Edited version of private advice

Authorisation Number: 1052030826769

Date of advice: 9 September 2022

Ruling

Subject: General deductions - service dog

Question

Are you entitled to claim a deduction for all, or a portion, of the expenses related to maintaining your service dog?

Answer

No.

This ruling applies for the following period:

The year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

For several years, you have had a licensed service dog.

You suffer from a medical condition.

Your service dog helps you aid your condition while you are working or in a public environment.

Prior to having your service dog, you were unable to work or leave your house without the assistance of your parents due to your medical condition.

After your service dog was fully trained, you were able to go outside more with their support.

Since getting your service dog, you have been able to secure your own private accommodation and employment. You would not be able to do so without the support of your service dog.

Your service dog assists you in all aspects of your working life.

You work in a customer service role with your employer.

Whether working from home or in the office, your service dog stays with you, offering you support.

You contend that you would not be able to manage the situations you encounter without assistance from your service dog.

Your service dog helps manage your medical condition while performing your employment duties and dealing with customers and other staff members.

Living independently, travelling on your own and working is all possible for you because of your service dog's assistance.

Your service dog is fully licenced according to state regulations and is assessed every 12 months by completing the Public Access Test (PAT).

The costs of maintaining your service dog are:

•                    PAT: $X

•                    Pet insurance: $X

•                    Food: $X

•                    Vet: $X

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 Division 40

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for losses and outgoings to the extent that they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature.

Various decisions of the courts have determined that to show that an outgoing is incidental and relevant to the gaining of assessable income, there must be a sufficient nexus or connection between the outgoing and the assessable income.

In limited circumstances a deduction for the purchase, training and care of a dog can be claimed. This is the case where a dog performs an integral part of the income producing activity and contributes to the production of that income. Examples include a dog that is trained as a cattle dog, guard dog, sniffer dog or police dog and is used in such a capacity that the dog performs an identifiable function in the income earning activity conducted by their owner.

In your circumstances, your service dog aids you by supporting you in aspects of your private life, including assisting you in living at your home and leaving your home independently. Your service dog also stays with you while you complete your employment duties, however they do not form an integral part of your income earning activity. Therefore, the expenses related to maintaining your service dog are not incurred in earning assessable income and are also private in nature. Consequently, they are not deductible under section 8-1 of the ITAA 1997.

Division 40 of the ITAA 1997 contains rules about the deductibility of capital expenditure, including the deductibility of depreciation on capital assets. For a depreciation deduction to be allowable the capital asset must be used for the purpose of producing assessable income. As with section 8-1 of the ITAA 1997, there must be a sufficient nexus with the income earning activity.

Taxation Ruling TR 2021/3 Income tax: effective life of depreciating assets (applicable from 1 July 2021) provides that working dogs are depreciating assets. However, the definition of working dogs under TR 2021/3 excludes assistance dogs, such as guide dogs, hearing dogs, service dogs and support dogs. As stated previously, it is not considered that your service dog forms an integral part of your income earning activity. Therefore, you are also not entitled to claim a deduction for the depreciation of your service dog.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).