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Ruling
Subject: Work related expenses - guard dog
Question 1
Are you entitled to a deduction for maintaining a dog that guards your truck whilst you are at work, thereby protecting your tools of trade?
Answer
No
This ruling applies for the following period
Year ended 30 June 2012
The scheme commences on
1 July 2011
Relevant facts and circumstances
You are employed in the building trade.
You have a work vehicle that carries substantial tools.
You purchased a dog.
You drive to work each day accompanied by your dog.
The dog stays with your truck protecting your tools and vehicle whilst you are working.
When you are not working, the dog returns to your residence where it lives with you.
Relevant legislative provisions
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 & Anor v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404 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 that remains on site at all times and a working dog used to muster stock.
In your case the dog is guarding your vehicle, tools and work vehicle while you are at work but at all other times is a pet that resides with you.
It is considered that the costs incurred in relation to your dog are essentially private in nature. A deduction for these expenses is therefore not allowable.