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Edited version of your written advice

Authorisation Number: 1051335532841

Date of advice: 07 February 2018

Ruling

Subject: Expenses for pet dogs

Question

Can I claim a deduction for the ongoing expenses relating to the maintenance of pet dogs?

Answer

No

This ruling applies for the following period:

Year ending 30 June 2018

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You own a pet grooming business.

You operate out of your main residence.

You own and keep as pets, two dogs.

You have incurred expenses in the maintenance of the two, pet dogs.

The two dogs are used for advertising on Facebook.

The two dogs’ image is used on commercial products and merchandise.

The two dogs are kept at the front of the premises and present themselves to potential customers who pass.

The two dogs have access to the whole premises which they guard and patrol 24 hours a day.

The two dogs are used to calm timid and anxious dogs (clients).

You and the two dogs are members of an obedience club.

The education provided by the obedience club has prevented injury to you, the two dogs and customers.

Relevant legislative provisions

Income Tax Assessment Act 1997, Section 8-1

Reasons for decision

Summary

The two dogs’ primary role is as a pet and do not play a sufficient role in your business to convert the expenses incurred in maintenance from private or domestic expenses into work related expenses. Therefore, the ongoing expenses relating to the maintenance of your two pet dogs are not deductible.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoing 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.

In order for an expense to be deductible under Section 8-1 of ITAA 1997 there must be a nexus between the expense and the assessable income. The expense must be relevant to the gaining of assessable income and the expenditure must not be capital, private or domestic in nature.

A dog is inherently considered a pet so generally, expenses incurred in maintaining a dog are a private or domestic nature and therefore is not deductible under Section 8-1 of ITAA 1997.

In some instances a dog is considered a working beast or item of plant for a business, for example:

A working beast (item of plant for a business) such as a guard, working or police dog remain on the business premises and do not socialise with owners. These dogs are relevant to the operation of the business and maintenance expenses would generally be deductible under Section 8-1 of ITAA 1997.

However, in your situation the two dogs are primarily pets, who reside at your home, are cared for and socialise with you.

The two pet dogs perform a passive role as opposed to the example of the guard, working or police dog where they actively perform substantial tasks relevant to the earning of assessable income.

It is not a requirement of your employment or business that you have dogs to carry out your duties and having the dog assist you, has not led to an increase of income. The expenses you incur for the two pet dogs are not considered to be expenses incurred in gaining your assessable income.

As such, the two dogs’ primary role is as a pet and do not play a sufficient role in your business to convert the expenses incurred in maintenance from private or domestic expenses into work related expenses. Therefore, the ongoing expenses relating to the maintenance of your two pet dogs are not deductible.

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