FEDERAL COURT OF AUSTRALIA Morris v Commissioner of Taxation [2002] FCA 616 TAXATION – income tax – whether taxpayers' expenditure on sun protection items deductible from assessable income – whether expenditure incurred in gaining or producing assessable income – whether real connection between expenditure on sun protection items and taxpayers' employment activities – whether expenditure incidental and relevant to activities directed at gaining or producing assessable income – whether expenditure of private or domestic nature – whether distinction between working in natural and artificial working environment – where nature of work required applicants to be exposed to sunlight – necessary to consider nature of income-producing activity in which taxpayer engaged and nature of use of sun protection items. Income Tax Assessment Act 1997 (Cth): s 8‑1 Income Tax Assessment Act 1936 (Cth): s 51(1) Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 applied Federal Commissioner of Taxation v Smith (1981) 147 CLR 578 referred to Commissioner of Taxation (Cth) v Payne (1999) ATC 4391 applied Mansfield v Federal Commissioner of Taxation (1995) 31 ATR 367 considered Commissioner of Taxation v Cooper (1991) 29 FCR 177 distinguished Federal Commissioner of Taxation v Edwards (1993) 119 ALR 375 considered Commissioner of Taxation v Edwards (1994) 49 FCR 318 considered Federal Commissioner of Taxation v New South Wales Cancer Council (1999) 99 ATC 4819 distinguished RODNEY JAMES MORRIS & ORS v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA V 71 of 2000 GOLDBERG J 14 MAY 2002 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 71 of 2000 BETWEEN: RODNEY JAMES MORRIS RODNEY JAMES FLOOD RUTH FARADAY BOYDELL JACE THOMAS PEARSON CHARLES PETER GIFFARD ADRIAN FRANCIS BARRY UNA ANN HAMPSON STEPHEN DOUGLAS FENNELL ANTHONY GRAEME LANE and ROBERT LINDSAY FITTON Applicants AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: GOLDBERG J DATE OF ORDER: 14 MAY 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal by each applicant be allowed. 2. The following decisions, namely: (a) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the first applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 25 August 1998. (b) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the second applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 22 July 1998. (c) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the third applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 16 November 1998. (d) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the fourth applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 9 September 1998. (e) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the fifth applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 29 July 1999. (f) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the sixth applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 31 August 1998. (g) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the seventh applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1999, notice of which was given by notice of assessment dated 10 September 1999. (h) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the eighth applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 10 August 1999. (i) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the ninth applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 31 July 1998. (j) The decision by the Deputy Commissioner of Taxation notified by letter dated 30 December 1999 disallowing in full the objection by the tenth applicant dated 7 October 1999 against an assessment of income tax for the year ended 30 June 1998, notice of which was given by notice of assessment dated 4 February 1999, are set aside. 3. Each of the said decisions is remitted to the Deputy Commissioner of Taxation for reconsideration in accordance with the reasons for judgment delivered this day. 4. There be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 71 of 2000 BETWEEN: RODNEY JAMES MORRIS RODNEY JAMES FLOOD RUTH FARADAY BOYDELL JACE THOMAS PEARSON CHARLES PETER GIFFARD ADRIAN FRANCIS BARRY UNA ANN HAMPSON STEPHEN DOUGLAS FENNELL ANTHONY GRAEME LANE and ROBERT LINDSAY FITTON Applicants AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: GOLDBERG J DATE: 14 MAY 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT Introduction and Background 1 The issues to be determined in this proceeding are whether ten taxpayers are entitled to a deduction from their assessable income in respect of expenditure each of them has incurred in the purchase of items of sun protection being variously sunglasses, sunhats and sunscreen during the financial years ended 30 June 1998 and 30 June 1999. The applicants claim that the expenditure by each of them in respect of these items was work related expenditure, that is to say, it was an expenditure or outgoing incurred in gaining or producing their assessable income and was not an expenditure or outgoing of a private or domestic nature. The respondent ("the Commissioner") contends that the expenditure by each of the applicants in respect of these sun protection items was not a deductible expenditure because it was not incurred in gaining or producing their assessable income, that is to say it was not incidental or relevant to their income‑producing activities and was of an essentially private nature. 2 Each of the applicants carries on a different occupation but a feature common to all the applicants is that the nature of their work requires each of them to work in the open air for varying periods during the day. The facts and circumstances relating to each of the applicants are not controversial between the parties. The applicants filed a statement of facts, issues and contentions and the facts in relation to each of the applicants, to which I refer in these reasons for judgment, are taken from that statement. Most of those facts were agreed in a proposed agreed statement of facts, issues and contentions filed by the Commissioner. The Commissioner set out the facts he accepted in relation to the fourth applicant, Mr Jace Thomas Pearson, in a different form than was set out by the applicants. However, there was substantial agreement between the parties as to the facts which related to Mr Pearson and his application. I have not set out all the facts agreed between the parties, but only those which I consider to be relevant to the issues to be decided. Nevertheless, I have considered and taken into account what is contained in both documents. I turn to the facts and circumstances relating to each applicant which existed at the date of the hearing. The first applicant, Rodney James Morris 3 Mr Morris is 39 years of age and has been employed by the Hadley Farming Company since 1986, his present position being a farm manager. The property he manages covers 11,156 hectares and is used for cotton growing, dry land farming and cattle farming. During the summer period his working day is from 7.00am to 7.00pm and in the winter period it is from 7.30am until 5.00pm or 5.30pm. Mr Morris has no skin conditions caused by ultraviolet radiation, but his doctor has told him that he is in the high risk age group because the highest cause of death in Australia in the 30‑40 years age group is skin cancer. His doctor recommended that he wear sunglasses because of the glare from the bonnet of the vehicle which he uses to travel around the property. Mr Morris wears sunglasses for the whole year when driving the four‑wheel drive vehicle and for six months each year when carrying on other activities on the property. He did not purchase a pair of sunglasses in the 1998 year of income. 4 Mr Morris has used and applied sunscreen at work since 1981 and always keeps a sunscreen container in his vehicle. In the 1998 year of income he purchased one big bottle of sunscreen from the New South Wales Cancer Council for $40 and he has estimated that during the 1998 year of income sunscreen to the value of $15 was used by him solely at work. The balance was used by his family and himself for recreation. When Mr Morris is working, the sunscreen he uses protects his ears and hands and provides long‑term protection from ultraviolet rays. Mr Morris could not carry out his work without the use of sunscreen because he must work in the sun. 5 Mr Morris wears a hat when working, but he did not purchase a hat in the 1998 year of income. Mr Morris wears a hat because it makes his work more comfortable, it prevents sunstroke and bad headaches, it prevents the possibility of overheating and protects him from sunburn on his face and head. If he did not wear a hat, he would not be as productive as he is when he wears a hat. 6 In his income tax return for the 1998 year of income, Mr Morris claimed a deduction for the expenditure of $15 in respect of his purchase of sunscreen. In the notice of assessment, the Commissioner disallowed the deduction claimed. On 7 October 1999, Mr Morris lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Morris of the decision disallowing his objection. It is in respect of that disallowance that Mr Morris appeals to the Court. The second applicant, Rodney James Flood 7 Mr Flood is 39 years of age, holds a Master Class Five licence issued by the Queensland Marine Board and during the 1998 year of income he was the master of a game‑fishing vessel which operated out of Hamilton Island. Mr Flood's work as master of a game fishing vessel required him to take people out on charter fishing trips in the Whitsunday passage for four days a week for fifty weeks of the year. On the other three days of each week he was engaged outdoors in boat maintenance. A normal working day consisted of twelve hours which included: · working on the boat on charter trips from 7.45am to 5.00pm dock to dock; · about another three hours per day working on cleaning and refuelling the boat. On average Mr Flood would spend eight hours each day working in the sunlight, which in summer is intensely strong and less strong in the months of May to July. Approximately eight years ago, Mr Flood had surgery on his lip for skin cancer and about four years ago his doctor removed a growth by freezing it from the back of his hand. 8 During the course of his work Mr Flood uses as safety items, earmuffs provided by his employer, deck shoes, sunglasses, a sunhat and sunscreen. The deck shoes give him better traction on fibreglass and he buys one pair each year. Whilst working Mr Flood wears Sportsoptic super polarised sunglasses which cost $200 a pair. Mr Flood replaces his sunglasses each year because of salt, condensation and scratching. He uses these sunglasses solely for work and wears them for approximately eleven hours per day for twelve months of the year. He wears another pair of sunglasses when he is not working. The Sportsoptic sunglasses are made from glass which Mr Flood understands provides the best filtration system. They have leather patches on the side which help him avoid hooks flying in the air and keep out glare. Mr Flood started wearing sunglasses about ten years ago because his eyes felt tired and sore and were stung by salt so that he could not see properly. Without the sunglasses Mr Flood could not see rocks, reefs and other dangerous objects in the water and he could not see the bait fish. He needs to be able to identify colour changes in the water which allow him to identify areas where fish naturally feed and are easier to catch. If Mr Flood did not wear sunglasses, he could not manoeuvre the boat to take lines near the game fish. The sunglasses also protect him from cornea damage and cancer of the eyes. 9 Mr Flood wears a hat with a tail when working on the deck of the boat. He uses this hat solely at work and he wears a different type of hat when he is inside the cabin. In the 1998 year of income, he bought one hat for $20. Mr Flood uses one or two hats each year because the hats rot as a result of exposure to salt, water and the sun. The hat prevents sunburn, skin cancer, sunstroke and the possibility of collapse as well as dehydration and loss of concentration. It also reduces glare and makes visibility easier. 10 Mr Flood uses sunscreen at work. He also uses zinc on his nose, lips and cheeks. If Mr Flood did not use sunscreen, his concentration span would be reduced and he would be unable to work as effectively. Further, if Mr Flood became sunburnt he would miss work for a week or more because he would get third degree sunburn. In the 1998 year of income, Mr Flood spent $30 on sunscreen which he used solely for work purposes. 11 Mr Flood would be out of business and possibly lose his licence without the use of all three items of sun protection. If Mr Flood did not use the sunglasses, hat and sunscreen, he expects that he would pass out and faint. If Mr Flood did not use sunglasses he would be blinded by the glare, he may not notice unmarked reefs and there would be a danger of collision with vehicles in very bright glare. Further, as the sunglasses assist Mr Flood to identify where to catch fish, without sunglasses he would not catch as many fish and would attract fewer passengers. If Mr Flood did not wear a hat and sunscreen, after 9.00am or 10.00am each day he would be burned by ultraviolet rays within a period of time which varies from ten minutes in summer to thirty minutes in winter. 12 In his income tax return for the 1998 year of income, Mr Flood claimed a deduction for his expenditure of $200 in respect of the acquisition of a pair of sunglasses, $20 in respect of the acquisition of a hat and $30 in respect of the acquisition of a quantity of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Mr Flood lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Flood of the decision disallowing the objection. It is in respect of that disallowance that Mr Flood appeals to the Court. The third applicant, Ruth Faraday Boydell 13 Ms Boydell is a 43 year old teacher who holds a Master Mariner Class Four Certificate. She teaches maritime studies at the Belmont Technical and Further Education Institution ("Belmont TAFE"), which is part of the Hunter Institute of Technology in New South Wales. Ms Boydell conducts four week courses for students to gain a Statement of Attainment in Marine Coxswain, seven week courses for students to gain a Statement of Attainment in Master Mariner Class Five and two week courses for students to gain a Statement of Attainment in pre‑sea and marine safety skills, a course for deck hands. While conducting the courses, Ms Boydell spends approximately 20% of her time working on boats or around swimming pools, demonstrating life raft drills and other similar exercises. 14 At work Ms Boydell uses a pair of non‑slip shoes, a life jacket, sunglasses, sunhat, sunscreen and a shirt to protect her neck, shoulders and back. The Occupational Health and Safety Manual published by Ms Boydell's employer sets out the clothing and equipment which is compulsory for staff teaching maritime studies to wear. Such equipment includes eye protection which is not supplied by Ms Boydell's employer. Accordingly, it must be purchased by Ms Boydell and the other staff teaching maritime studies. Ms Boydell wears sunglasses about 90% of the time when working outdoors. The sunglasses make her eyes more comfortable, reduce the risk of contracting an eye condition known as pterygium and relieve Ms Boydell from tired eyes and lapses in concentration. Ms Boydell purchases a new pair of sunglasses each year because they break or are lost. During the 1998 financial year she purchased one pair of sunglasses for $30. Ms Boydell estimates that she wore the sunglasses 75% of the time she was working and 25% of the time she was not working. 15 Ms Boydell wears a sunhat provided by her employer as part of her uniform when working outdoors. The sunhat reduces glare and strain on Ms Boydell's eyes, protects her face from ultraviolet glare and the risk of cancer and protects her against heat stroke and dehydration. 16 Ms Boydell wears sunscreen about 50% of the time when working outdoors. She spends $10 each year on sunscreen which she uses solely for work. The sunscreen Ms Boydell uses while she works protects her from sunburn, heat stroke and the risk of cancer. If Ms Boydell did not wear sunscreen when working outdoors, she would sometimes have to miss work as a result of sunburn and heat exhaustion. Ms Boydell uses sunscreen about 30% of the time when she is outdoors and not working. 17 Sunglasses, a sunhat and sunscreen protect Ms Boydell against the risk of injury or loss of life to herself and her students due to glare and the possibility of sunburn, heat stroke, heat exhaustion and heat dehydration. When one works on the water there is a double risk of ultraviolet radiation directly from the sun and indirectly caused by reflection from the water, and a real risk of personal injury as a result of sunburn, sore eyes and heat exhaustion. 18 Ms Boydell must maintain a Certificate of Competency in order to teach maritime studies at Belmont TAFE. In addition to the time Ms Boydell spends outdoors while working, she must spend 2,000 hours every five years on the water to re‑validate her Certificate of Competency. Ms Boydell always wears sunglasses, sunscreen and a hat while completing this requirement. 19 In her income tax return for the 1998 year of income, Ms Boydell claimed a deduction for her expenditure of $30 in respect of the acquisition of a pair of sunglasses and $10 in respect of the acquisition of a quantity of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Ms Boydell lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Ms Boydell of the decision disallowing the objection. It is in respect of that disallowance that Ms Boydell appeals to the Court. The fourth applicant, Jace Thomas Pearson 20 Mr Pearson is 39 years of age, has been a registered surveyor for ten years and has been working as a surveyor since 1983. Mr Pearson spends 70‑80% of his working time outdoors during which time he uses sunglasses, a sunhat and sunscreen. Mr Pearson said that these items improve his productivity and are necessary to protect him from personal danger. In 1996 Mr Pearson had a basal cell carcinoma burnt off his back. 21 Mr Pearson began wearing sunglasses at work approximately seven years ago. He uses two pairs of sunglasses each year because they are damaged by scratching and they break. During the 1998 year of income, Mr Pearson spent $40 on the purchase of two pairs of sunglasses. Mr Pearson wears sunglasses at work constantly to reduce glare, for comfort, for accuracy and so that he can work in all weather conditions. On the basis of Mr Pearson's experience over the last year, he estimated that 80% of his use of sunglasses was for work purposes. 22 Mr Pearson wears a straw hat at work which costs about $25. He has worn a hat since commencing work as a surveyor. He replaces each hat after two or three years because of wear and tear. During the 1998 year of income Mr Pearson spent $25 on the purchase of a new straw hat. Mr Pearson only uses the hat at work and wears it whenever he works outdoors, even when it is overcast. The hat keeps ultraviolet radiation from Mr Pearson's face and enables him to work in all types of conditions, including rain. 23 The sunglasses and hat enable Mr Pearson to work for longer hours during the year because he can work in rain and in conditions of very high ultraviolet radiation and hot conditions. Precision is critical in his profession, and without these items the standard of his work would decline. 24 Since commencing work Mr Pearson has used sunscreen to protect him from ultraviolet radiation. Using the sunscreen increases Mr Pearson's productivity because he is more willing to work during the hottest part of the day in the knowledge that he is being protected by sunscreen. During the 1998 year of income, Mr Pearson spent $40 on sunscreen which he used exclusively for work purposes. 25 Mr Pearson claimed a deduction in his income tax return for the 1998 year of income for the following expenditure: · $40 in respect of his acquisition of a pair of sunglasses; · $25 in respect of his acquisition of a hat; · $40 in respect of his acquisition of a quantity of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Mr Pearson lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Pearson of the decision disallowing the objection. It is in respect of that disallowance that Mr Pearson appeals to the Court. The fifth applicant, Mr Charles Peter Giffard 26 Mr Giffard is 38 years of age and has been the Site Construction Supervisor at the Concord Golf Club in Sydney since July 1997. He has been wearing sunglasses at work for fifteen years. He works outdoors for about 85‑90% of his working time from September to April and he wears sunglasses during this time. Mr Giffard estimates that during the period from May to August each year he wears sunglasses about 40% of the time. Mr Giffard wears sunglasses: · to reduce glare and protect himself against ultraviolet radiation; · to enable him to pick out objects more clearly on the golf course; · to protect him against grass and sand coming into his eyes while mowing; · to protect him against the need to squint, to see properly and to focus upon objects on the golf course; · to protect him from insects when moving around in a golf cart; · to protect him from sunburn around his eyes and the bridge of his nose. 27 During the 1998 year of income, Mr Giffard spent $25 on a pair of sunglasses. Mr Giffard replaces his sunglasses approximately every twelve months because of damage or loss. Mr Giffard uses his sunglasses 80% of the time while at work and 20% of the time outside of work. 28 Mr Giffard wears a wide brimmed canvas hat provided by his employer 100% of the time whilst working during the summer months and 50‑60% of the time whilst working in winter. He wears another hat when he is not at work. Mr Giffard wears a sunhat to protect him against sunstroke, to protect him against tree branches scratching his head while he moves around the course, and to make him cooler, less tired and more productive. 29 Mr Giffard uses sunscreen about 40% of the time whilst working in summer and 20% of his working time in winter. During the 1998 year of income, he spent about $14 on purchasing sunscreen which he used 50% of his time at work and 50% of his time outside work. He uses sunscreen to protect against sunburn and the consequences of having more time off work. 30 Mr Giffard has used both sunscreen and a hat throughout his working life. Mr Giffard considers that the sunscreen, hat and sunglasses are necessary for him to carry out his work and that a failure to have these items may cause a misjudgment in the performance of his work duties. 31 In his income tax return for the 1998 year of income, Mr Giffard claimed a deduction of $25 in respect of his acquisition of a pair of sunglasses and $7 in respect of his acquisition of a quantity of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Mr Giffard lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Giffard of the decision disallowing the objection. It is in respect of that disallowance that Mr Giffard appeals to the Court. The sixth applicant, Adrian Frances Barry 32 Mr Barry is 35 years of age and is a self‑employed builder who primarily undertakes carpentry and joinery work in Kyneton, Victoria. He spends 70‑80% of his working time outdoors working on home extensions and renovations. Mr Barry developed skin cancer as a teenager which did not reveal itself until recently. He has been advised by a Professor of Dermatology that he will periodically see manifestations of the skin cancer. 33 During the course of his work, Mr Barry uses safety boots, safety goggles, ear muffs, sunscreen, a sunhat and sunglasses. Mr Barry commenced using sunscreen before he was aware of his skin cancer condition. He applies sunscreen twice on each hot working day but often does not apply sunscreen when not working. In the 1998 year of income, Mr Barry spent approximately $30 on sunscreen which he used solely while working. Mr Barry's use of sunscreen reduces fatigue and heat exhaustion and prevents sunburn which enables him to work for longer periods and be more productive on hot days. 34 Mr Barry commenced wearing a hat at work about five years ago because of his increased awareness of the improved productivity which would be likely to result and which he has found has resulted. He often does not wear a hat when not at work. During the 1998 year of income Mr Barry purchased a sunhat for work which cost about $50. The sunhat, which is worn solely at work, reduces heat exhaustion and fatigue and improves Mr Barry's comfort and productivity due to its shade and cooling function. 35 Mr Barry commenced wearing sunglasses at work approximately five years ago. He purchased the sunglasses for $180 after being advised to do so by an optometrist after he complained about eye strain. He did not purchase another pair during the 1998 year of income. He uses the sunglasses at work for driving, to reduce glare and while working on roofs. Wearing the sunglasses reduces fatigue, improves his comfort and productivity and enables Mr Barry to achieve a higher degree of precision when working on roofing screws and in pencil marking. During the summer months Mr Barry wears the sunglasses about 50% of the time when he is working. He estimates that over the twelve month period ending 31 December 1997, he used the sunglasses approximately 95% of the time at work and 5% of the time outside work. 36 The sun protection items are necessary in carrying on Mr Barry's business because he exposes himself to the risk of sunburn, sunstroke, heat exhaustion and skin cancer. In Mr Barry's typical work places, the ordinary glare of the sun is exacerbated by reflection from various surfaces such as glass and roofing material. The use of a sunhat, sunglasses and sunscreen enables Mr Barry to carry out his work with precision and to be more productive, comfortable and safe. If he did not use these items, he would lose time by being away from work, he would not be able to work as fast or for extended periods without taking a break, and his powers of concentration would be diminished which would make his work less accurate and of a lower standard. 37 In his income tax return for the 1998 year of income, Mr Barry claimed a deduction for the expenditure of $50 in respect of his acquisition of a hat and $30 in respect of the acquisition of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Mr Barry lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Barry of the decision disallowing the objection. It is in respect of that disallowance that Mr Barry appeals to the Court. The seventh applicant, Una Ann Hampson 38 Ms Hampson is 58 years of age and has been employed as a physical education teacher since 1966. She is presently employed as a physical education teacher at Wollongong High School on a casual basis. Pursuant to an arrangement commencing in 1999, she works one full day each week and other days as required to relieve absent teachers. 39 When working outdoors, Ms Hampson uses a pair of sunglasses, a sunhat and sunscreen in order to carry out her job properly and so that she is not absent from work due to sunburn. She has worn sunglasses while working outdoors as a physical education teacher since 1966 and usually buys one pair of sunglasses each year which are solely for use at school. She has two other pairs of sunglasses which she uses when not working. Ms Hampson wears sunglasses when outdoors at school to protect her from ultraviolet radiation, to prevent damage to the retina, to protect her skin around the eye region, to reduce glare and to ensure that her work place is not dangerous. 40 If Ms Hampson did not wear sunglasses when working outdoors at school: · she would not see all the balls or other items thrown by the students; · she would not be able to concentrate as well as she could otherwise; · she would not teach as efficiently as she could otherwise; · dangerous situations would occur for the students as she would not be able to control their behaviour to the appropriate level as required by her duty as a teacher; · the incidence of headaches would increase as a result of which she would be more likely to be absent from work. 41 In addition to her usual duties as a physical education teacher, Ms Hampson sometimes attends special events such as the school swimming carnival and a one week snow trip to Perisher. The sunglasses provide protection in these situations against the glare which is accentuated by both water and snow. 42 Ms Hampson wears a hat about 95% of the time at work when she is outdoors. She has a straw hat and a cotton hat which she uses solely at work. She replaces the cotton hat each year at a cost of $15 and the straw hat about every two or three years at a cost of $40. During the 1999 year of income, Ms Hampson bought both a cotton hat and a straw hat. Ms Hampson wears a hat while outdoors at work to protect her face and neck against the ultraviolet rays and heat of the sun, to reduce glare and to improve her vision and concentration so as to reduce the danger of sports accidents to students. 43 The school supplies the teachers, including Ms Hampson, with sunscreen for use when on campus. Ms Hampson spends $10 each year on the purchase of sunscreen for use by her when she attends school sporting events off‑campus. During the 1999 year of income, Ms Hampson spent $10 on sunscreen for work purposes and $3 on a sunblock stick for her lips which she uses when she is at work outdoors. Ms Hampson uses the sunscreen to protect her from ultraviolet rays, to help prevent skin cancer and sunburn, to improve her concentration, to decrease the incidence of headaches and because it is mentally comforting. 44 Ms Hampson claimed a deduction in her income tax return for the 1999 year of income for the following expenditure: · $29 in respect of her acquisition of a pair of sunglasses; · $55 in respect of her acquisition of two hats; · $13 in respect of her acquisition of a quantity of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Ms Hampson lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Ms Hampson of the decision disallowing the objection. It is in respect of that disallowance that Ms Hampson appeals to the Court. The eighth applicant, Stephen Douglas Fennell 45 Mr Fennell is 47 years of age and has been trained as an electrical fitter and mechanic. For approximately thirteen years he has been employed as a district operator by Energy Australia, a utility company which supplies electricity to a large part of New South Wales. Mr Fennell is responsible for the restoration of power to systems in the central coastal area of New South Wales which covers the region from the Hawkesbury River to Lake Macquarie and westward to Wiseman's Ferry. Mr Fennell responds to "outages" or power blackouts in that region. He is required to identify the fault, isolate it and restore power to the affected area as quickly as possible. He also identifies and responds to signal alarms, which occur when there are transformer or circuit breaker faults. He is involved in the general inspection of lines, transformers, substations and other installations. 46 Mr Fennell drives approximately 50,000 km each year for work purposes. He estimates that he spends 55% of his time at work driving, 35% of his time at work attending to faults and inspections and 10% of his time in the office. Mr Fennell's work conditions are sometimes harsh or extreme. He must always be able to respond immediately to "outages". He would not be able to do this without sun protection items, especially sunglasses. 47 Mr Fennell has a condition known as pterygium, which is damage to the cornea of his eye caused by ultraviolet radiation. He has not required surgery for this condition. While working Mr Fennell uses a hard hat, a sunhat, sunglasses and sunscreen. 48 Since commencing work as a district operator, Mr Fennell has worn sunglasses when working outdoors or driving for work purposes. Excluding night shifts, Mr Fennell estimates that he wears sunglasses approximately 90% of the time that he is working, either on site or driving to and from locations. Although his employer provides sunglasses, Mr Fennell prefers to wear his own sunglasses which he purchases for $25 and which are more comfortable and have side protection from ultraviolet radiation. Mr Fennell replaces the sunglasses every twelve months due to scratches. During the 1998 year of income, Mr Fennell purchased one pair of sunglasses for $25. He estimates that for the twelve month period ending 31 December 1997, he wore sunglasses 75% of the time when he was working and 25% outside of work. Mr Fennell wears sunglasses because they: · reduce the glare from the sun; · reduce and relieve eye strain caused by ultraviolet radiation; · enable him to focus more clearly on overhead lines and equipment; · enable him to focus for longer periods; · enable him to read various types of written material when working outside; · reduce exposure to personal danger from ultraviolet radiation and road accidents while driving. 49 Mr Fennell is required to wear a hard hat provided by his employer while working on site. Mr Fennell wears a wide brimmed felt hat provided by his employer when working outside and not wearing the hard hat. Wearing the sunhat protects his face and head, improves Mr Fennell's vision when inspecting sites, reduces the chance of dehydration and heat stroke and makes him cooler, which assists him to work with greater concentration and for longer periods without a break. 50 Mr Fennell uses sunscreen provided by his employer about 60% of the time when he is working. If he did not use sunscreen during that time, he would become sunburnt and require time off work. If Mr Fennell did not use sunglasses, sunscreen and a sunhat he would not be able to work for as long as he does each day. 51 In his income tax return for the 1999 year of income, Mr Fennell claimed a deduction of $25 in respect of his acquisition of sunglasses. In the notice of assessment, the Commissioner disallowed the deduction claimed. On 7 October 1999, Mr Fennell lodged a notice of objection against the assessment, and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Fennell of the decision disallowing the objection. It is in respect of that disallowance that Mr Fennell appeals to the Court. The ninth applicant, Anthony Graeme Lane 52 Mr Lane is 29 years of age and is a full time employee of the Australian Tax Office ("the ATO"). In addition to this employment, for the past ten years Mr Lane has been employed as a professional tennis umpire by Tennis Umpires Australia Inc and Tennis Australia Ltd for about sixty days each year. As a tennis umpire Mr Lane works approximately 95% of the time in the sun and 5% of the time at indoor tournaments and night sessions. 53 Mr Lane always wears sunglasses when working as a tennis umpire in the sun. During the 1998 year of income, Mr Lane purchased a pair of prescription sunglasses for $220 which he uses solely during his work as a tennis umpire. Mr Lane usually replaces his sunglasses every two years because of scratching, bending and general wear and tear. There has been a significant improvement in the quality of Mr Lane's work while wearing sunglasses and a greater accuracy in making line call decisions. This is because, without sunglasses, Mr Lane's eyes tire after about fifteen minutes which leads to increased errors. At the 1992 Australian Open, a professional tennis umpire evaluator informed Mr Lane that his accuracy in calling lines was becoming questionable and suggested that Mr Lane wear sunglasses. Mr Lane immediately did so and his accuracy has improved. Mr Lane would not have reached his present level of seniority if he did not always wear sunglasses when working outside. 54 It has been compulsory since 1994 or 1995 for line umpires to wear caps or hats at the Australian Open. Hats or caps are not compulsory when working as a chair umpire. 55 Mr Lane wears a wide‑brimmed sunhat nearly always while working as a chair umpire and always while working as a line umpire. During the 1998 year of income Mr Lane purchased a broad‑brimmed sunhat which cost $35 and was likely to wear out after about two years. The hat is prescribed as part of the national uniform which Mr Lane is required to purchase and wear when working outdoors as a line umpire. He only wears the sunhat when working as a tennis umpire. The sunhat protects Mr Lane from the heat and wind and significantly reduces the effect of the sun. If he were to be burned on his head, face or neck, Mr Lane expects that his work would become less accurate and he would be absent from work on some days. 56 Mr Lane works as a tennis umpire in a high glare environment which causes a great strain on his eyes. The wearing of sunglasses and a sunhat relieves the stress and enhances his vision in these conditions and reduces the glare from the sun, the stadium and the court material. 57 Mr Lane applies sunscreen while umpiring 95% of the time. The remaining 5% of time is spent by Mr Lane working at indoor tournaments or umpiring night sessions. During the 1998 year of income, Mr Lane spent approximately $65 on sunscreen for use exclusively for work purposes. 58 As a chair umpire, Mr Lane is required to control the proceedings of the entire match which may extend over a period in excess of four hours, uninterrupted, in the heat of the day. Without the sunglasses, sunscreen and sunhat, Mr Lane would not be able to work for such a long, uninterrupted time in the sun without suffering sunburn, exhaustion, a lack of concentration and lack of accuracy in his work. As a chair umpire Mr Lane is usually engaged to control two or three matches per day during each tournament. In the absence of sun protection items, he would not be able to accept such a daily engagement and would therefore be unable to work as a professional tennis umpire. Further, without the sun protection items, the accuracy of his work would decline and he would be employed less often. 59 Mr Lane claimed a deduction in his income tax return for the 1998 year of income for the following expenditure: · $220 in respect of his acquisition of a pair of sunglasses; · $35 in respect of his acquisition of a hat; · $65 in respect of his acquisition of a quantity of sunscreen. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Mr Lane lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Lane of the decision disallowing the objection. It is in respect of that disallowance that Mr Lane appeals to the Court. The tenth applicant, Mr Robert Lindsay Fitton 60 Mr Fitton is 51 years of age and is a senior auditor in the large business and international section of the ATO. He is based in Sydney. Mr Fitton often travels to the premises of various organisations to conduct audits and strategic reviews by train and walks from the nearest station to the organisation's premises. It may take up to one hour for Mr Fitton to walk to and from these locations. While conducting an audit, in addition to looking at financial statements, Mr Fitton is often required to conduct inspections of outdoor sites which may take several hours. 61 On 12 November 1993, Mr Fitton caused a Provisional Improvement Notice under the Occupational Health and Safety (Commonwealth Employment) Act 1991 (Cth) ("the OHSA") to be issued to the ATO in relation to the protection of the ATO staff against the effects of exposure to sunlight. As a result of the Provisional Improvement Notice, on 27 January 1994 the ATO contracted with South Western Occupational Health Services to conduct a survey of staff employed in various branches of the ATO in metropolitan Brisbane and to produce a report entitled "Review of Protection from Ultraviolet Radiation". 62 On 12 October 1994, the Deputy Commissioner of Taxation, Chatswood, issued a circular to heads of section at the Chatswood Office in relation to the implementation of an ATO policy on the protection of its staff from the effects of ultraviolet sunlight. The circular required staff who worked outdoors for a portion of their working day to attend an in‑house training session by the Cancer Council for the purpose of implementing the ultraviolet radiation policy. During 1995, the ATO produced a written policy on protection of staff from ultraviolet radiation in sunlight. The policy reads, in part, as follows: "The purpose of this policy document is to provide guidance to managers and staff on methods of reducing the adverse health effects arising from solar ultraviolet radiation to which staff may be exposed whilst on duty in sunlight, without the protection of being in a building or a car. The policy also discusses the provision of information to all staff in order to raise awareness of the risks involved, and identifies the precautions required. … Individual staff members are responsible for bringing activities which might place them at risk to the attention of managers and supervisors, and ensuring that they use protective equipment as outlined in this policy." 63 On 8 May 1995, Mr Fitton, as the Health and Safety representative at the Chatswood Office of the ATO, issued a Second Provisional Improvement Notice to the ATO. On 29 May 1995, as a result of the failure of the ATO to respond adequately to the Second Provisional Improvement Notice, the matter was referred to Comcare Australia under s 28(1)(ii) of the OHSA. After conducting an investigation, on 30 October 1995, Comcare issued an Improvement Notice under s 47 of the OHSA to the Assistant Commissioner of Taxation, requiring him to implement the Policy on Ultra Violet Radiation within 35 days. 64 Approximately eight years ago, Mr Fitton had a skin cancer removed from his leg by a medical practitioner. On 29 August 1997, Mr Fitton had two suspected skin cancers surgically removed. 65 Mr Fitton purchased a hat for $74.95 which he wears whenever he works outdoors and which he uses solely for work purposes. Pursuant to a policy document issued by the ATO and entitled "ATO Policy on the Protection of Staff from the Ultraviolet Radiation in Sunlight", ATO staff may be reimbursed for an amount up to $25 expended on the purchase of a sunhat once every four years. On 4 September 1996 Mr Fitton made an application to the ATO for reimbursement of the cost of his hat and received $25 from the ATO. The hat lasted almost four years. During the 1998 year of income, Mr Fitton spent $85 to purchase a replacement hat which he uses solely at work. The hat provides shade and protection from the sun and allows Mr Fitton to conduct his inspections for longer periods of time and with greater care and attention to detail. 66 When working outside, Mr Fitton generally uses sunscreen which is supplied by the ATO to its employees. During the 1998 year of income, Mr Fitton purchased a new pair of sunglasses for approximately $30 which he uses whenever he works outside and which he does not use for non‑work purposes. 67 If Mr Fitton did not use sunglasses, a sunhat and sunscreen when working outside, he would not be able to work outside for as long as he does, he would be reluctant to spend the time necessary to complete stock inspections, his work would be curtailed and the diligence of his work would be affected. Mr Fitton feels himself being burned within ten minutes of being in the sun without protection, and he considers that being in the sun for more than fifteen minutes at a time constitutes extreme working conditions for him. 68 Mr Fitton claimed deductions in his income tax return for the 1998 year of income for the following expenditure: · $30 in respect of the acquisition of a pair of sunglasses; · $60 in respect of the acquisition of a hat. In the notice of assessment, the Commissioner disallowed the deductions claimed. On 7 October 1999, Mr Fitton lodged a notice of objection against the assessment and on 30 December 1999 the Deputy Commissioner of Taxation notified Mr Fitton of the decision disallowing the objection. It is in respect of that disallowance that Mr Fitton appeals to the Court. 69 In their submissions to the Court, the applicants also referred to several documents including statements of employers, unions, occupational health and safety groups to demonstrate the relationship between the sun protection items and work. The Commissioner accepted that: · exposure to the sun, especially in summer, without adequate sun protection, including a hat, sunglasses and sunscreen carries significant health risks; · there is an accepted causal link between exposure to the sun and the development of skin cancer (including malignant melanoma) and eye damage; · a person who uses one or more of the sun protection items referred to when working outdoors is acting reasonably or prudently in his or her own interests. This is so whether or not the person has a previous history of sun‑related injury; · the health and safety implications of outdoor work have been recognised by employers, unions and individual employees, and occupational health and safety measures have been implemented in many industries, including in relevant awards, to address those matters. It was not in issue that the relevant portions of the subject expenditures related to sun protection items used by the applicants while at work and that each applicant spent some working hours outside in the course of his or her duties. 70 The following issues did not arise for consideration in the proceeding: · whether it is desirable that members of the community in general, or outdoor workers in particular, use sun protection items when exposed to the sun; · whether it is desirable that the community in general, or outdoor workers in particular, be educated about the risks of unprotected exposure to the sun and about the available protective measures; · whether employers should, or are obliged by law to, ensure that outdoor workers take appropriate steps to protect themselves against the sun; · whether as a matter of policy there should be tax incentives to encourage the use of sun protection items. The legislation 71 The issues raised fall to be determined by reference to s 8‑1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act") which provides: "(1) You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or (b) it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: (a) it is a loss or outgoing of capital, or of a capital nature; or (b) it is a loss or outgoing of a private or domestic nature; or (c) it is incurred in relation to gaining or producing your exempt income; or (d) a provision of this Act prevents you from deducting it. (3) A loss or outgoing that you can deduct under this section is called a general deduction." For all practical purposes this section reproduces the provisions and concepts found in s 51(1) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). The submissions 72 The applicants submitted that the whole of the amount spent by an applicant in a year of income on sunglasses, sunhats or sunscreen in respect of which a deduction was claimed was an allowable deduction under s 8‑1 of the 1997 Act as expenditure incurred by an applicant in the course of gaining or producing assessable income. It was said that there was a real connection between the expenditure by an applicant on these items and the activities of each of the applicants in gaining or producing his or her assessable income. The applicants submitted that the derivation of assessable income was the cause of the expenditure on the sun protection items and that the sun protection items were used up during the time that the assessable income was gained or obtained. 73 The applicants submitted that to determine whether an outgoing was wholly or partly incurred in gaining or producing assessable income, it was necessary to characterise the outgoing by considering the essential character of the expenditure and its connection with the income producing operations undertaken by the taxpayer. It was said that, in the case of each of the applicants, the character of the relevant expenditures on sun protection items was for the purposes of, and to enable, productive work. The increased productivity of each of the applicants as a result of the use of one or more of the sun protection items confirmed that each of those items was used up during the time the assessable income was derived. The applicants argued that there was an analogy between each of the sun protection items used by the applicants and protective clothing, which has been found to be deductible, but in addition to providing protection, the sun protection items increased productivity and had an intimate relationship with the work undertaken. 74 The applicants contended that the Commissioner's argument wrongly focused on the item in respect of which the deduction was claimed and not the income producing activity which was the occasion for the expenditure. The applicants said that to determine whether an expenditure was deductible under s 8‑1 of the 1997 Act, it was necessary to look at the expenditure or outgoing and the relationship between that expenditure and the activity undertaken by that taxpayer and not merely some abstract question about the physical nature of the item. Accordingly, it was necessary to focus on the activity, including the conditions of employment or the working environment, and determine whether or not the outgoing was an outgoing which was occasioned by the activity. The applicants asserted that in the case of each of the applicants, the income‑earning activity included protection from risks arising from work activities. The distinction between an artificial environment and the natural environment was irrelevant. An artificial environment and the natural environment were simply part of the conditions in which the particular employee had to carry out his or her work‑related activities. Further, the applicants submitted that there was no legislative provision or legal authority which required a worker to have harsh or unusual working conditions for the expenditure to be deductible. 75 The Commissioner submitted that none of the expenditures by the applicants on sun protection items was deductible because, in each case, the expenditure was not incidental or relevant to the applicant's income‑producing activities and was of an essentially private nature. The Commissioner contended that there was no, or no sufficient, connection between the particular income‑producing activities of the applicants and their expenditures on sun protection items. The occasion of each applicant's expenditure on sun protection was not found in their respective income‑producing activities, but in the protection of each applicant from the effects of sunlight. The activities by which the applicants earned their assessable income did not include the application of sunscreen, the wearing of a hat, or the wearing of sunglasses and therefore did not include the doing of the things which occasioned the expenditure. The expenditures were a living expense, not a business expense, and were caused by living and working in the sunlight. 76 The Commissioner argued that expenditure which makes a person feel more comfortable when working or which increases output was indistinguishable from expenditure undertaken to achieve good health, regular exercise, sound sleep or the wearing of comfortable clothes. The Commissioner asserted that, except for Mr Flood's sunglasses (par 8 above), the applicants' sun protection items had no additional features which elevated the expenditures out of the private category and into the work category. 77 The Commissioner submitted that an artificial working environment may transform expenditures on what were usually regarded as private items into expenditures which were relevant and incidental to gaining or producing income. It was the combination of the artificial working environment and the activities undertaken in that environment which created the need for the item and the necessary connection between the expenditure and the income producing activity. However, the Commissioner asserted that in the natural environment, the necessity for the sun protection items was created by the changing natural conditions and not by the task itself. The Commissioner contended that the natural environment was of universal application to every worker who spent time outdoors and was infinitely variable. Reasoning 78 Pursuant to s 8‑1 of the 1997 Act, a taxpayer is entitled to a deduction for expenditure: · incurred in gaining or producing assessable income, or · necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income, which is not of a capital, private or domestic nature, or incurred in relation to gaining or producing exempt income. Section 8‑1, and its predecessor s 51 of the 1936 Act, state the circumstances in which work‑related expenditure is deductible in general terms. 79 There are a number of principles and propositions which are well‑established in relation to whether expenditure is deductible as being expenditure incurred in gaining or producing assessable income: · Expenditure incurred in the course of gaining or producing assessable income is expenditure incurred in gaining or producing that assessable income: Ronpibon Tin NL v Federal Commissioner of Taxation (1949) 78 CLR 47 at 56‑57; Lunney v Commissioner of Taxation (1958) 100 CLR 478 at 496‑497; Commissioner of Taxation v Payne (2001) 202 CLR 93 at 99‑101. · The question whether an outgoing is wholly or partly incurred in gaining or producing assessable income is a question of characterisation: Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 17. The question to be asked is whether the occasion of the outgoing operates to give it the essential character of a working expense, that is, whether the occasion of the outgoing is to be found in the income‑earning activity itself: Ronpibon Tin NL v Federal Commissioner of Taxation (supra) at 57. · It is not sufficient to make an expenditure deductible that it is a prerequisite to, or a sine qua non of, the derivation of assessable income: Lunney v Commissioner of Taxation (supra) at 498‑499; Commissioner of Taxation v Cooper (1991) 29 FCR 177 at 198; Federal Commissioner of Taxation v Edwards (1993) 93 ATC 5162 at 5167 (upheld on appeal (1994) 49 FCR 318). · An outgoing, in order to be deductible, must be incidental and relevant to the activities directed at gaining or producing the assessable income: W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 at 305; Ronpibon Tin NL v Federal Commissioner of Taxation (supra) at 56; Lunney v Commissioner of Taxation (supra) at 497. · It is sufficient and necessary that the occasion of the outgoing be found in whatever is productive of the assessable income, or would be expected to produce the assessable income: Ronpibon Tin NL v Federal Commissioner of Taxation (supra) at 57; John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 426; Commissioner of Taxation v Payne (supra) at 99. · The taxpayer must show a real connection between the expenditure and the taxpayer's employment activities as an employee in order for the expenditure to be deductible: Federal Commissioner of Taxation v Smith (1981) 147 CLR 578 at 586; Mansfield v Federal Commissioner of Taxation (1995) 31 ATR 367 at 372. · The words "to the extent to which" in s 8‑1 indicate that the provision contemplates apportionment: Ronpibon Tin NL v Federal Commissioner of Taxation (supra) at 59; Fletcher v Federal Commissioner of Taxation (supra) at 16. Accordingly, where expenditure on an item serves both an income producing function and a private function, it will be necessary to apportion the expenditure between these two functions. · The fact that an employer requires an employee to expend money on the purchase of a particular item is relevant in considering deductibility, but it is not determinative of deductibility under s 8‑1. It is still necessary to demonstrate that the relevant expenditure is occasioned by the work income‑producing activity: Mansfield v Federal Commissioner of Taxation (supra) at 374; Cooper v Commissioner of Taxation (supra). 80 In Fletcher v Federal Commissioner of Taxation (supra), the High Court encapsulated these principles and propositions at 17‑18: "The question whether an outgoing was, for the purposes of s 51(1), wholly or partly 'incurred in gaining or producing the assessable income' is a question of characterization. The relationship between the outgoing and the assessable income must be such as to impart to the outgoing the character of an outgoing of the relevant kind. It has been pointed out on many occasions in the cases that an outgoing will not properly be characterized as having been incurred in gaining or producing assessable income unless it was 'incidental and relevant to that end'. It has also been said that the test of deductibility under the first limb of s 51(1) is that 'it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income or, if none be produced, would be expected to produce assessable income'. So to say is not, however, to exclude the motive of the taxpayer in making the outgoing as a possibly relevant factor in characterization for the purposes of the first limb of s 51(1). At least in a case where the outgoing has been voluntarily incurred, the end which the taxpayer subjectively had in view in incurring it may, depending upon the circumstances of the particular case, constitute an element, and possibly the decisive element, in characterization of either the whole or part of the outgoing for the purposes of the sub‑section. In that regard and in the context of the sub‑section's clear contemplation of apportionment, statements in the cases to the effect that it is sufficient for the purposes of s 51(1) that the production of assessable income is 'the occasion' of the outgoing or that the outgoing is a 'cost of a step taken in the process of gaining or producing income' are to be understood as referring to a genuine and not colourable relationship between the whole of the expenditure and the production of such income." (footnotes omitted) 81 Several authorities also point to the need to examine the scope of the operations undertaken by the taxpayer for the production of assessable income to determine whether the relevant expenditure is incidental and relevant to the derivation of assessable income from those operations. In Federal Commissioner of Taxation v Smith (supra), Gibbs CJ, Stephen, Mason and Wilson JJ said at 585‑586: "[Section 51 (1)] does not require that the purpose of the expenditure shall be the gaining of the income of that year, so long as it was made in the given year and is incidental and relevant to the operations or activities carried on for the production of income. What is incidental and relevant in the sense mentioned falls to be determined not by reference to the certainty or likelihood of the outgoing resulting in the generation of income but to its nature and character, and generally to its connexion with the operations which more directly gain or produce the assessable income." In Commissioner of Taxation v Cooper (supra), Hill J said at 198: "It will often, therefore, be necessary to analyse with some care what the operations or activities are that are regularly carried on by the taxpayer for the production of income, and to determine whether the outgoings (or where relevant the losses) are incidental and relevant to those operations or activities." 82 It should be emphasised that the relevant inquiry to be made is whether the outgoing was incurred in the course of deriving assessable income and not whether it was incurred for the purpose of deriving assessable income. This was made clear by the majority of the High Court in Commissioner of Taxation v Payne (supra). Gleeson CJ, Kirby and Hayne JJ said at 102: "The principle which had to be applied in that case [Lunney], and must be applied in this, is one which limits the allowance of a deduction for outgoings to those outgoings that are incurred in the course of deriving assessable income. It is a principle which excludes outgoings which, although incurred for the purpose of deriving assessable income, are not incurred in the course of doing so. Distinguishing between those two kinds of outgoing may well invite some criticism, but if it does, the criticism is directed at the legislation, not at the way in which the legislation has been interpreted. Moreover, the distinction has long been made and it is now too late for the Court to 'rip it up' and treat the section as allowing any and all deductions having some causal connection with the derivation of assessable income." 83 As was pointed out by the majority in Payne (supra), the occasion of the outgoing must be found in whatever is productive of actual or expected income in order for the expenditure on the outgoing to be deductible under s 8‑1. 84 What is common to all the applicants is that the nature and content of their work requires them to be outdoors exposed to the sunlight for extended periods. They do not have an option as to the environment in which they can work. Mr Morris, the farm manager must work in the open on the farm; Mr Pearson, the surveyor, can only carry out his surveying activities in the open air; Mr Giffard, the site construction supervisor, must work on the golf course. They are compelled by the nature of the work they are required to undertake in order to carry out their income producing activities to work in an environment of exposure to sunlight. 85 This aspect of their work gives rise to an issue of characterisation and the extent to which there is a sufficient connection between the expenditure on the sun protection items and the manner in which the applicants derive their respective assessable incomes. The Commissioner contended that the fact that the applicants were required to undertake work activities in the open air did not provide the necessary connection and that, rather, the expenditures incurred were simply incurred as a consequence of living and working in sunlight. It is true, as the Commissioner submitted, that none of the work activities or tasks performed by the applicants required the wearing of a hat or sunglasses, or the application of sunscreen as part of the work process, but that proposition fails to have sufficient regard to the environment in which, or the place at which, the work activity is to be undertaken. It is also important to take into account the fact that the wearing of a hat and sunglasses and the application of sunscreen enables the applicants to be more productive in their work output. This aspect of assisting or enhancing productivity is not the determiner of deductibility, but it assists in demonstrating that there is a connection between the expenditure on those items and the derivation of assessable income, and that the expenditure is incidental and relevant to that derivation. 86 The relevant consideration is not simply that the applicants work outside in the open air but, rather, that they are obliged to do so in order to carry out the work as a result of which their assessable income is derived. 87 The Commissioner contrasted the position of a person working in a solarium in which artificial ultraviolet light was provided to enable indoor tanning. In such a case, the Commissioner said that the worker confronted an occupation–specific exposure to ultraviolet rays produced by equipment in the workplace. Thus, according to the Commissioner, it was the particular income–earning activity engaged in by the worker which provided the occasion for the expenditure incurred by the worker in limiting the worker's exposure to artificial light. This position may be accepted, but it is reached by considering the place at which and the environment under which the particular income‑earning activity is undertaken. 88 The Commissioner placed considerable emphasis on the distinction between persons working in an artificial environment and persons working in a natural environment. However, this distinction fails to pay sufficient regard to the fact that it is the nature of the particular employment of the present applicants which dictates whether they work in an artificial environment or in the natural environment. 89 When one contrasts the worker in the solarium with, for example, the surveyor working in the open air, it is seen that it is the particular income‑earning activity engaged in by each person which provides the occasion for the expenditure incurred by each person in limiting that person's exposure to harmful light rays. The fact that in one case the light source is artificial, whereas in the other case the light source is natural, is a distinction without a difference. What is common to both workers is that each must carry out his or her income‑producing activities in an environment which exposes them to harmful light rays in respect of which they need protection. 90 It is not to the point, as the Commissioner submitted, that sunglasses and hats are conventional clothing and have no intrinsic occupation‑specific function in relation to the work of any of the applicants. (The Commissioner appeared to except the second applicant Mr Flood, who wears Sportsoptic super polarised sunglasses, from this submission). When the proposition is put by the Commissioner in these terms, it focuses on the nature of the item, the subject of the expenditure, rather than upon the activity and the environment in which the activity is undertaken which gives rise to the occasion for the expenditure. It is the nature of the use of the sunglasses, the hat and the sunscreen in relation to the income‑producing activities of the applicants which identifies the occasion of the outgoing, rather than simply the nature of the item itself. 91 The Commissioner put the distinction another way when he submitted that in some circumstances the working environment is intrinsic to the duties undertaken by a worker, and that it is of the nature of the duties that they are carried out in a particular workplace which is an artificial working environment. It was said that it is of the nature of the duties of a solarium worker that the worker is exposed to ultraviolet radiation in providing the solarium service to the customers. It was also said that it is in the nature of working in a blast furnace that a worker approaches the furnace door and needs protection against heat, molten metal and sparks. The Commissioner then drew a contrast by submitting that it is not in the nature of building or carpentry that a builder or carpenter wears a hat, and that it is not in the nature of designing golf courses that the designer puts on sunglasses. The contrasting position, put this way, concentrates on the item used instead of focusing on the income‑producing activity undertaken in the particular environment, which is the relevant issue to consider for the purpose of deductibility under s 8‑1. The underlying factor which is common to the solarium worker, the steelworker, the builder and the carpenter is that in order to derive their assessable income they are required (by the nature of their work) to work in a particular environment, in respect of which they have no choice, in which they are exposed to harmful light and heat rays which necessitate the use of protective equipment or products. 92 Putting the matter another way, the occasion of the relevant expenditure in each case is found in the income‑producing activities of the applicants. The Commissioner submitted that, rather, the occasion of the relevant expenditure was to be found in the protection of the applicants from the effects of sunlight. That submission pays insufficient regard to the fact that the occasion of the expenditure is that the applicants are required (in the sense in which I use that expression in [105] below) by the nature of the income‑producing activities from which the applicants' income is derived, to work in an environment which exposes them to harmful ultraviolet rays. 93 The Commissioner submitted that the applicants' use of sun protection items to protect them from the sun's rays was no different from the situation of a short‑sighted person who needed glasses at his or her desk to read documents and who could not undertake the work without glasses, or an employee who wore warm clothes to work because there was no heating in the office. It was said that, in these cases, expenditure on the glasses and the warm clothes was not deductible. That may be so, but the examples used are different from the situation, such as in the present circumstances, where the applicants are required to work in an environment in which they are exposed to conditions which require them to take protective steps in order to avoid harm in the course of carrying out their income‑producing activities. 94 It is true that being a carpenter does not involve the application of sunscreen, but being a carpenter, like Mr Barry the sixth applicant, who is required by the nature of his income‑producing activities to work outside, does involve the application of sunscreen. In such a situation there is established the appropriate connection and relevance between the expenditure and the income‑producing activities. 95 Not all occupations or callings expose workers to the harm which can be caused by over‑exposure or excessive exposure to ultraviolet rays and sunlight. It is the nature of the activity which enables a worker to derive assessable income which is relevant to consider in this context, rather than the nature of the item for which a deduction is claimed. 96 A number of cases have demonstrated that the nature of the work place and the work environment in which the income‑producing activities of the taxpayer are required to be undertaken is a critical consideration in determining the deductibility of expenditure by the taxpayer which is claimed to have been incurred in the course of gaining or producing assessable income. 97 The situation most analogous to the claims of the applicants is found in Mansfield v Federal Commissioner of Taxation (1995) 31 ATR 367. A flight attendant employed by Australian Airlines claimed deductions for expenditure on cosmetics (including moisturiser), hair care items (including conditioner), pantyhose and shoes which were disallowed by the Commissioner. Hill J allowed the deductions for expenditure on moisturiser, hair conditioner, pantyhose and shoes but disallowed the deductions claimed in respect of other grooming and haircare items. The taxpayer supported her claim in relation to the expenditure on moisturiser by saying that the "continual working in pressurised aircraft dries the skin and requires the use of moisturisers". The airline required certain standards of grooming and it gave attendants advice on grooming and the need for moisturisers. Hill J found that the taxpayer had incurred expenditure on moisturisers used to combat the dehydration effects of pressurisation and lack of humidity in the cabin. 98 Hill J concluded that the expenditure on moisturisers was deductible under s 51(1) of the Act and said at 374: "In my view, expenditure for moisturiser, the necessity for which was brought about by the harsh conditions of employment which Mrs Mansfield was called upon to endure, is incidental and relevant to her occupation as a flight attendant. It has the necessary connection with her activities in the cabin itself. It is these activities which are directly relevant to her gaining and producing assessable income by way of salary." Hill J referred to the airline's requirement that flight attendants be well‑groomed and continued at 374: "As the cases indicate, the mere fact that a particular expenditure may be required to be made by the employer, while relevant will not be determinative of deductibility. The additional feature present in the present case is the fact that the occasion of the expenditure is to be found in Mrs Mansfield's working in the cabin, that is to say, in the dehydration brought about by pressurisation of the cabin at altitude." However, his Honour did not allow the claim for expenditure on makeup, even though it was required by the airline, as it was expenditure of a personal nature. 99 The important distinction which Hill J drew between the expenditure on moisturisers and the expenditure on makeup was that it was the working environment in the cabin which necessitated the use of moisturisers; that working environment did not necessitate the use of makeup to any greater extent than was required by not working in the cabin. 100 The working environment in the cabin was also the feature which enabled Hill J to allow the deduction claimed for expenditure on shoes. His Honour accepted that "generally expenditure on ordinary articles of apparel will not be deductible, notwithstanding that such expenditure is necessary to ensure a suitable appearance in a particular job or profession", but he found a feature in the shoes which was related to the work environment in which they were worn. Hill J explained this feature at 375: "The shoes in the present case were required to be worn as part of the uniform. It is true that there was nothing to distinguish the shoes from shoes which a flight attendant might purchase for domestic purposes other than, on the evidence of the present case, colour. But there are other features besides the requirement that the shoes match the remaining parts of a flight attendant's uniform which assist the taxpayer here. There is the additional feature that the cabin pressure requires the shoes to be a half‑size too large for ordinary use. Further, of course, there is the fact that the taxpayer's employment brings about regular scuffing of the shoes. It is these features that lead, in my view, to the conclusion that the occasion of the outgoing on shoes, that is to say cabin shoes, should be seen as being found in the duties which Mrs Mansfield performed as a flight attendant in the year of income." Although the cabin shoes were worn solely inside the cabin and never outside it, what loomed large in his Honour's reasoning was the fact that it was the work environment that brought about the use of the shoes in order for the taxpayer to carry out her cabin duties. 101 Hill J allowed the deduction for hair conditioner which was "necessitated by the lack of humidity and pressurisation of the cabin", as it fell into the same category as the moisturiser, but did not allow expenditure claimed for the remaining hairdressing items as it was of a private nature. Hill J said at 376: "There is no additional feature which shows any relationship between the expenditure on the one hand and Mrs Mansfield's employment as a flight attendant. The expenditure does not have the character of employment‑related expenditure and in my view is not deductible. Her selection of a perm, which requires somewhat regular maintenance, is her choice. It is not occasioned by her employment." 102 The Commissioner submitted that the reasoning and conclusions in relation to moisturiser, conditioner and shoes in Mansfield did not apply to the applicants as the "additional feature", which provided the relevant connection between the expenditure and the employment activities and which took the expenditure out of the category of expenditure of a personal or private nature, was the pressurised cabin, which the Commissioner described as an artificial working environment. 103 The submission was expressed in the following terms: "In some circumstances, like the airline hostess, the working environment is intrinsic to the duties. It is of the nature of the duties that they are done in that particular workplace, which we call an artificial working environment. It is of the nature of the duties of a solarium worker that she is exposed to ultraviolet radiation in providing that service to the customers of the business. It is of the nature of working in a blast furnace that you approach the furnace door and need protection against sparks. It is not of the nature of building or carpentry that you put a hat on. It is not of the nature of designing golf courses that you put on sunglasses" 104 I consider that the distinction drawn between an artificial working environment and an ordinary or naturally occurring working environment obscures the key issue to be identified. That issue is to identify the environment in which, by virtue of the duties required by the nature of the employment, the employee is to discharge those duties. The fact that ordinary people may go about their personal and private activities in the same environment, and in the course of doing so use a hat, sunscreen and sunglasses for protection from the natural rays of the sun is not to the point. People in their personal and private activities may be exposed to the elements. They may also be required to expose themselves to those elements in the course of undertaking their work. 105 But what is important for present purposes, is that the applicants are required by the nature of their work obligations and duties to expose themselves to the rays of the sun for sustained periods of time in order to fulfil and carry out their work activities. I use the expression "required" by reference to what has to be undertaken in order to carry out their duties. I do not use that expression by reference to an expenditure which is stipulated by the employer as it is a well accepted principle that the fact that expenditure is required by an employer to be expended by an employee will not necessarily render the expenditure deductible under s 51(1) of the 1936 Act or s 8‑1(1) of the 1997 Act, although it is a relevant factor to be taken into account: Commissioner of Taxation v Cooper (supra) at 184, 200; Mansfield v Federal Commissioner of Taxation (supra) at 373. 106 The Commissioner relied upon Commissioner of Taxation v Cooper (supra) in support of his submission that the income‑producing activities of the applicants did not include the use or application of sun protection items with the result there was no real connection between the expenditure on the sun protection items and the applicants' employment or work activities. In Cooper a professional footballer claimed a deduction under s 51(1) of the 1936 Act in respect of expenditure on specified quantities of food and drink he was required by his employer to consume in order to maintain an optimum playing weight. 107 A majority of the Court (Lockhart and Hill JJ) held that there was no necessary connection or nexus between the consumption of the food and drink, and the instruction to consume it, and that the essential character of the expenditure was private. 108 Lockhart J said at 185: "The taxpayer incurred the expenditure on additional food and drink for the purpose of increasing his weight and thus to play professional football and earn assessable income. But its character as the cost of additional food and drink is neither relevant nor incidental to the training for and playing of football matches, which is the activity by which he gained assessable income. The expenditure was not incurred in or in the course of that activity. The taxpayer was paid money to train for and play football, not to consume food and drink. His income‑producing activities did not include the consumption of food and drink." Hill J said at 199‑201: "The income‑producing activities to be considered in the present case are training for and playing football. It is for these activities that a professional footballer is paid. The income‑producing activities do not include the taking of food, albeit that unless food is eaten, the player would be unable to play. Expenditure on food, even as here 'additional food' does not form part of the expenditure related to the income‑producing activities of playing football or training." 109 This analysis does not easily translate into the applicants' circumstances in a manner which supports the Commissioner's submissions. The connection between the sun protection items and the applicants' income‑producing activities is closer, more immediate and more direct than the connection between the intake of extra food and drink and the activity of playing football in Cooper. Mr Cooper's income‑producing activities may not have included the consumption of extra food and drink, but the applicants' income‑producing activities were such that they included carrying out employment duties whilst exposed to the harmful rays of the sun. The nexus is closer and the expenditure on sun protection items is more incidental and relevant to the applicants' work activities than was the expenditure by Mr Cooper on extra food and drink. It is the nature of the activity which gives rise to the expenditure upon which attention must be focused in order to determine the nexus between the subject matter of the expenditure and the activity which produces assessable income. 110 Similar reasoning underlies the conclusion of Gummow J in Federal Commissioner of Taxation v Edwards (1993) 119 ALR 375 (which was upheld on appeal, (1994) 49 FCR 318), where particular emphasis was placed on the essential character of the expenditure for which a deduction was claimed. The personal secretary to the wife of the Governor of Queensland claimed a deduction under s 51 of the 1936 Act in respect of expenditure on clothing, hairdressing and dry‑cleaning which she used and required in the course of carrying out her duties. On occasions, the personal secretary was required to undertake a number of changes of clothing during the day. 111 The Tribunal found that the taxpayer's income‑producing activities included her being suitably dressed to meet the formality of the occasion of each engagement in any one day which required her wardrobe to be more extensive. Gummow J accepted the submission that it was open for the Tribunal to characterise the expenditure on clothing as serving a mixed business and private purpose, notwithstanding that the clothing was conventional and the taxpayer selected the items of clothing she would wear. 112 At first instance, Gummow J accepted that the Tribunal had not erred in finding that the essential character of the expenditure on clothing was not to clothe the taxpayer in the ordinary sense as part of daily life but to enable her to perform satisfactorily the duties of her position. His Honour held that the Tribunal had not considered the essential character of the expenditure on hairdressing and dry‑cleaning and held that there must have been a strong likelihood that, at least as to the dry‑cleaning, the essential character of the outgoing was not sufficiently relevant to the income‑producing activity of the taxpayer. Apparently with the consent of the parties, Gummow J held that the expenditure on these items should be disallowed as a deduction. 113 An appeal against Gummow J's decision was dismissed: Commissioner of Taxation v Edwards (1994) 49 FCR 318. The Full Court rejected the proposition that expenditure on conventional clothing worn conventionally when working could never be an outgoing incurred in gaining or producing assessable income and was always an outgoing of a private or domestic nature. However, the Full Court made it clear that its decision did not establish that expenditure on clothing acquired and worn at work would, because of that circumstance alone, be deductible as an outgoing incurred in deriving assessable income. 114 Although the decision in Edwards turned on its own special facts, it demonstrates that expenditure on items which ordinarily might be regarded as for private or domestic use will be deductible if the expenditure on the item can be characterised as having a close and relevant connection with the income‑producing activity. 115 The applicants' evidence was that the sun protection items were necessary to enable them to perform their employment duties, that these items increased productivity and provided protection from exposure to the sun and ultraviolet radiation which can cause sunburn and skin cancer. This evidence was not disputed by the Commissioner. These factors, therefore, provide a substantial and close nexus between an applicant's expenditure on sun protection items and his or her income producing activities. Working outside in conditions of exposure to the sun and ultraviolet radiation forms part of the activities undertaken by each of the applicants for the production of their assessable income. Accordingly, there is a real connection between an applicant's production of assessable income and his or her expenditure on items such as sun protection items which increase productivity and provide protection while carrying out work activities. That is to say, an applicant's income producing activities include the use of the sun protection items. 116 This does not mean that expenditure on sunscreen, sunhats and sunglasses used at work will always be deductible. In each case it will be necessary to examine the facts of the case, including the nature and scope of the income‑producing activities and the nature and character of the expenditure, to determine whether there is a real connection between the expenditure on such items and the activities which produce assessable income. 117 The Commissioner submitted that in any event the applicants' expenditures on sun protection items were essentially of a private character and, therefore, were not incidental and relevant to their income‑producing activities. It was said that expenditure on conventional clothing, toiletries and pharmaceuticals was prima facie a private or living expense. The sunglasses and the sunhat were conventional clothing and the sunscreen was a pharmaceutical product which enabled the applicants to perform their employment duties without pain or discomfort. 118 The evidence pointed to the fact that some of the applicants used the sun protection items at work and home and the Commissioner conceded that the fact that such items were used at home and work did not affect the allowance of the relevant proportion of the expenditure. However, the Commissioner argued that the fact the items could be used, and were used, without differentiation for private purposes pointed to their private character. According to the Commissioner neither sun-glasses (with the arguable exception of the Sportsoptic sunglasses used by Mr Flood), nor a hat, nor sunscreen had an occupation specific function or occupational character in relation to any of the occupations of the applicants. 119 The Commissioner accepted that a workplace with conditions which peculiarly gave rise, by way of example, to situations of dehydration or glare, could transform what was ordinarily private expenditure into an expenditure which had the relevant nexus with the income‑producing activities of the taxpayer. The Commissioner acknowledged, for example, that a worker in a blast furnace would be entitled to a deduction in respect of expenditure on protective clothing and that expenditure would be an allowable deduction in respect of the purchase of special glasses required to protect a person against the glare of a visual display unit as the glasses had no use outside the workplace. 120 However, the Commissioner's argument depended on the proposition that the income‑producing activities of the taxpayer must be undertaken in what he called an artificial working environment in order to convert expenditure on private items into expenditure on items which was relevant and incidental to the gaining or producing of income. 121 I do not consider that the distinction between an artificial working environment and a working environment under naturally occurring conditions should determine whether expenditure is of a private nature. The reason why an artificial working environment may transform expenditure on what is usually regarded as a private item into expenditure relevant and incidental to the gaining or producing of assessable income is not because the working environment is artificial rather than naturally occurring. It is because the taxpayer who is working in that environment is required (because of the nature of the work to be undertaken for the purpose of undertaking the income producing activities) to work in an environment, whether it be artificial or naturally occurring, which has features about it which create the real connection between the expenditure and the taxpayer's employment activities which have to be undertaken. 122 Thus, if the nature of the work required to be undertaken by a taxpayer in order to carry on his or her income‑producing activities is such that the taxpayer must carry on those activities in a manner which exposes him or her to harmful rays of the sun and ultraviolet radiation and the taxpayer uses sunglasses, a hat or sunscreen to protect himself or herself from such harmful rays and radiation whilst undertaking those work activities, the expenditure on such items will not be classified as expenditure of a private nature, which it would otherwise be if the taxpayer did not have to carry out his or her income‑producing activities exposed to the harmful rays of the sun and ultraviolet radiation. 123 In order to take expenditure out of the category of expenditure of a private nature and make it deductible expenditure, the Commissioner looked for an "additional feature" which took the expenditure out of the category of private expenditure. The Commissioner did not consider that working outdoors provided that additional feature because it was not specific to any of the occupations of the applicants. The Commissioner reached that conclusion because of the distinction he drew between an artificial and a naturally occurring working environment. I do not consider this is the relevant distinction to draw. Rather, the distinction is determined by asking whether the relevant work of the taxpayer which must be carried out in order to gain or produce assessable income is to be carried out in conditions which expose the taxpayer to factors such as the ultraviolet rays of a solarium, the heat, flames and sparks from a blast furnace or the harmful rays and ultraviolet radiation from the sun. If the answer to this question is in the affirmative, then the expenditure on items such as sun protection items used and applied during the undertaking of the work will not be expenditure of a private nature but will rather be expenditure relevant and incidental, and with a sufficient nexus, to the gaining or producing of assessable income. 124 In short, I do not accept the Commissioner's distinction between an artificial and a natural working environment. Such a distinction is itself artificial and is not supported by the wording of s 8‑1 which provides that an expenditure is deductible if it is incurred in gaining or producing assessable income and is not of a capital, private or domestic nature. Notwithstanding that an expenditure on an item may often be of a private nature, s 8‑1 requires an assessment of the connection between the expenditure and the income‑producing activity of the taxpayer in order to determine whether the expenditure is, or is not, of a private nature. The decision in Mansfield shows that the working environment is relevant to that analysis, but it does not require the nature of the working environment in respect of which the expenditure is incurred to be artificial in order for the expenditure to be deductible under s 8‑1 and to fall outside the category of expenditure of a private nature. The conditions of a natural environment may be just as intrinsic to an income producing activity as the conditions of an artificial environment. 125 Although expenditure on sunglasses, a sunhat and sunscreen may be of a private nature in certain contexts, I am satisfied that the circumstances in which these items were used by each of the applicants and the relationship between the expenditure on these items and the income‑producing activities of each of the applicants required to be undertaken in a naturally occurring environment were such that the expenditure was not of a private nature. 126 I was referred to Federal Commissioner of Taxation v New South Wales Cancer Council (1999) 99 ATC 4819 in which a Full Court dismissed an appeal by the Commissioner against a decision that three models of sunglasses sold by the New South Wales Cancer Council were exempt from sales tax pursuant to the provisions of the Commonwealth sales tax legislation: New South Wales Cancer Council v Federal Commissioner of Taxation (1999) 99 ATC 4427. The issue for determination was whether the sunglasses came within the description in the exemption: "Equipment of a kind ordinarily used in the course of industrial operations to protect persons engaged in those operations, including masks, respirators, shields, goggles, visors, helmets, belts and machine guards." Sackville J, at first instance, concluded that the ordinary language of the exemption did not result in excluding equipment used in the course of industrial operations to protect against natural hazards inherent in the environment. Sackville J found that the sunglasses, which complied with a relevant Australian Standard, other than fashion spectacles, were ordinarily used in the course of work by outdoor workers to protect them against the health risks associated with exposure to ultraviolet radiation and visible light. On appeal, the Full Court agreed with Sackville J's reasoning. That reasoning is of interest, but of limited use in the present circumstances, where there is a different statutory scheme, different issues of statutory interpretation and different concepts underlying the words used. 127 I turn to the circumstances of each applicant and the determination of the deductibility of their individual expenditures on sun protection items. 128 The first applicant, Rodney James Morris. I am satisfied that the expenditure of $15 claimed as a deduction in respect of his purchase of sunscreen is incidental and relevant to his occupation as a farm manager. The necessity for the expenditure was brought about by the conditions of his employment as a farm manager which requires him to work in an environment which exposes him to the harmful rays of the sun and ultraviolet radiation for long periods. There is a sufficient real connection between the expenditure and Mr Morris' income‑producing activities which results in the expenditure being deductible under s 8‑1. 129 The second applicant Rodney James Flood. I am satisfied that the expenditure of $200 in respect of the acquisition of a pair of sunglasses, $20 in respect of the acquisition of a hat, and $30 in respect of the acquisition of a quantity of sunscreen is incidental and relevant to his occupation as a master of a game‑fishing vessel. The necessity for the expenditures was brought about by the conditions of his employment as a master of a game‑fishing vessel which required him to work in an environment which exposed him to the harmful rays of the sun and ultraviolet radiation. There is a sufficient real connection between Mr Flood's activities as a master of a game fishing vessel which required him to spend an average of eight hours each day working in the sunlight and his expenditure on the sunglasses which he purchased for use at work. The essential character of Mr Flood's expenditure on the sunglasses is to enable him to perform his work duties satisfactorily and provide protection while he carries out those duties. The connection between the expenditure and Mr Flood's work activities is strengthened by the fact that the sunglasses are particularly adapted for his work activities as they are made from glass with a superior filtration system and have leather patches on their sides which assist Mr Flood to avoid flying hooks and keep out glare. The connection is also strengthened by the fact that without the sunglasses Mr Flood could not see rocks, reefs and other dangerous objects in the water or the bait fish, or identify colour changes in the water to enable him to identify areas where the fish naturally feed, and he could not manoeuvre the boat to take lines near the game fish. While Mr Flood carries out his work activities, the sunglasses also protect him from damage to his eyes. 130 Mr Flood's expenditure on a hat is also deductible as it protects him while he works from sunburn, skin cancer, sunstroke and the possibility of collapse from dehydration and loss of concentration which may arise as a result of the work environment in which he is required to carry on his income‑producing activities. The hat also reduces glare and makes visibility easier. I am further satisfied that Mr Flood's expenditure on sunscreen is deductible as its essential character, determined by reference to his work environment, is to protect him from sunburn whilst working and to enable him to perform his duties satisfactorily. 131 The third applicant, Ruth Faraday Boydell. I am satisfied there is a real connection between Ms Boydell's income‑producing activities and part of her expenditure of $30 in respect of her acquisition of sunglasses, which she uses about 90% of the time when working outdoors. Ms Boydell estimated that she wore the sunglasses 75% of the time she was working and 25% of the time when she was not working. Accordingly, an apportionment of this expenditure will be required to establish the amount of the deduction. This connection is supported by the Occupational Health and Safety Manual published by her employer which requires staff teaching maritime studies to wear eye protection. This is not determinative of deductibility but it is relevant to establishing the extent of the connection. 132 The connection is also supported by the assistance which the sunglasses give Ms Boydell in carrying out her work duties in the outside environment in which she is required to work in order to undertake her income‑producing activities. I am satisfied therefore that a proportion of Ms Boydell's expenditure on the sunglasses is incidental and relevant to her occupation as a teacher of maritime studies. The necessity for such expenditure was brought about by the conditions of her employment which requires her to work in an environment which exposes her to the harmful rays of the sun and ultraviolet radiation. I reach the same conclusion and make the same finding in respect of Ms Boydell's expenditure of $10 in respect of the acquisition of sunscreen. 133 The fourth applicant, Jace Thomas Pearson. I am satisfied that there is a real connection between part of Mr Pearson's expenditure of $40 on two pairs of sunglasses which he wears to reduce glare, for comfort, accuracy and to enable him to work in all weather conditions, and Mr Pearson's work as a surveyor which requires him to spend 70‑80% of his time outdoors. As Mr Pearson uses the sunglasses 80% for work purposes and 20% outside of work it is necessary to apportion that expenditure. The amount of the expenditure to be apportioned in respect of Mr Pearson's use of the sunglasses at work is incidental and relevant to his work as a surveyor in an open air environment which exposes him to the harmful rays of the sun and ultraviolet radiation. The necessity for that expenditure was brought about by the conditions of his employment as a surveyor which requires him to work in that environment. Mr Pearson also claimed a deduction in respect of his expenditure of $25 on a straw hat which he uses only at work and his expenditure of $40 on sunscreen which he uses exclusively for work purposes. I am also satisfied that there is a real connection between Mr Pearson's expenditure on the hat and the sunscreen and his income‑producing activities as the hat and sunscreen protect Mr Pearson from the harmful rays of the sun and ultraviolet radiation and increase his productivity. 134 The fifth applicant, Charles Peter Giffard. I am satisfied that a proportion of the expenditure of $25 claimed in respect of Mr Giffard's acquisition of sunglasses and the expenditure of $14 claimed in respect of his acquisition of sunscreen is incidental and relevant to his occupation as a Site Construction Supervisor. Mr Giffard uses the sunglasses 20% of the time for private or domestic purposes and uses 50% of the sunscreen whilst at work. I consider that there is a real connection between Mr Giffard's expenditure on these items and his income‑producing activities as a Site Construction Supervisor at the Concord Golf Club. His work duties require him to spend 85‑90% of his working time during September to April working outdoors, during which time he wears sunglasses. Mr Giffard wears sunglasses at work about 85‑90% of the time during September to April and 40% of the time during May to August. Whilst working outdoors Mr Giffard is exposed to the harmful rays of the sun and ultraviolet radiation. The sunglasses reduce glare, provide protection against ultraviolet radiation, protect him against sunburn, assist him to focus on objects on the golf course and therefore protect him from the conditions of his employment and enable him to carry out his work duties in the outside environment. As Mr Giffard uses the sunglasses 80% at work and 20% outside work, it will be necessary to apportion the expenditure. 135 A proportion of Mr Giffard's expenditure of $7 on sunscreen is also deductible as it is incidental and relevant to Mr Giffard's income‑producing activities. The sunscreen protects him against sunburn and the consequences of having time away from work. Together with the sunglasses and hat, the sunscreen also assists him in the performance of his work duties and to prevent misjudgment. As Mr Giffard uses the sunscreen 50% at work and 50% outside of work, the expenditure should be apportioned. 136 The sixth applicant, Adrian Frances Barry. I am satisfied that there is a real connection between Mr Barry's expenditure of $50 on the purchase of a hat and $30 on the purchase of sunscreen which he used solely while working and Mr Barry's work as a self‑employed builder which requires him to spend 70‑80% of his time outdoors and thereby exposed to the harmful rays of the sun and ultraviolet radiation. These expenditures are incidental and relevant to Mr Barry's income‑producing activities. The use of sunscreen by Mr Barry protects his skin, reduces fatigue and heat exhaustion and prevents sunburn which enables him to work for longer periods and be more productive on hot days. The sunhat reduces heat exhaustion and fatigue and improves his comfort and productivity. The sunhat and sunscreen are necessary in Mr Barry's business because he exposes himself to the risk of sunburn, sunstroke, heat exhaustion and skin cancer when working outdoors and these items protect him and enable him to carry out his work with precision and to be more productive and safe. Further, Mr Barry has a particular need for these sun protection items because in his typical work places the ordinary glare of the sun is exacerbated by reflection from various surfaces such as glass and roofing material. 137 The seventh applicant, Una Ann Hampson. I am satisfied that the expenditure of $29 in respect of the acquisition of sunglasses, $55 in respect of the acquisition of two hats and $13 in respect of the acquisition of sunscreen are deductible as they have a real connection with Ms Hampson's income‑producing work as a physical education teacher. The necessity for the expenditures was brought about by the conditions of her employment as a teacher which requires her to work in an environment which exposes her to the harmful rays of the sun and ultraviolet radiation. When Ms Hampson works outdoors at school, the sunglasses protect her from harmful rays of the sun and ultraviolet radiation and ensure that her work place is not dangerous. They also assist her concentration, enable her to teach more efficiently, assist in preventing dangerous situations and decrease the incidence of headaches. The sunhats protect her face and neck against the ultraviolet rays and heat of the sun, reduce glare and improve her vision and concentration. Ms Hampson uses the sunscreen to protect her from ultraviolet rays and sunburn. 138 The eighth applicant, Stephen Douglas Fennell. I am satisfied that a proportion of the expenditure of $25 claimed as a deduction in respect of his purchase of sunglasses is incidental and relevant to his occupation as a district operator with Energy Australia. The necessity for the expenditure was brought about by the conditions of his employment as a district operator which requires him to work in an environment which exposes him to the harmful rays of the sun and ultraviolet radiation. I consider that there is a real connection between part of Mr Fennell's expenditure of $25 on the acquisition of sunglasses and his income‑producing activities as a district operator with Energy Australia. Mr Fennell estimated that he wore sunglasses approximately 90% of the time that he was working during the day. Mr Fennell wears the sunglasses because they reduce the glare from the sun, reduce and relieve eye strain caused by ultraviolet radiation, enable him to focus more clearly on overhead lines and equipment, enable him to focus for longer periods, enable him to read various types of written material when working outside and reduce exposure to personal danger from ultraviolet radiation and road accidents while driving. Mr Fennell estimated that for the twelve month period ending 31 December 1997 he wore the sunglasses 75% of the time when he was working and 25% of the time outside work. I infer that he used the glasses in the same ratios during the 1998 year of income. It will therefore be necessary to apportion 75% of the cost of the sunglasses as the expenditure which is deductible for the purposes of s 8‑1. 139 The ninth applicant, Anthony Graeme Lane. I am satisfied that the expenditure of $220 in respect of the acquisition of sunglasses, $35 in respect of the acquisition of a hat and $65 in respect of the acquisition of sunscreen are incidental and relevant to his occupation as a tennis umpire. The necessity for the expenditure was brought about by the conditions of his employment as a tennis umpire which requires him to work in an environment which exposes him to the harmful rays of the sun and ultraviolet radiation. There is a real connection between the expenditures and Mr Lane's employment income‑producing activities which results in the expenditures being deductible under s 8‑1. The sunglasses relieve the stress on his eyes and enhance his vision in the high glare environment in which he works. Without the sunglasses, Mr Lane's eyes tire after about 15 minutes which leads to increased errors. The connection between the expenditure on sunglasses and Mr Lane's work as a tennis umpire is strengthened by the fact that in January 1994, Tennis Umpires Australia Inc adopted a policy which strongly recommended to all tennis umpires the use of sunglasses and sunscreen. 140 Mr Lane wears a broad‑brimmed sunhat which he uses only when working as a tennis umpire. The hat is prescribed as part of the national uniform, which Mr Lane is required to purchase and wear when working outdoors as a line umpire. Further, the sunhat protects Mr Lane from the heat and wind and it significantly reduces the effect of the sun and assists the accuracy of his work. The environment in which Mr Lane works as a tennis umpire is a high glare environment and, together with the sunglasses, the wearing of the sunhat relieves stress and enhances Mr Lane's vision in these conditions. The sunscreen assists him to work for long, uninterrupted periods of time in the sun without suffering sunburn, exhaustion or a lack of concentration and lack of accuracy in his work. Mr Lane gave evidence, which was not disputed, that in the absence of these three sun protection items he would not be employed as a tennis umpire as often as the accuracy of his work would decline. He would not be able to control the proceedings of two or three tennis matches per day during each tournament and, therefore, he could not work as a professional tennis umpire. 141 The tenth applicant, Robert Lindsay Fitton. I am satisfied that the expenditure claimed of $30 in respect of the acquisition of sunglasses and $60 in respect of the acquisition of a hat are incidental and relevant to his occupation as a senior auditor. The necessity for the expenditure was brought about by the conditions of his employment as a senior auditor which requires him to work in an environment which exposes him to the harmful rays of the sun and ultraviolet radiation. There is a real connection between the expenditure and Mr Fitton's income‑producing activities which results in the expenditure being deductible under s 8‑1. Mr Fitton uses the sunglasses solely at work which requires him to spend time outdoors while travelling and conducting inspections of outdoor sites. Although Mr Fitton spent a total of $85 on the hat, pursuant to the ATO policy entitled "ATO Policy on the Protection of Staff from the Ultraviolet Radiation in Sunlight", ATO staff may be reimbursed for an amount up to $25 expended on the purchase of a sunhat once every four years. This policy and the in‑house training associated with its implementation recognise the need for protection from the ultraviolet radiation to which staff may be exposed while working in sunlight, and therefore strengthen the connection between Mr Fitton's expenditure on the sun protection items and his earning of assessable income. Further, Mr Fitton gave evidence, which was not disputed, that if he did not use the sunglasses and hat when working outside he would not be able to work for such long periods, he would suffer sunburn, he would be reluctant to spend the time necessary to complete stock inspections and his work would be curtailed. Accordingly, the expenditures on these items were made to enable Mr Fitton to perform his work duties and to provide protection to Mr Fitton while he gained assessable income. The expenditures are deductible as their character is such that they were incurred in gaining or producing assessable income. 142 The result is that the appeal of each applicant will be allowed. The decision of the Deputy Commissioner of Taxation in respect of the relevant objection of each applicant should be set aside and each objection should be remitted to the Deputy Commissioner of Taxation for reconsideration in accordance with these reasons. As agreed between the parties there will be no order as to costs. I will give the parties the opportunity to speak to the form of order to be made. I certify that the preceding one hundred and forty‑two (142) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 14 May 2002 Counsel for the Applicants: Mr G T Pagone QC, Ms M M Gordon Solicitor for the Applicants: Herbert Geer & Rundle Counsel for the Respondent: Mr C M Maxwell QC, Dr K L Emerton Solicitor for the Respondent: Australian Government Solicitor Dates of Hearing: 4 & 5 October 2000 Date of Judgment: 14 May 2002