Private ruling: Work related expenses
Published: September 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for the purchase cost and maintenance of your dog? | A1: No.

Relevant facts and circumstances: You work as a builder. You purchased an English Staffordshire Bull Terrier to act as a guard dog while you are at work sites. Your dog remains with your vehicle during the day protecting your tools and equipment. The dog was trained as a guard dog by a veterinarian. The dog returns home with you at the end of each day and is also your pet.

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

Reasons for decision: Detailed Reasoning - Detailed reasoning: 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. 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 is guarding your vehicle, tools and equipment while you are at work but at all other times is a pet that resides with you. 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 purchase or maintenance of your dog.

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