Guard Dog or Working Dog Expenses – when are they deductible?

As seen in Woopi News October 2021

Occasionally I am asked if costs such as vet bills, dog food and dog bedding can be claimed as a tax deduction.  This question is usually coming from a farmer or a tradie with a pooch on his Ute that he likes to refer to as his guard dog.  It is important to understand the criteria that must be met for this deduction to be allowable.

For expenditure to be deductible all the following must apply, regardless of if you are an employee or the business owner:

• The animal is used in carrying out your work duties.
• It is a requirement of your employment that you provide your own animal.
• That expenses incurred have not been reimbursed by your employer.
• When not working, the animal is not treated by you or your family as a pet.
• The animal was trained for the role from a young age.

Generally, all dogs must be registered by six months of age, this is a once only payment and there is no additional cost to register the dog as a working dog. It is advisable where your intention is to claim a tax deduction for the cost of maintaining the animal to register it as a working dog.

Some examples of working dogs include, guard dogs, police dogs, race dogs, performing dogs, detention dogs or security dogs (excluding guide dogs, hearing dogs and service dogs).  Primary Production working dogs are used for the purposes of herding livestock; however, this must be its sole purpose, they must not be treated as or considered a family pet.   There doesn’t appear to be a list of breeds that can be registered as a working dog however you’re likely to get a no from me if you’re trying to convince me a Chihuahua is guarding the back shed full of tools and materials.  It’s more convincing if the guard dog lives at your business premises (where possible) rather than at your home to overcome any uncertainty as to whether the dog is guarding personal assets as well as business assets.  An example of a deductible guard dog would be a dog that lives at and guards a caravan or car dealership, provided it has been trained to do the job rather get excited want to play with the intruder.  An example of non-deductible is where your dog guards your Ute and tools while onsite, however is the family pet when at home.

The initial cost of acquiring a working dog is not always deductible. The intention would need to be clear that the animal is being purchased for the sole purpose of being a working dog and not a pet at the time it was purchased.  Believe it or not, they are considered a depreciating asset, which means if the business is an eligible small business, an instant asset deduction may be allowable and where the business is not eligible working dog has an effective life of 8 years, meaning the deduction for the cost of the dog is spread over an 8 years.  It’s also important to consider when a working dog retires and or becomes no longer fit for its purpose as expenses from then on are non-deductible.