Welcome to the world of ethics, i.e. just because something may be legal does not necessarily make it morally proper.
It's akin to herd mentality in that politicians, company directors, even we little people, take a position that this is allowed, everybody who I know does it, so it must be OK.
Same situation as some of our Federal MPs who own a property in Canberra, live in it during Parliamentary sessions, yet claim an overnight allowance of $240 per day because their "home" is declared to be located somewhere in their electorate. Legal and proper from their perspective. The fact it artificially inflates their income (and is tax free) and that Canberra based MP's cannot do that escapes their attention. Yet if all these allowances were rolled up into their taxable pay packets that would have an impact, possibly unwanted from our viewpoint, of increasing their superannuation payout.
And if it was required to return unspent funds from electoral allowances, you will find that no stone will be left unturned to spend all of those funds.
You cannot legislate honesty or integrity.
Apart from instigating the Oliver Cromwell principle of abolishing Parliament, blowed if I actually know the answer to these vexing issues.