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Ruling
Subject: Work related expenses
Question
Are you entitled to a deduction for the purchase cost and maintenance of your dog?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
You work as a builder.
You purchased an English Staffordshire Bull Terrier to act as a guard dog while you are at work sites.
Your dog remains with your vehicle during the day protecting your tools and equipment.
The dog was trained as a guard dog by a veterinarian.
The dog returns home with you at the end of each day and is also your pet.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Detailed reasoning
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.
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 (Ronpibon Tin NL & Tongkah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236), 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 that remains on site at all times and a working dog used to muster stock. An animal does not qualify as plant unless it is used in a business (Case M59, 80 ATC 409 and Case M72, 80 ATC 497).
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. Accordingly, you cannot claim a deduction for the purchase or maintenance of your dog.