Australia’s 30% video game tax rebate is finally introduced to parliament

Over 18 months after first being announced, Australia’s Digital Games Tax Offset (DGTO) is finally being introduced to Parliament. Once passed, the DGTO will offer a 30% rebate to Aussie video games developers that have projects above $500,000.

The DGTO is a part of the Treasury Laws Amendment (2022 Measures No. 4) Bill 2022, which was introduced to Parliament on Wednesday.

The offset was originally announced by the Coalition back in May 2021 and was supposed to be passed by July 2022. Eighteen months and a new government later, it’s finally happening.

The Interactive Games and Entertainment Association (IGEA), welcomed the news, thanking Treasury, as well as Minister for Trade Don Farrell and Communications Minister Michelle Rowland, who has been championing the Australian video games industry for years.

“By backing and introducing the legislation into Parliament, the Albanese Government has provided certainty and growth opportunities for our highly creative and technically skilled industry,” IGEA CEO Ron Curry said in a statement.

“The job creation, revenue growth and international investment in game development will further cement and enhance Australia’s reputation for delivering quality content internationally. In particular, it will create a new generation of creative 21st century Aussie tech workers.”

With some luck, the DGTO will hopefully help revitalise the Australian  game development scene. Over the past 15 years we have seen large studios in Australia such as 2K, Team Bondi and Pandemic Studios gutted and shuttered.

It’s a shame, because as reports show, the global gaming industry was valued at around US$195.65 billion in 2021. It is also expected to have a 12.9% annual growth rate between 2022 and 2030.

But IGEA is confident that the future of game development in Australia will eclipse the past.

“I think the DGTO is going to trigger a level of growth and investment that far surpasses the previous boom in Australian game development prior the GFC,” Ben Au, Director of Policy & Government Affairs at IGEA, said to SmartCompany over email.

“Currently, we have many existing studios in Australia that have been able to expand through their hard work and successes, while we have a few international companies firmly established here. With the help of the DGTO, they’re going to grow even faster and we’re going to see many more studios created both organically and through significant foreign investment.”

Au also said that the local industry is more diverse and mature since the last boom. He also makes the point that the business models of games over the last decade has changed, particularly with the growth of digital distribution platforms.

“We’re particularly excited by the fact that the core of the Australian sector now comprises of a number of ambitious and talented indie studios creating their own IP, and many of them have already achieved or are on the cusp of global renown. Imagine what they’ll be able to do with the DGTO’s support.”

He’s not wrong. With the growth of incredibly popular indie games, there is an opportunity to make video games a huge Australian export. A great example of this is the wildly popular Cult of the Lamb by Massive Monster. Developed primarily in Melbourne, it sold over 1 million copies in its first week.

The Digital Games Tax Offset is a first of its kind

The Digital Games Tax Offset will be a first-of-its-kind rebate in Australia. While federal funding for video game production has existed in the past, particularly through the Australian Interactive Games Fund, it was short lived. However, back in 2019 Labor promised to resurrect the defunct fund if it was re-elected. We’re still waiting on that one.

In general, most funding for local video game production has come from direct grants that are often state-based. And there’s certainly no parity when it comes to these grants.

Within the local gaming industry, Melbourne is generally seen as its beating heart due to a combination of robust tertiary programs and funding opportunities.

VicScreen has been particularly supportive of game development for years. At the present time, its Victorian Production Fund offers grants up to $500,000 for cash-flowed projects. It also offers a 10% offset as part of its Victorian Screen Incentive program.

Other states are catching up. Back in August, Western Australia announced a $2 million pilot fund for digital game production in the state. Screen Queensland also announced a 15% incentive program and Screen Tasmania also has its own game fund.

Sadly, New South Wales is woefully behind when it comes to funding Australian games. Though it offers the same 10% rebate as Victoria, that’s about it. Developers creating games within the state either have to leave or rely on Screen Australia’s competitive Games: Expansion Pack fund, which offers grants up to $150,000.

It’s worth noting that this grant was designed specifically for developers who won’t be eligible for the DGTO.

“It hasn’t always been like this, but we’re so grateful for all the support that is now being provided to Australian game development by governments at all levels, who have suddenly all understood how much long-term economic potential there is in our sector,” Au said to SmartCompany.

Let’s hope the DGTO will be a major step towards even more federal and state-based support for what could be a booming industry for Australia.