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 Games, Bubble Gum Interactive and Immutable, will also benefit from the tax offset which will drive economic growth, exports and innovative digital literacy.
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.
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