Games sector tax incentive ‘levels playing field’

Joseph Brookes
Senior Reporter

Australia based game developers will receive a 30 per cent tax offset on qualifying expenditure, as part of the federal government’s $1.2 billion digital economy package announced Thursday.

The measure is Australia’s first federal tax incentive for the video games sector and part of the government’s plan to attract top global talent.

The announcement has been welcomed by the industry, which has spent more than a decade advocating for government support for the industry.

The Digital Games Tax Offset will be available from July 2022 and allow eligible games businesses that spend a minimum of $500,000 on qualifying Australian games expenditure to receive a 30 per cent refundable tax offset.

The government will consult this year on eligibility criteria, including what counts as eligible expenditure.

Ron Curry: Government support will spur the local gaming sector and attract publishing giants.

The incentive brings Australia into line with leading game development countries and will allow the local industry to grow at home, according to the Interactive Games & Entertainment Association (IGEA) CEO Ron Curry.

“It levels that playing field,” he told InnovationAus.

“We’ve got so much talent here, that’s what we want. It allows them to grow their businesses. It signals to investors that the government has confidence in this industry. It also signals to investors that Australia is competitive with the rest of the world, which is great for local businesses.”

Major games publishers are now much more likely to consider Australia alongside traditional game development powerhouses like Canada and France, according to Mr Curry.

“[Publishers] know we’ve got the talent and the skills and the expertise. Now we’ve got a level playing field as far as tax offsets, and it’s going to bring those companies, we believe, into Australia.”

IGEA called for the 30 per cent offset in a submission to a government inquiry into Australia’s creative and cultural industries last year, saying it would help the local industry capture a greater share of the $225 billion global games market. Currently, Australia captures just five cents in every $100 spent on gaming globally, according to Mr Curry.

The new offset marks the first major incentive for the local industry from the federal government. A$20 million Interactive Games Fund was established by Labor in 2012 but was scrapped by the coalition government in 2014 with the remaining money diverted to other programs.

Mr Curry said advocates had been campaigning for support for almost 15 years.

“Today feels like the end of a marathon. We’re all really tired, we’re all really excited.”

“And we’re all looking forward to the devil in the detail and what comes next. But from the conversations we’ve had with government we’re quite buoyant about what this means for the industry.”

The government is currently running a program to attract top global talent to Australia and has developed a taskforce to promote the country overseas and expedite visa applications for leaders in certain “high value” sectors like space and cybersecurity.

While gaming is not considered one of the strategic sectors, it is regarded as one of their “enabling technologies”, and high talent individuals and games businesses are also being targeted.

In an update on Wednesday, the Global Business and Talent Attraction Taskforce’s Chair, Peter Verwer said digital games had become a “high priority area” for the program.

“If you add up all songs sold, all movies for which tickets are issued in the world, [the total] is smaller than digital games,” Mr Verwer said.

“This is an industry of the future. Because it’s driven by sciences and technologies where a breakthrough in digital games can be used for say keyhole surgery for other sectors as well.”

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