Private ruling: Deductibility of a dog
Published: August 2012
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for costs related to your dog? | A1: No. | Q2: Are you entitled to a deduction for the decline in value of your dog? | A2: No. | Q3: If expenses relating to your dog are deductible, are you required to apportion the expenses based on days the dog actually spends on 'guard duty'? | A3: Not applicable.

Relevant facts and circumstances: You own a work vehicle and use that vehicle to carry substantial tools. You own a dog. Your dog is taken to work with you and remains with the vehicle while you are working to protect your tools and vehicle. While you are not working, the dog is kept at your residence.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 40-25

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. 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 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 costs relating to your dog. | Detailed Reasoning - Decline in value: Section 40-25 of the ITAA 1997 allows you to deduct from your assessable income an amount equal to the decline in value of a depreciating asset to the extent that it is used to produce assessable income. As previously established, your dog is not utilised to produce assessable income, therefore a deduction for the decline in value of the dog is not available.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.