A magistrate has ruled a Canberra teenager accused of killing animals is mentally impaired and does not belong in the criminal justice system.

But the Education and Training Directorate has said the boy, who has homicidal fantasies quelled by medication, is not welcome back into mainstream schools.

Magistrate Peter Dingwall on Monday dismissed under mental health laws four charges of aggravated animal cruelty causing death. He was satisfied the 16-year-old, who cannot be named, suffered mental impairment and it was appropriate to remit him to the care of the ACT Civil and Administrative Tribunal (ACAT).

The boy spent about eight months on remand after expressing homicidal fantasies after his arrest for the animal cruelty offences earlier this year.

Two psychiatrists diagnosed him as having Asperger's-type autism with probable youth psychopathic traits.

The ACT Children's Court heard the boy began experiencing homicidal impulses at preschool, imagining ramming a pencil up someone's nose.

But psychiatrists expressed the view the bright student with a high IQ could mask both his mental illness and the murderous fantasies because of his intellect.

The doctors were satisfied that, while he understood the nature of the alleged crimes, they were a manifestation of his impairment. And the court was told while the condition was likely to be life-long, medication reduced his fantasies to zero and allowed him to experience emotions he had never before felt.

The teen was released on extremely strict bail conditions earlier this year. They amount to almost 24-hour scrutiny in out-of-home care, except when in his room, and prevent him from accessing the internet.

Conversations, except those with his parents, are reported to youth justice staff and effectively he has zero contact with peers.

The boy's lawyers argued their client had already served as much jail time as likely, given his age and the two-year maximum penalty applying to the offences.

Mr Dingwall was faced with a good-behaviour order mirroring the bail conditions, or placing him under the auspices of the tribunal.

"Clearly, in this case there is a very real concern that [the teenager] by reason of his mental impairment is likely to cause serious harm to others," he said. A good-behaviour order would have an eventual expiry date but a mental health treatment order would be a longer-term solution.

One treating psychiatrist, John Kasinathan, said a mental health order alone would be "toothless" without criminal sanction.

But Mr Dingwall said the tribunal had the power to make restrictive orders which would provide appropriate safeguards. However, he declined to make any order until 2013 to give the tribunal time to put restrictive orders in place.

The teenager has previously flagged a desire to return to the college system.

But prosecutor Anthony Williamson told the court the directorate was not prepared to let him "due to the concerns the director-general has for the safety of the student population".

The court heard the directorate was working to find another arrangement for the boy's education, and "he will not be abandoned by the territory".