that had been accepted by the Tribunal as credible, to support the conclusion that the bank statement amounts were linked to the expenditure of amounts for meals. It was not necessary to undertake some form of precise apportionment of the kind agitated for by the Commissioner in order for the Tribunal to reach the conclusion that it did and the Tribunal did not do so. Rather, having found that Mr Shaw's evidence was enough, it went on to make a further finding to supplement its finding based on Mr Shaw's evidence. In effect, the Tribunal found that, in addition, the evidence provided a mechanism that could have addressed most of the Commissioner's concerns if (contrary to the view of the Tribunal) they were concerns that were valid.

124    In my view, this conclusion is supported by regard to Footnote 73 (and the reference back to Footnotes 44 and 45). The specific example given at Footnote 73 as to how the Commissioner's concerns could have been covered is to disregard monetary transfers to Ms Fisher unless they were made close to the day of the big shop (a Sunday or a Monday). There is no indication that the Tribunal undertook such an analysis, or that there was evidence before that Tribunal which would have enabled that to be done. Certainly, it was not suggested for Mr Shaw that an analysis of that kind was undertaken and presented to the Tribunal or that there was some part of the record to which the Tribunal could have had regard in order to undertake such an analysis. The point being made by the Tribunal seems to be that there was a way of apportioning if the case depended upon such an approach (which the Tribunal believed was not required because it was an approach that did not get 'the balance right'). The significance of the example in Footnote 73 is that it is presented as an example of what could have been done not as a finding or conclusion. Its form supports the view that the Tribunal was not reasoning to its conclusion on the basis of some specific apportionment. Rather, it was approaching the case on the basis that (a) Mr Shaw's evidence enabled the Tribunal to conclude that parts of the bank statement amounts were for expenditure on groceries for meals as part of the big shop in the way Mr Shaw had described; and (b) in addition, the evidence did give a broad mechanism that could have formed the basis for an appointment if it had been necessary to address the Commissioner's concerns about the proof required as to apportionment, an approach that the Tribunal did not accept.

125    It is also significant in my view that the example given at Footnote 73 does not refer to the evidence about the $50 amounts that Mr Shaw conceded could have been expended by Mr Shaw on personal or household items. It does not propose an apportionment based on that figure. Footnote 45 did refer to a different type of approach to apportionment that could have been undertaken that reduced payments made to Ms Fisher by $50 'to allow for private expenditure'. However, again this is simply identified as a possible approach that the Commissioner could have taken. Footnote 44 gives a different example of an approach that could have been adopted. These are all expressed as possibilities not as methodologies that the Tribunal is adopting.

126    As has been explained, Footnotes 44 and 45 formed part of the Tribunal's reasons where it was being critical of the Commissioner's overall approach and was pointing out methodologies that the Commissioner 'could have' deployed. Again, the context and the terms of the footnotes do not suggest that the Tribunal undertook an analysis of that kind to support its own reasoning. Rather, the Tribunal seems to be saying no more than there were methodologies that could have been conceived of that could have been used as a broad mechanism to effect an apportionment of the payments made to Ms Fisher of the kind the Commissioner maintained was required.

127    In my view, the terms in which the footnotes are recorded do not suggest that the Tribunal undertook or otherwise relied upon any of the various methodologies to which it referred to support the sentence about a broad mechanism for apportionment The Tribunal was simply saying that there were ways of apportioning the transfers to Ms Fisher if that was a real concern. Of course, as I have explained, this was not a case where all of the expenditure on meals was said to have been incurred by Ms Fisher from the amounts transferred. There was the evidence from Mr Shaw that he also undertook the big shops, that he also paid for some meals with cash and that he spent more than the amount claimed.

128    Fourth, in the overall structure of its reasons, the Tribunal did not embrace the Commissioner's focus on apportionment. It stated the issue for determination as being whether the claimed expenses on meals were incurred. The parts of the Tribunal's reasons that deal with apportionment are addressing contentions advanced by the Commissioner to the effect that Mr Shaw did not provide a method to apportion or estimate his expenditure on meals. The Tribunal deals with these contentions by identifying them as 'the Commissioner's concerns', language which indicates that they were not considered to be concerns by the Tribunal when it came accepting Mr Shaw's account that he incurred the amounts claimed.

129    Fifth, the Tribunal's reasons in para 49 must be considered in the context of the two preceding paras where the Tribunal contrasted Duncan and Gleeson. The Tribunal described Duncan as a case where there was no reliable evidence at all to demonstrate what had been incurred. The Tribunal then said that the difference in the case of Mr Shaw was that 'we do have a way to estimate what is private expenditure and what is not, because of Mr Shaw's sworn evidence' (italics added) (para 47). The Tribunal then described the outcome in Gleeson as flowing from the acceptance of the testimony of Mr Gleeson. In my view, the reference to Mr Shaw's evidence providing a way to estimate what is private is indicating that, unlike in Duncan, Mr Shaw gave evidence and that evidence is a way to reach a conclusion. It is not a case where there is no basis to differentiate between private expenditure and expenditure on meals when travelling for work. Mr Shaw's evidence affords that basis.

130    Therefore, the Tribunal did not make an apportionment finding of the kind contended for by the Commissioner. As I have explained, the Tribunal reasoned based upon its acceptance of all the evidence of Mr Shaw. His evidence provided a foundation for its conclusion that the claimed expenditure has been incurred. In reaching that factual conclusion, detailed apportionment of bank accounts was not required and was not undertaken by the Tribunal.

Issue (2): Did the Tribunal reverse the onus of proof?

Specifically, in its reasoning concerning Footnotes 44 and 45, did the Tribunal, in effect, reverse the onus of proof and require the Commissioner to prove that the meal expenses were not deductible by pursuing the 'areas of investigation' in Footnotes 44 and 45 (Ground 1)?

131    In exercising his right to seek review in the Tribunal, Mr Shaw assumed the burden of proving that the amended assessments that issued after his objection were excessive or otherwise incorrect and what the assessment should have been: s 14ZZK of the Taxation Administration Act. The issue for the Tribunal did not concern whether there was some defect in the Commissioner's procedure or analysis in the objection process. Nor did it require some evaluation by the Tribunal as to whether the Commissioner's approach to the available evidence was reasonable. The question for the Tribunal was whether, on the material before the Tribunal, Mr Shaw had discharged his burden. That required regard to the persuasiveness of the material before the Tribunal, particularly Mr Shaw's account.

132    Equally, there was no prescription concerning the nature of the evidence that was required to discharge the onus other than it must be sufficient to persuade the Tribunal that the assessments were excessive. Relevantly, in the present case, having regard to the matters at issue, that required Mr Shaw: (a) to bring forth material that demonstrated that he had incurred the amounts he claimed as deductions on meals when travelling for work; and (b) to demonstrate that he did not have to comply with the substantiation requirements (there being no issue that he had not complied). As to (a), that could take the form of evidence from Mr Shaw that he spent the money which the Tribunal accepted as credible. As to (b), in oral submissions for the Commissioner it was accepted that if the grounds of appeal which challenged the Tribunal's reasoning as to deductibility were not upheld then the exception in s 900-50 applied. That concession was properly made given the terms of the Determination. It was a statement from the Commissioner to the effect that amounts that had been shown to be incurred that were up to the maximum daily allowance in the Determination were reasonable. What was emphasised in the Determination was the requirement to be able to demonstrate that such amounts had been incurred.

133    The Commissioner contended that the Tribunal approached its reasoning on the question of apportionment on the basis that there were lines of investigation and analysis that the Commissioner could have pursued but did not. This was said to impose a form of onus upon the Commissioner to undertake those steps. In effect, it was said that the Tribunal reasoned that the failure by the Commissioner to do those things in relation to apportionment was a basis upon which Mr Shaw's appeal should be upheld.

134    The submissions advanced for the Commissioner proceeded from the premise that Mr Shaw had to show that the big shop amounts transferred to Ms Fisher were spent on his meals and were not of a private or domestic nature. Based upon that premise, the Commissioner contended that concessions by Mr Shaw in the course of giving his evidence to the effect that parts of the big shop amounts were spent by Ms Fisher on items for herself or the household required the Tribunal to reach a conclusion, based on the evidence, as to apportionment. For reasons I have given in dealing with Issue (1), I do not accept the Commissioner's premise.

135    I accept that the relevant footnotes recorded the Tribunal's view of hypothetical lines of investigation that the Commissioner could have undertaken in considering whether Mr Shaw had demonstrated that he had incurred the amounts claimed as deductions for meals. Further, I accept that the Tribunal expressed views as to what the Commissioner could have done in terms which suggest that the Commissioner had some responsibility to undertake the areas of investigation described by the Tribunal. However, as I have explained, I am not persuaded that the Tribunal in reaching its conclusion that the meal amounts had been incurred by Mr Shaw reasoned on the basis that the failure by the Commissioner to pursue the identified areas of investigation was part of the basis for that conclusion. Rather, in my view, the Tribunal was expressing dissatisfaction with the Commissioner's insistence upon an apportionment methodology and was suggesting ways in which the Commissioner could have adopted a broad mechanism for apportionment that 'covered' many of the Commissioner's concerns.

136    I am not persuaded that the Tribunal took the failure by the Commissioner to adopt the methodologies that it suggested as a basis upon which Mr Shaw succeeded. I am not persuaded that the Tribunal found that Mr Shaw succeeded because the Commissioner failed to disprove apportionment. Regard to the overall structure of the Tribunal's reasons and its reliance upon the credibility of Mr Shaw's account show that the Tribunal found those matters sufficient to discharge Mr Shaw's onus.

137    Whilst recital by the Tribunal of the onus of proof provision does not, of itself, establish that the Tribunal properly applied that provision. Nevertheless, it is part of the context. I have explained my understanding of the 'unattractive aspects' part of the reasons. Ultimately, the Tribunal explained the distinction between Duncan and Gleeson in terms that demonstrated that it understood the need for Mr Shaw to adduce evidence that discharged the onus. The Tribunal then proceeded to conclude that Mr Shaw's evidence was credible and it was his evidence that provided the link to demonstrate that relevant amounts in the bank statements had been expended on meals.

138    It follows that there was no reversal of the onus of proof of the kind alleged.

139    For those reasons, ground 1 has not been established.

Issue (3): Did the Tribunal apply a general reasonableness standard?

Properly construed, does the test for deductibility in s 8-1(1) of the ITAA97 involve the application of a general 'reasonableness' standard and, if not, did the Tribunal apply a general 'reasonableness' standard in reaching its conclusion that the meal expenses were deductible (Ground 2)?

140    The test for deductibility in s 8-1(1) of the ITAA97 does not involve the application of some form of reasonableness standard. On an appeal to the Tribunal, a taxpayer who claims that part or all of a deduction was not allowed and consequently that the assessment is excessive has the onus of demonstrating deductibility. Where s 8-1(1) is the alleged basis for the deduction it must be shown that a loss or outgoing was incurred in gaining or producing assessable income.

141    The Commissioner contended that the Tribunal approached its task on the basis that Mr Shaw need only establish that the claimed expenses were reasonable. Reliance was placed on aspects of the Tribunal's reasons that dealt with what it characterised as unattractive aspects of the Commissioner's case. It included statements by the Tribunal to the effect that $19 per day (being the amount determined on the objection) was absurdly low. Later, in the same section of reasoning, the Tribunal referred to the Commissioner's obligation to say what was reasonable. However, this was in the context of dealing with the Determination and the publication of the Commissioner's view as to what was reasonable for the purposes of s 900-50.

142    As has been explained, the operative part of the Tribunal's reasons were directed to whether Mr Shaw incurred the meal expenses claimed. For reasons that have been given, the operative part of the Tribunal's reason did not purport to accept Mr Shaw's claim on the basis that it met some form of reasonableness standard.

143    For those reasons, ground 2 has not been established.

Issue (4): Did the Tribunal reach a conclusion on apportionment in the absence of evidence?

Specifically, did the Tribunal find that, for the purpose of apportioning private expenditure under s 8-1(2)(b) of the ITAA97, the potential private expenditure by Ms Fisher from the big shop transfers was limited to $50 per transfer and, if so, was the finding made in the absence of evidence or by drawing an inference that was not open on the facts found (Ground 3)?

144    For reasons that I have given in dealing with Issue (1), the Tribunal did not reach a specific conclusion as to apportionment based upon Mr Shaw's evidence about the extent of private personal expenditure. Rather, it reasoned in terms that the evidence of Mr Shaw gave a broad mechanism for apportionment.

145    Had the Tribunal reasoned from its finding about Ms Fisher having spent amounts for herself and the household being potentially $50 here and there then it would have been necessary to consider the Commissioner's submissions to the effect that there was no evidence to support that finding.

146    The relevant evidence was given when Mr Shaw was being questioned by counsel for the Commissioner. It was as follows:

Would you agree that generally, Ms Fisher's not purchasing the food and drink only for you? The money you're transferring to her is for her use?---I don't ask to see a receipt on what she's bought me and how much she's spent. If I give her $500 to go down to Coles to buy me stuff and she's spent 320 and then bought herself something, I don't know. I don't ask her what she spends her money on. I just give her money and she just buys stuff. That's it.

No, that's fine, Mr Shaw. I was just trying to understand - you're purchasing food for your work trips yourself?---Yes.

The money that you're transferring to Ms Fisher is for her use. She can spend it on whatever; she's not only spending that money for you - for your work trips?---I'm sending it to her to buy me stuff. If she wants to buy something for herself that's $50 or whatever, then she can go and buy it.

147    Later, there was the following question from the Tribunal to Mr Shaw:

When you get her funds - I appreciate your honesty in saying that if she wants to spend $50 here and there on herself that you would understand that. I appreciate that honesty. That's a really good, honest answer. I suppose I want to understand - she knows, does she, when you give her funds, that's for her to go and get your stuff so that you can have that stuff on the road or that's for her to go and get your stuff so it can be thawed in the freezer at home so you can take it eventually when you go on the road. Is that how you present the transfer of funds to her?

148    Mr Shaw gave the following answer:

Yes. Like, on my statement, sometimes you'll see I've transferred $600. Sometimes even more. And that's because she's actually wanted something and I've given her the money to go get it. That's why some of the ones that I've got on my statements are a lot higher than $300 or $400.

149    The Commissioner's position was that this evidence was not evidence that might justify the use of a $50 figure to undertake some form of apportionment and the Tribunal's approach raised a question of law which could be the subject of the present appeal.

150    Where an appeal on the basis of an error of law is provided for in respect of an administrative determination then the court is required to exercise original, not appellate, jurisdiction and to do so in proceedings which are in the nature of judicial review: The Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2001] HCA 49; (2001) 207 CLR 72 at [15]. The existence of a question of law is both the qualifying condition for the application and its sole subject matter: Brown v Repatriation Commission (1985) 7 FCR 302 at 304. The statutory right to appeal to this Court from a decision of the Tribunal on a question of law does not extend to 'mere questions of fact'. There is no error of law in simply making a wrong finding of fact. However, there may be legally erroneous fact-finding: Haritos v Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315 at [192]. The reasoning in these cases applies to the Tribunal: eSafety Commissioner v Baumgarten [2026] FCAFC 12 at [48] (Mortimer CJ and Beach J).

151    The relevant principles concerning when a lack of probative foundation for a factual finding will give rise to a question of law that may be the subject of an appeal in a case like the present were summarised by Jagot J in Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26 at [83]-[90].

152    Assuming, contrary to the findings I have made, that the Tribunal did reason on the basis of a finding that of the amounts transferred by Mr Shaw to Ms Fisher to do the big shop, Ms Fisher potentially spent $50 here and there on herself or the household, I am persuaded that there was an absence of probative evidence to sustain that finding. The evidence given was not to the effect that Ms Fisher potentially spent $50 here and there on herself or the household. That was a matter of conjecture on the part of Mr Shaw. It was legally faulty reasoning to treat the evidence that referred to the fact that Ms Fisher could spend additional amounts above that required to complete the big shop as supporting some form of basis for a conclusion that those amounts were potentially $50 here and there. The evidence provided no such basis.

153    However, that conclusion does not establish the ground because of the conclusion I have reached to the effect that the finding was not used in reaching the Tribunal's conclusion.

154    For those reasons, ground 3 has not been established.

Issue (5): Did the Tribunal err as to the broad mechanism for apportionment?

Specifically, did the Tribunal find that that Mr Shaw had established a broad mechanism for apportionment and, if so, was the finding made in the absence of evidence or by drawing an inference that was not open on the facts found (Ground 4)?

155    For reasons I have given in relation to Issue (1), the Tribunal did not make any such finding.

156    For those reasons, ground 4 has not been established.

Issue (6): What did the Tribunal conclude concerning the application of s 900-200?

Specifically, did the Tribunal find that a 'reasonable expectation' within the meaning of s 900-200 of the ITAA97 relieved Mr Shaw of the obligation to establish that the meal expenses were incurred within the meaning of s 8-1(1) and, if so, was that a misconstruction of s 8-1(1) and did the Tribunal act on that misconstruction in concluding that Mr Shaw incurred the meal expenses (Ground 6)?

157    The final sentence in the Tribunal's reasons (para 54) was to the effect that s 900-200 of the ITAA97 would have applied to relieve Mr Shaw from the obligation to substantiate his meal expenses 'in any event'. Given that those words form the conclusion to the Tribunal's reasoning as to whether Mr Shaw was required to substantiate under his expenses, I take those words to mean that if Mr Shaw was not entitled to rely upon the exception under s 900-50, then s 900-200 applied to relieve him of that obligation.

158    As I have explained, s 900-200 does not confer a right to deduct. That must be found in some other provision in the ITAA97. Section 900-200 only relieves a taxpayer from the substantiation requirements in Division 900.

159    I do not understand the Tribunal to have been expressing a conclusion to the effect that Mr Shaw did not have to prove that he incurred the meal expenses to claim the deduction. The issue of identification of a basis for deductibility (including whether the claimed amounts had been incurred by Mr Shaw) was separately addressed by the Tribunal. The Tribunal concluded that Mr Shaw had incurred the claimed expenditure (para 50). The Tribunal then turned to the separate question whether the substantiation obligations had to be met. It found that s 900-200 applied. The reference to 'in any event' is a reference to an event where s 900-200 did not apply.

160    Therefore, the Tribunal did not find that the existence of a reasonable expectation within the meaning of s 900-200 relieved Mr Shaw of his obligation to prove that the relevant expenses were incurred within the meaning of s 8-1(1) of the ITAA97.

161    For those reasons, ground 6 has not been established.

Issue (7): Does the concept of 'reasonable expectation' used in s 900-200 exclude an instance where the taxpayer acts on incorrect advice from a tax agent?

Specifically, did the Tribunal misconstrue s 900-200 in making the alternative finding that s 900-200 applied to relieve Mr Shaw of his obligation to substantiate his meal expenses on the basis of advice provided by his tax agent that the Tribunal found to be 'not supportable at law' gave rise to a 'reasonable expectation' (Ground 5)?

162    The issue posed by the Commissioner's ground 5 seeks to challenge the Tribunal's alternative pathway to finding that Mr Shaw did not have to provide the particular evidence required by the substantiation provisions. As I have explained in dealing with Issue (6), it was reasoning to the effect that s 900-200 would have applied. It did not concern the separate question whether Mr Shaw had incurred the amounts claimed.

163    The Commissioner's concern in the appeal was with the suggestion that a taxpayer may have a reasonable expectation for the purposes of s 900-200 based upon advice from a tax agent that was obviously incorrect. In Mr Shaw's case, the incorrect advice from his tax agent was that Mr Shaw did not have to substantiate that he actually incurred the meal expenses he claimed where he limited his claim to the maximum reasonable amount in the Determination.

164    The terms of s 900-200 were said by the Commissioner to require an objective approach and it could not be said to be objectively reasonable for a taxpayer to rely upon the incorrect advice of a tax agent.

165    Whilst it may be accepted that the phrase 'reasonable expectation' means objectively reasonable, I do not accept that the demonstration that the advice from a tax agent was incorrect in and of itself means that the provision of that advice by a tax agent could not, as a matter of construction, ever form the basis for a reasonable expectation for the purposes of s 900-200. All depends upon whether there was such an expectation in fact. In the present case, the Tribunal based its finding that Mr Shaw had a reasonable expectation on the finding that he had received advice from his tax agent that he did not have to substantiate his expenses if he made a claim to the maximum reasonable amount where that amount was lower than his actual expenditure on meals. That factual aspect of the reasoning is not challenged.

166    For those reasons, ground 5 has not been established.

Issue (8): Did the Tribunal's views about s 900-200 infect its reasoning as to s 8-1(1)?

Specifically, did the Tribunal incorporate its views as to s 900-200, incurred within the meaning of s 8-1(1) of the ITAA97 and, if so, were those views informed by a misconstruction of s 900-200 to the effect that there could be a 'reasonable expectation' based on the views of a tax agent that the Tribunal found to be 'not supportable at law' (Ground 7)?

167    In the course of oral submissions, the Commissioner reframed his ground 7 to explain that it was not based upon any assumption as to success on other grounds and to expose two distinct points raised by the ground. The separate points were to the effect that (a) the Tribunal incorporated its views about 'reasonable expectation' when determining whether Mr Shaw met the criteria for a deduction under s 8-1(1); and (b) assuming that the Commissioner succeeds in demonstrating that the Tribunal was in error as to the proper construction of s 900-200, it incorporated that erroneous view when determining whether Mr Shaw met the criteria for a deduction under s 8-1(1).

168    Both points depend upon a contention by the Commissioner to the effect that the Tribunal's conclusion that Mr Shaw had incurred the amounts claimed for meal expenses and had shown that they were deductible under s 8-1(1) was informed by a distorted view of what was required by way of evidence to 'substantiate', that is prove, deductibility. The Commissioner contended that the Tribunal's reasons showed that it had formed the view that Ms Shaw had a 'reasonable expectation' that he did not have to substantiate the fact that he had spent the amounts claimed because of what he had been told by his tax agent. The Commissioner further contended, in effect, that the Tribunal had made some form of allowance to Mr Shaw for that aspect when it came to evaluating whether he had discharged his onus to prove that he had incurred the amounts claimed.

169    As I have explained, the substantiation requirements of Division 900 are additional to demonstrating deductibility under s 8-1(1). Relief from the Division 900 substantiation requirements does not relieve a person from the need to demonstrate that they incurred the amounts claimed. The nature and extent of that obligation does not depend upon whether the taxpayer had a 'reasonable expectation' of the kind that might relieve the taxpayer from substantiation under Division 900. Therefore, if the Tribunal had taken the course the Commissioner contended it did in relation to s 8-1(1) then that would have been in error. For the following reasons, the Tribunal did not take that course.

170    In my view, it has not been established that the Tribunal imposed some form of lesser standard on Mr Shaw when it came to the evidence that he needed to put before the Tribunal to show that he had incurred the amounts claimed. For reasons I have given, the Tribunal's concern was with whether the Commissioner was seeking to impose a substantiation requirement of the kind required by Division 900 in circumstances where there might be an exception or relief from that requirement. It accepted that the onus was upon Mr Shaw. It accepted that he had to demonstrate that the amounts claimed had been incurred. It found that Mr Shaw's evidence discharged that onus.

171    Properly understood, the Tribunal took issue in its reasons with the Commissioner's insistence upon some form of detailed apportionment or a degree of 'substantiation' for the purposes of s 8-1(1) that, in its view, did not take due account of the fact that the level of substantiation required by Division 900 did not apply. This concern on the part of the Tribunal can be traced back to what occurred at the objection stage where the outcome was one which it considered to be absurdly inadequate and a product of an unrealistic and too demanding approach to the proof that was required. This was not to impose an incorrect standard. It was to form a view as to what was sufficient by way of evidence to demonstrate that the amounts claimed actually had been incurred in circumstances where, by reason of the Determination, Mr Shaw could rely upon s 900-50 (and also, in the Tribunal's view, on s 900-200). Therefore, Mr Shaw could conduct his affairs on the basis that he did not have to meet the substantiation rules. As I have explained, the Tribunal's concern was that the Commissioner was insisting on a level of proof that required detailed records to be provided and this did not get the balance right as between substantiation under Division 900 (on the one hand) and proof that the claimed expenses had been incurred for the purposes of demonstrating deductibility under s 8-1(1) (on the other hand).

172    The Tribunal in its critical reasoning at paras 47-50 still required Mr Shaw to demonstrate by evidence that he had incurred the claimed expenditure. In my view, the Tribunal's reasons do not indicate that the Tribunal reduced the standard of the evidence that was required by s 8-1(1) on the basis of some form of 'reasonable expectation' held by Mr Shaw. Rather, it was saying that both the Determination (by operation of s 900-50) and the 'reasonable expectation' (by operation of s 900-200) had the effect that the detailed substantiation of expenses provided for by Division 900 did not apply. In those circumstances, it was a factual question in each case whether the evidence that was provided was sufficient in circumstances where the taxpayer was not called upon to provide the detailed paperwork to comply with Division 900 and was entitled instead, in the words of the Commissioner in the Ruling to maintain 'fewer records'. The requirement that Mr Shaw discharge his onus of proof by demonstrating before the Tribunal that the claimed expenses were incurred was still imposed by the Tribunal.

173    It appears that as part of the factual circumstances the Tribunal brought to account Mr Shaw's belief that he was not required to keep records. However, I am not persuaded that in doing so the Tribunal, in effect, altered what Mr Shaw was required to prove. It did not, in effect, excuse Mr Shaw from having to prove that he incurred the expenses on the basis that he believed that he did not need to maintain the records. Rather, Mr Shaw's belief was part of the factual context in which the Tribunal evaluated whether his account that he had incurred the meal expenses was to be accepted.

174    For those reasons, ground 7 has not been established.

Conclusion and costs

175    The appeal must be dismissed. The Commissioner having funded the costs of Mr Shaw, no party sought any order as to costs.

Associate:

Dated:    4 March 2026