Australian tax law recognises the expenses of keeping working dogs and horses as being tax deductible via section 8-1 of our Tax Act which allows a deduction for expenses incurred in gaining or producing assessable income. 

For businesses and farmers this can include the costs of purchasing, training, feeding and maintaining working dogs or working horses. Some dog related expenses have also been held to be deductible for guard dogs, police dogs and racing dogs.

There are several cases testing the deductibility of costs for working dogs and horses, generally confirming the deductibility of expenses for farm animals and security dogs but denying deductions for personal pooches, cuddly companions or hobby horses.

Other animals to get the deductibility tick include livestock and bees, whereas ferret, falcon and snake related costs are more likely to attract ATO scrutiny.

Importantly, for costs to be eligible, a working animal cannot be treated like a pet at any time, and must have been raised as a working animal, otherwise costs would need to be apportioned accordingly.

Recently researchers from a variety of pet welfare organisations have weighed in on the issue and suggest that we should paws and consider if tax relief should be extended to the upkeep of working cats.

It’s considered that cats were domesticated around 7500 BC motivated by the need to safeguard grain stores from rodents.

Apparently modern dairy farmers rely heavily on working cats to keep their rodent population under control without the need for baiting, which is expensive and unsafe for other animals. This reduces the likelihood of electrical issues and disruption from rats chewing through wires and has the added advantage of better food safety and animal welfare as well as keeping the snake population down (i.e. less rats equals less food purr snake).

Some dairies have 20 or more (some as many as 60) working cats. However, the costs to farmers of desexing, tick treating or microchipping the cats can be expensive, and resisting these costs can lead to cats roaming more and killing native animals.

A tax deduction for working cats would be a win-win as farmers would get some welcome relief for their costs and conservationists would see benefits in a reduced cat population. The UK and USA both allow tax deductions to farmers for the upkeep of their working cats.

This would necessitate a change (new claws) to our tax laws as currently cats do not meet the training requirements as working animals given that they are natural predators of rodents.

The costs of rat baits currently qualify for a tax deduction for farmers, so it’s hard to argue that the cost of maintaining a mouser should not qualify for similar treatment. 

by MARK DOUGLAS
FCPA
Managing Partner of Francis A Jones
www.faj.com.au