The service of a dog walking business must be a taxable service in order for the business to be classified as a taxable service business. This means that if you are hiring a dog walker to walk your dog on the public street, and the business is in business for tax purposes, then the dog walker’s work is a taxable service.
Note: It is important to understand these facts before deciding if dog walking is a taxable service. For example, even though you offer your dog for free, there’s still a potential liability if it’s a nuisance to other dogs, or attacks a resident dog.
The Tax Reform Authority recently published guidance about taxing animal companions.
How are dog businesses taxed?
A dog business is either a taxable business and paid through the Business Tax Act (BT Act) or an unincorporated business that is subject to the Taxation Administration Act and the related Acts of Parliament.
The only exception to this approach is certain unincorporated animal welfare bodies that have a business-related purpose that provides services to the community as a whole through their own organisations.
The Taxation Administration Act requires the business of a charity to be registered.
What is a taxable service and what are taxable activities?
A taxable service is something that is taxable by law. Taxable activities are activities that would normally come under GST.
For example, you need to pay GST when:
you pay to your business customer a service that includes:
selling an item with an identified GST-free cost
selling property, services or food to your business customer by mail
selling products such as books, clothing, or computers to your business customer by mail or online
You can assess income as whether you have GST-eligible supplies or receipts from your activities, from the sale of a service or goods and from the payment of GST-eligible services.
For more, see:
Do I need a business plan to determine if dog walking is a taxable service?
Yes. The Taxation Administration Act requires all businesses that will receive tax on their activity to have a business case, or plan for assessment and tax.
It is important to understand that there is no requirement in the Taxation Administration Act for any business to have a plan to assess GST. For tax purposes, only businesses which have a business case can rely on their business plans to determine whether income from their dog walking business is properly subject to tax.
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