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Edited version of private ruling
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Ruling
Subject: Guard dog expenses
Are you entitled to a deduction for a dog that guards your truck whilst you are at work, thereby protecting your tools of trade?
No.
Relevant facts and circumstances
You are an employee and have a truck that you drive to work each day accompanied by a dog. The truck carries the tools and equipment that you need to perform your employment duties.
The dog stays with the truck protecting your tools and equipment whilst you are on a job and unable to gain truck access to the site. At the end of the day the dog returns to your residence where it lives with you.
The dog is over 10 years old and has had training as a guard dog but is also your pet.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Summary
Guard dog expenses are usually private in nature unless the dog is used for no other purpose than guarding a business asset.
Detailed reasoning
In order to be deductible under section 8-1 of the Income Tax Assessment Act 1997, expenditure must have the essential character of an outgoing incurred in gaining assessable income. This principle was considered in Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 ATR 166 where it was held that 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 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 and remains on site at all times and a working dog used to muster stock.
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. A deduction for these expenses is therefore not allowable.
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