How Pets and Livestock Can Help Lower Your Tax Bill

Pets and livestock enrich our lives in countless ways. But providing them with a quality life can be expensive! The costs can add up pretty quickly, from food to regular visits to the veterinarian, and other essentials. 

However, every cloud has a silver lining! In this case, it’s in the form of tax savings. Yes, there are many situations in which pets and livestock could help lower your taxes. 

Let us explore ways in which pets and livestock can help with tax deductions and other benefits. From veterinary expenses of qualified service animals to certain operational costs of livestock, there are various tax-saving weapons that many pet and livestock owners are unaware of. 

Does your Pet or Livestock Qualify for Tax Deductions?

Not all pets and livestock are qualified for tax deduction. Those that do include assistance or service dogs, working animals, and fostering pets.

Assistance Animals

Assistance animals are specially trained to alleviate the effects of a person’s disability (Disability Gateway). Assistance Dogs are more than companions; they are lifelines, providing more support, independence, and an enhanced sense of freedom for people living with disability (Assistance Dogs Australia).

To qualify for tax deduction, the assistance animal must have been trained to perform specific tasks directly related to the disability of the owner. For example:

• Guiding a visually-impaired person
• Pulling a wheelchair
• Hearing dogs for people who are deaf
• Calming a person suffering from post-traumatic stress disorder (PTSD) during bouts of anxiety attack
• Alerting and protecting a person experiencing a seizure

Deductible expenses may include veterinary bills, pet food, grooming, the cost to buy or train the animal, boarding, and supplies like harnesses, leashes, tags, etc. 

Working Animals

Does your pet or livestock contribute directly to your business? This can include working dogs, pest-control cats, breeding stock, or livestock raised to be sold. 

For working dog expenses to be deductible, the following criteria must apply:1

1. The animal is used in carrying out your work duties.
2. It is a requirement of your employment that you provide your own animal.
3. Your employer has not reimbursed you for the expenses incurred.
4. You and your family do not treat the animal as a pet when it is not working.
5. The animal was trained for the role from a young age.

1Source: StaySharp Accounting 

Tax deductions for working animals may include food, veterinary bills, and breeding fees. 

Fostering Pets

Sharing your life and home with a foster pet is a wonderful act of kindness. You may be able to write off some of your expenses associated with your foster pet as charitable expenses on your taxes. 

Most animal shelters or rescues will cover food costs and medical expenses for foster pets. But anything that you might have spent and not reimbursed could potentially qualify for a tax write-off. Just be sure that you keep a complete record of your expenses and keep the receipts. 

To capture the maximum write-off for fostering,2 

1. Ensure you’re working with a valid organization that has the charitable purpose of fostering or rescuing pets. 
2. Align yourself with a valid charity that has the proper status with the IRS (if you’re in the United States) or The Australian Taxation Office (ATO), which means that they are recognized as a tax-exempt organization.
3. Work with your tax professional and the charity to capture the write-offs and take the deduction. 

2Source: Mark J. Kohler,CPA

Tax Advantages for Livestock Owners

Farmers and ranchers can often claim tax deductions for livestock operation-related expenses. Knowing what these deductions are can significantly help offset the costs of raising and maintaining livestock. 

According to the ATO, you can claim a deduction for the costs associated with a working horse if the following criteria are met:

1. You use the animal in carrying out your work duties – for example, your duties require you to herd cattle or livestock and the animal assists you in doing this
2. It is a requirement of your employment that you provide your own animal
3. You train the animal for their role from a young age and don't treat them like pets.

Claiming depreciation of breeding livestock over their expected productive life may help reduce your taxable income. The sale of your livestock can also have tax implications, depending on whether it’s a short-term sale (livestock held for less than a year) or a long-term sale (more than a year).

Record-Keeping is Key

To claim deductions for pet or livestock-related expenses, make sure you have detailed records that will include:

• Receipts and invoices (food, veterinary bills, equipment, breeding fees, etc.); invoices are particularly important for bigger expenses like breeding fees or purchase of equipment. 
• Documentation for assistance animals: a letter from your doctor describing your disability and how your assistance dog helps you. 
• Mileage logs: When you use your vehicle for pet- or livestock-related business purposes, such as transporting an animal to the veterinarian, you should always have a mileage log to keep track of your mileage. 

Keeping complete and well-organized records can help ensure you have adequate proof needed to support your tax deductions. 

Consulting a Tax Professional

Tax laws and codes are complex and ever-evolving. Your best partner in navigating through the tax maze and maximising your tax savings is a qualified tax professional who can offer advice on deductions and ensure you’re complying with all tax regulations.  

With the help of a tax advisor, you will be able to deal with the intricacies of claiming pet and livestock-related expenses and ensure you're optimizing the utilization of all tax benefits that you can avail of. 

Looking for more tools to help keep your animals safe and healthy whilst ensuring your business runs efficiently?

Take a look at our livestock collection for the most reliable and durable equipment to help you get the job done. We offer professional-grade equipment at affordable prices, and all of our products are built to last; offering you the best value for your investment.