Government proposes digital games tax offset

By Tom Ravlic

March 21, 2022

Jane Hume
Minister for superannuation, financial services and digital economy Jane Hume. (AAP Image/Mick Tsikas)

The federal government has made a pre-election announcement it hopes will create an incentive for growth in the digital games market in Australia.

A digital games tax offset has been proposed in draft legislation released for public comment today by communications and arts minister Paul Fletcher and Senator Jane Hume, minister responsible for the digital economy.

Developers of digital games would need to spend a minimum of $500,000 on the development of new games, additional functions or modules to existing games in order to qualify for the tax offset of 30%.

This does not mean that any digital game or extension of one that is already in existence will be eligible for the offset.

Games not eligible for the offset are ones that are a gambling service, a game with elements that might lead the game to be refused classification under classification rules, a game that is developed solely for internal corporate or institutional purposes, and a game that is simply used to promote another product or service.

Companies that can apply for the tax offset will need to be an entity that is an Australian resident or a foreign company that has a permanent operation in Australia.

Any entity applying for the tax offset will need to apply for a certificate and state the amount spent on the development of digital games for which the tax offset is being sought. That certificate is issued by the communications and arts minister.

There is a limit to the offset, however, so in the event that any company has an offset total that is calculated to be more than $20 million then the amount of the offset will be capped at $20 million.

The digital tax offset being contemplated by the draft legislation would come into effect on July 1 this year and people wanting to respond to the proposal will only have until April 18 to submit their views to federal Treasury.

Providing incentives to the digital games sector is not the only area in the digital space in which the federal government is seeking to deal with before it goes to the polls.

Regulation of cryptocurrency will be looked at by the federal government in order to determine how to deal with the taxation of the digital assets as well as how to ensure that consumers are able to get some degree of protection where investors invest or seek advice on the investment in digital assets.


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