The Australian Federal government has officially chosen to support the videogame industry in the new 2021 budget. They have officially confirmed a refundable, national tax break for video game development in Australia.
The Federal Budget contains a tax offset for videogame creation. This will mark the first time the Federal Government has created a financial incentive for local video game creators.
As stated on the Australian Government website, (https://digitaleconomy.pmc.gov.au/fact-sheets/investment-incentives) incentives will be provided to businesses to “stimulate investment in digital technologies” to improve productivity and generate jobs. This will be done by:
- Providing qualified companies with a tax offset for eligible spending in and by this sector.
- Allowing taxpayers to calculate the effective life of depreciating intangible assets on their own accord.
- Performing an assessment review of the venture capital tax concessions to confirm that they are fulfilling their intended objectives.
Digital Games Tax Offset
A 30% refundable tax offset will be available for eligible companies that spend a minimum of $500,000 on qualified Australian games. The scheme is designed to not only provide video game creators with a tax incentive but to also further attract digital talent to the region. In mid-2021, the criteria and definition of qualifying expenditure to assist the development of digital games will be formally defined by consultation between the Federal Government and the Australian Video Game Industry. It should be noted that games with gambling aspects or those that cannot obtain a classification rating will be ineligible for the tax incentive.
Gaming talent has digitally transferrable skills that Australia may use for a variety of industries. This includes defence innovation, medical technology, education technology, emergency planning, construction (digital twins), and contemporary manufacturing.
From 1 July 2022, Australian resident business and foreign resident enterprises with a permanent base in Australia will be eligible for the Digital Games Tax Offset.
The support for video games, according to the CEO of the Interactive Games and Entertainment Association, Ron Curry, would surely generate “huge inbound investment” for a sector with “unparalleled” export potential.
“We congratulate the Prime Minister, Minister Hume, and the Minister for the Arts the Hon Paul Fletcher MP, for recognising not only that video games have an important place alongside TV and film in Australian screen production and storytelling, but also their unparalleled potential for supercharging Australia’s exports, attracting vast inward investment, and up-skilling a whole new generation of Australian digital workers,” said Ron Curry.
Contributor: Kieran Clarke, IT consultant at BD Welsh & Co. (firstname.lastname@example.org)
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.