Listen to Your Accountant

Two Ways You May Be Able To Deduct Your Animal Expenses From Your Taxes

by Kim Perkins

If you have a lot of animals -- and a lot of animal-related expenses -- you might be wondering whether you can deduct them from your expenses. An ordinary pet, such as a family dog, probably cannot be deducted in any way, but Canada does provide two major ways that animal keeping expenses can be used to reduce net income. 

Livestock: Farming Income

Any animal that is raised or purchased for the express purpose of making money, such as through farming, can have its expenses deducted as a farming-related expense. However, you don't need to own a large farm to qualify as farming income. A small hobby farm or family farm may still have "livestock." This could include racehorses, poultry, bees and other potentially revenue generating animals.

As an example, many individuals keep chickens, which would be considered livestock animals. But they may also purchase a dog to keep their chickens safe. If the dog is kept with the chickens to protect them, that dog is considered to be livestock. But if the dog is kept in the family home and rarely interacts with the chickens (and is not trained in interactions with the chickens), then that dog is not considered to be livestock. 

Trained: Specially Trained Disability Animals

There are very specific qualifications for specially trained disability animals. They need to be for one of the following disabilities: blindness, deafness, physical impairment involving arms or legs, autism, epilepsy or severe diabetes. Emotional assistance animals, though incredibly useful, are not included by the Canadian tax code.

A trained disability animal should be able to perform specific tasks for the individual afflicted. However, there is no certification or regulatory process for a trained disability animal -- any dog can go through disability training. In fact, there are many programs that take shelter dogs through disability training to provide a better quality of life for both the dog and a human. In addition to the costs of the animal itself, veterinary expenses, food expenses and even training expenses can all be tax deductible.

Animals can be very expensive, so finding ways to include their cost in your tax deductions are definitely beneficial. But if your animals are strictly pets and don't fall into either of the two major categories above, you're probably out of luck. Even extreme expenses, such as veterinarian bills, cannot be included as a tax deduction if the animal neither classifies as livestock or is specially trained. For more information, you may want to contact a local tax accountant