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Edited version of private ruling
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Ruling
Subject: Work related expenses
Are you entitled to a deduction for a dog that guards your vehicle whilst you are at work?
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You are a self employed tradesman and carry your tools in your vehicle to your job sites.
To prevent your tools from being stolen, you have a dog that you take to work each day. It sits in your vehicle to protect your tools.
The dog has been given obedience training and stays in a securely fence yard at your home.
Relevant legislative provision
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
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 and tools 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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