Demomonkey,
No, you are not legally obliged. The downside is though that the IR would use the lack of evidence of any spending on down-route necessities as an excuse to consider the allowances a taxable benefit.
Because it isn't your human right to spend them or not spend them as you see fit. They are tax free because the assumption is that they are real expenses of doing your job. If the IR finds out they are being used to boost peoples' take home tax free - they will tax them.
Of course it is double standards. The Government/ State is that entity which has a legal monopoly on violence and incarceration. You can fight The Man, but you will lose.