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Edited version of private ruling
Authorisation Number: 1011873520130
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Ruling
Subject: Work-related expenses - therapy dog
Question and answer:
Are you entitled to a deduction for expenses related to your dog?
No.
This ruling applies for the following periods:
Year ended 30 June 2010
Year ended 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on:
1 July 2009
Relevant facts and circumstances
You are employed as a therapist at a facility.
You purchased a small dog to interact with residents at the facility and to train and develop as a therapy and companion animal for the residents, following discussions with your employer.
He spends more than four days each week interacting with residents without your direct supervision as part of their care plan, and also in their free time.
Your dog lives with you. You paid for his purchase and you pay all his ongoing expenses such as vet bills, grooming and food.
It is not a requirement of your employment that you have a dog.
Your employer does not contribute financially to any of the expenses relating to your dog.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
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.
In order to be deductible under section 8-1 of the ITAA 1997, expenditure must have the essential character of an outgoing incurred in gaining assessable income. 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 inherently considered a pet, so generally expenses incurred in maintaining a dog are a private or domestic expense, and are not deductible under section 8-1 of the ITAA 1997.
In some limited circumstances a dog is considered an item of plant for a business, for example, a guard dog. A guard dog is used to provide security for business premises. They remain on the premises and do not socialise with their owners. Guard dogs serve a productive function of the business. For these reasons, expenses relating to guard dogs are generally deductible as business expenditure under section 8-1 of the ITAA 1997, or are capital expenses where a deduction for decline in value is available (ATO Interpretative Decision ATOID 2011/18).
In your situation your dog lives at home with you and is cared for by you. Your dog performs a passive role, providing therapy and companionship, rather than an active role such as a guard dog that performs substantial tasks relevant to the earning of assessable income. While at your place of employment, your dog is not directly supervised by you. Furthermore, the dog is not required in order for you to perform you employment duties as a therapist and your employer does not provide you with any financial support relating to the dog.
All of these factors show that there is not a sufficient nexus between the expenses relating to your dog and your assessable employment income. The role that your dog plays in your work is not sufficient to make the inherently private expenses incurred in purchasing and maintaining your dog expenses incurred in earning your assessable income.
Therefore you are not entitled to a deduction for the purchase of your dog or any related expenses such as vet bills and food.