Tax offset announcement puts South Australia at the forefront to attract and foster video game developers

South Australia is boosting the video game industry by combining national and state tax rebates in a proven formula that will help keep IP in the country.

Dan Thorsland, a game development consultant who has been in the industry for more than 35 years, said that up until now, the Australian video game industry has been relying almost entirely on American cash proceeds.

“This tax package now targets the Australian industry that overwhelmingly creates its own stories, and keeps those stories in Australia,” Thorsland said.

“It comes from [Australia] and it is owned by the company that developed it. It’s not service work for a big international movie, but it’s more important for the community that intellectual property remains here.”

Thorsland was reacting to the federal government’s introduction this week of a 30% refundable tax offset for eligible businesses that spend a minimum of $500,000 on qualifying Australian games expenditure, making Australia an attractive destination for digital talent.

The federal investment will assist a new wave of Australian video game development, leading to more Australian-made games and bringing new Australian voices and stories to a global audience.

Last year, South Australia became the first jurisdiction in Australia to introduce a rebate for the video games industry by offering a 10% rebate in a move to drive job growth and attract international investment into the state, in a sector worth more than $250 billion globally.

As the first state in Australia to offer a dedicated rebate to video game companies, the announcement by the Australian government now puts South Australia at the forefront to attract and foster video game developers.

In 2018, a similar state-based rebate for Visual Effects, Digital and Post Production boosted South Australia’s creative industries with the outcome of the blockbuster film Mortal Kombat being produced in South Australia.

Tony Lawrence, the executive director and chief operating officer of Adelaide-based gaming company Mighty Kingdom said the total 40% rebate will increase the opportunities for video games development companies to establish in South Australia’s fast-growing video game industry.

“The 30% rebate from the federal government will be a rocket for the South Australian games industry,” Lawrence said.

“We expect tremendous growth as we become globally competitive, attract investment and talent to develop world-class games, and provide dream jobs for many South Australian game developers.”

South Australia has a growing games development sector, led by a mixture of international, independent and established mid-sized companies and access to world-standard graduates from local universities that use cutting-edge AI, data analytics, visualisation and cyber.

South Australian Minister for Trade and Investment, Stephen Patterson said the state is leading the way in the value it places upon the creative industries sector.

“There are opportunities for (gaming) companies to transfer their skills across industries as they adopt gaming technology, 3D simulation and virtual reality,” Minister Patterson said.

Talent in the gaming sector has transferable digital capabilities that can be applied to a range of other sectors including defence innovation, medical technology, education technology, emergency planning, construction, agricultural technology and modern manufacturing.

The Digital Games Tax Offset will be available from 1 July 2022 to Australian resident companies or foreign resident companies with a permanent establishment in Australia.

This article was first published by The Lead South Australia.