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Edited version of private advice
Authorisation Number: 1052070456158
Date of advice: 15 December 2022
Ruling
Subject: Deduction - therapy dog
Question 1
Are you entitled to claim a deduction for the decline in value of the dog purchased to use as a therapy dog?
Answer
Yes, section 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the decline in value of depreciating assets. It is accepted that the dog will perform an integral part of the income producing activity and contributes to the production of that income will constitute use for a taxable purpose. Taxation Ruling TR 2021/3 Income tax: effective life of depreciating assets (applicable from 1 July 2021), stipulates that the effective life of a working dog, including certified therapy dogs is 8 years.
Question 2
Are you entitled to claim a deduction for the ongoing expenses related to the maintenance, training and care of a certified resident therapy dog?
Answer
Yes. The expenses incurred for a therapy dog that is actively engaged in the business are deductible under section 8-1 of theITAA 1997. This is because there is a sufficient nexus between the use of the dog and the nature of the income producing activities.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The entity operates a business of supporting children with special needs.
They offer assistance to children with disabilities through various programs, including face-to-face meetings, personal therapy and group workshops.
The entity purchased a dog with the intention of it being trained to become a therapy dog.
The dog will be directly and indirectly involved in appointments.
Therapy dog sessions will be advertised via brochures, the website and other marketing channels.
Various expenses will be incurred in relation to the dog including training, accreditation, and membership fees.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 40-25