Private ruling: Expenses for a Guard Dog
Date of advice: 11 November 2015
Published: November 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for the costs incurred in relation to your dog? | A1: No


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. There must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income ( Ronpibon Tin NL & Tongkah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236), and the expenditure must not be capital, private or domestic in nature. A dog is ordinarily considered a pet and therefore expenses incurred in relation to a dog are generally not deductible as they are private or domestic in nature and not sufficiently connected to the earning of assessable income. However, in some instances a dog is considered a working beast or item of plant for a business, for example, a guard dog used to provide security for business premises that remains on site at all times and a working dog used to muster stock. An animal does not qualify as plant unless it is used in a business ( Case M59 , 80 ATC 409 and Case M72 , 80 ATC 497). In your case, the dog lives at your residence at all times and its presence is used to act as a guard dog. It protects equipment that is not in use and stored in your garage. It is socialised as a family pet. On balance, we consider that the costs incurred in relation to your dog are essentially private in nature. Accordingly, you cannot claim a deduction for the food, medical and other expenses incurred in relation to your dog.

Relevant facts: You store your work equipment at your residence when not in use. There is also another business that also stores their work equipment at the residence when not in use. | At your residence there is a large garage that you use to house a trailer with your work equipment when not in use. The other business has a work vehicle and builders equipment, also housed there when not in use. You also have a small private vehicle garaged there. | You were concerned for the amount of assets that were being stored in the family garage and wanted to increase security. You purchased a dog to be a guard dog. | You have a dog that at all times lives at your residence. The dog was purchase as a guard dog and the breed of dog is also for this purpose. | You are the registered owner of the dog and have paid all expense involved with the dog. | You consider the dog's guard duties would equally cover both your and the other business's equipment. | You socialise the dog as a family pet for one day a week.