Digital Games Tax Break

In the dynamic landscape of the creative industry, the digital games and interactive entertainment sector reigns supreme as the largest and fastest-growing sector worldwide.

With a global value of approximately $250 billion, this industry plays a vital role in economies across the globe. In Australia alone, the sector experienced remarkable growth, expanding by 22% between 2020 and 2021, generating an impressive income of $226.5 million and providing employment opportunities for over 1,300 full-time workers. Recognising the significance of this industry, the Australian Government has introduced a new tax offset to support its continued growth and success.

Introducing the Digital Games Tax Offset

The Digital Games Tax Offset is a tax incentive that aims to foster the growth of the digital games industry by providing eligible companies with financial support. Additionally, this offset allows companies to claim 30% of their total qualifying Australian development expenditure incurred from 1 July 2022. Moreover, the maximum claimable amount per company (or group of companies) per year is $20 million. To reach this cap, a company would need to have eligible expenditures totaling approximately $66.7 million. Furthermore, several states in Australia, namely South Australia, Victoria, New South Wales, and Queensland, offer state-based tax incentives, providing an extra 10% to 15% on top of the federal support.

Eligibility for the Offset

To be eligible for the Digital Games Tax Offset, companies must meet certain criteria. This includes being Australian tax residents or foreign tax residents with a permanent establishment in Australia.

To access the offset, the company must obtain a certificate issued by the Arts Minister. This certificate is granted upon the completion of a new digital game, the porting of a digital game to a new platform, or for ongoing development of one or more existing digital games during the income year. The certificate obtained determines the offset claimed in the tax return, in consultation with the Minister.

Australian Success Stories in Digital Games

Australia has been home to numerous successful digital game ventures that have captivated audiences worldwide. These successes highlight the creativity and innovation of the local industry, showcasing its potential for growth and international recognition.

One such remarkable success story is Fruit Ninja, created by HalfBrick. This game took the world by storm in 2015, achieving over 1 billion downloads. Who could have imagined that a game involving slicing fruit with a sword would garner such widespread attention? Another notable achievement is Crossy Road, developed by Melbourne-based Hipster Whale. Within just ninety days of its release, it accumulated an astounding 50 million downloads, generating over $10 million in revenue. Moreover, The Sims Freeplay, a popular game enjoyed by millions, emerged from the merger of Melbourne studios Iron Monkey and Firemint after their acquisition by EA Games. Furthermore, Big Ant Studios, headquartered in Melbourne, has established itself as one of the world’s leading sports game developers, renowned for titles like the Tennis World Tour Game, Cricket 22, and an upcoming Rugby World Cup 2023 game. Get in touch with us!

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