Five-year-old Jonny Kelly has been plagued with nightmares since his neighbour's dog jumped the fence to maul his grandparent's dog Coco last Friday in Banks, his mum Allisha said.

The family were caring for Coco when the attack occurred.

They had just brought Coco home with them to join their own two dogs in the backyard when Jonny spotted one dog too many.

"I was inside and my husband [Daniel] was outside with my son and my son said 'Daddy, there's another dog in the yard' and that was exactly when we saw the dog attack Coco," Mrs Kelly said.

"His eye was hanging out and my son witnessed it."

She shooed the dog back over the fence while Mr Kelly attempted to round up their own dogs and bring them inside.

The neighbour's dog tried to return for another swipe at Coco but was again chased away.

Coco survived the vicious attack but lost the eye.

Mrs Kelly, who wasn't sure of the breed of the offending dog, said she has since learnt it was declared dangerous by Yass Valley Council and that rangers told her they hadn't been notified about the dog.

"It's been here at least two years," Mrs Kelly said.

"It wasn't chained up, she [the owner] never told us anything about it. Our fence isn't that high, if we'd known there was a dangerous dog over there we would have tried to extend it."

Mrs Kelly said rangers seized the dog and an investigation is underway.

The neighbour thus far has refused to assist with Coco's veterinary bills, she said.

Yass Valley Council's environmental services coordinator Mark Livermore was unable to comment due to the ACT Domestic Animal Services' ongoing investigation, but said the Council would "readily provide assistance" with their investigation if requested.

Domestic Animal Services registrar Fleur Flanery confirmed an investigation into the attack was underway.

She said investigators had spoken to the families of both dogs and contacted Yass Valley Council, while the dog at the centre of the attack had been impounded.

"We have the dog that was allegedly involved in the incident; that dog was impounded soon after the incident," she said.

"We have done all the things we would normally do when we have a serious dog attack."

Ms Flannery said it was important an investigation was carried out before jumping to conclusions.

A Territory and Municipal Services spokesman said all pet owners who had moved to the capital from interstate had to register their dogs in the ACT.

"The maximum penalty for failing to register a dog in the ACT is a fine of $750," he said.

The spokesman said any dog declared dangerous interstate was automatically considered dangerous in the territory, while attacks could incur hefty fines or prison time.

"Keeping a dangerous dog in the ACT requires a dangerous dog licence. The maximum penalty for keeping a declared dangerous dog in the ACT without a licence is a $7500 fine," he said.

"The penalties for owners whose dog attacks another animal or a person resulting in serious injury can be up to a year in prison, a $15,000 fine or both.

"If a declared dangerous dog attacks or harasses another animal or a person the owner can face up to a year in prison, a $15,000 fine or both."

The spokesman said the owner of a dangerous dog that attacked another animal or person as a result of recklessness or intent could face up to five years in prison, a $75,000 fine or both.

The attack occurred the same day two dogs broke through a screen door into a Dunlop living room to savagely slaughter a chihuahua.

The dogs - which jumped a fence to kill another dog in a neighbouring yard just one day earlier - were surrendered by their owner on Tuesday night.

The TAMS spokesman said that investigation was ongoing.