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Video Game Startups to Welcome Tax Offset

The 2021 federal budget revealed encouraging opportunities and changes for Australian startups. One of the measures includes a 30% digital games tax offset. The $1.2 billion boost is part of the government’s Digital Economy Strategy, aimed at stimulating Australia’s digital economy and providing employment opportunities in response to COVID-19.  

The announcement comes after eight years of lobbying by Interactive Games and Entertainment Association (IGEA). The offset will take effect from July 1 2022, and is set to encourage the production and development of local games for overseas export. The change will make it cheaper to set up local studios, prompting investment in Australian startups. 

Australia’s Game Industry  

Currently, the Australian video game industry is comprised of small businesses and startups with high growth potential. Australia’s independent game developers like Mighty Kingdom or Melbourne-based PlaySide, will soon be benefiting from the market’s recent boom in game development. Australian startups including Black Lab GamesBubble Gum Interactive and Immutable, will also benefit from the tax offset which will drive economic growth, exports and innovative digital literacy.  

Eligibility 

The 30% refundable tax offset is eligible for Australian startups and businesses that spend a minimum of $500,000 on qualifying Australian games expenditure. The criteria and definition of ‘qualifying expenditure’ will soon be informed after industry consultation in mid-2021. Games with gambling elements or that cannot obtain a classification will not be eligible. If you need advice on the criteria, it is recommended that you consult a commercial lawyer or accountant.

Need help? Contact us

At Allied Legal we keep up to date with the latest startup specific news and reforms so that we can save your startup time and money. If you want a commercial lawyer on your side, give us a call on 03 8638 0888 or send us an email at hello@alliedlegal.com.au. 

You might also like our article Budget Reform 2021: Employee Share Scheme Reform to Assist Startups.

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