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Edited version of your written advice
Authorisation Number: 1051499964961
Date of advice: 29 March 2019
Ruling
Subject: Deduction - assistance dog
Question
Are you entitled to claim a deduction for the expenses relating to the maintenance, training and care of an assistance dog?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts
You are employed by an education provider.
You are leading a program which uses canine assisted therapy to assist young people who may be dealing with complex issues that affect their capacity to learn.
You have a dog that has been trained and certified as a therapy dog.
The certification as a therapy dog will require periodic re-evaluation.
You acquired the dog personally and do not receive any reimbursement from your employer for ongoing costs.
You will acquire a second dog in 2019 for $XXX.
You estimate that the dog will spend between X to X per cent of your work hours with you.
You take the dog home with you when you are not working.
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.
Various decisions of the courts have determined that in order to show that the outgoing is incidental and relevant to the gaining of assessable income and the expenditure is not capital, private or domestic in nature, there must be a nexus or connection between the outgoing and the assessable income
There are limited circumstances in which a deduction for the purchase, training and care of the dog can be claimed. These involve a finding that the dog performs an integral part of the income producing activity and contributes to the production of that income. Where the dog is trained as a cattle dog, guard dog, sniffer dog or police dog and it is used in such a capacity, they perform an identifiable function in the business operated by their owner and a deduction for their upkeep would normally be allowable.
While it can be accepted that there is evidence to support the psychological benefits of dogs, in your case, you take your dog to work where it interacts in a passive way with students and the role of the dog will not be assisting you in directly performing your duties. Although the dog is used in your day to day role, it does not have an integral role in the income producing activities.
Conclusion
In these circumstances, it is considered that the cost of maintaining your dog is not a work related expense and therefore the training, maintenance and care of the dog is not deductible under Income Tax Assessment Act 1997 Section 8-1 as it is considered to be a private or domestic expense.