Australia’s burgeoning video game development industry has received a long-campaigned-for boost as part of the federal government’s Digital Economy Strategy.
The 2021 federal budget included a 30 per cent tax offset for video game manufacturers, a move broadly welcomed by the industry.
The Interactive Games and Entertainment Association (IGEA) has been lobbying for a tax offset for years to help makers become more competitive internationally.
What’s on offer?
Eligible game development businesses that spend a minimum of $500,000 on qualifying games expenditure get a 30 per cent refundable tax offset. The expenditure will be capped at $20 million per annum, and games cannot contain gambling elements.
The government will consult with the industry in coming months to define just what that expenditure should be.
The offset will be available from July 1, 2022 to Australian resident companies or foreign resident companies with a permanent establishment in Australia.
Digital economy boost
The federal government said the gaming sector has transferable skills that can be applied to other sectors such as medical and educational technology, emergency planning, construction, agtech, and manufacturing.
Minister for the Digital Economy Senator Jane Hume said the game development offset will drive investment and uptake of emerging technologies.
The game development market is valued at $250 billion globally. It’s estimated about 90 per cent of Australian game developers’ revenue comes from exports.
The 30 per cent tax offset – the first federal tax incentive for the Australian game development arena – will assist an increase in overseas export and, the hope is, encourage international investment in the Australian industry.
Tax offset a welcome change of policy
Welcoming the federal government’s position change, IGEA’s CEO Ron Curry told Mumbrella that video games have “unparalleled potential for supercharging Australia’s exports, attracting vast inward investment, and up-skilling a whole new generation of Australian digital workers”.
LDB Group’s managing partner Luke Henry, who has provided tax and grants advice to gaming studios, has also welcomed the announcement as a boost for sustainable game development in Australia.
“Start-up studious will be able to build more easily on the success of individual titles and move towards further development,” he said.
“The tax offset could mitigate financial risk for more established studios releasing a title and make them attractive to investors.”
With Australia having some of the best game developers in the world, financial support such as the tax offset helps talent stay in Australia and provide job security, Mr Henry said.
Need to level up your game development business?
With a strong passion for software and the video game industry, LDB’s has a specialised team that is ready to help your game development business grow.
A successful game development studio needs a sound financial foundation from which to launch. Our team can help with tax for game developers, as well as accounting and business advisory needs.
Fill in our form below or call (03) 9875 2900 and we can organise a time to talk about your game development studio. You can also find out more about how we assist gaming studios here.
