Tax Offset: A Game-Changer for Australian Game Developers

Fuelling the Future of Game Development in Australia

Australia’s digital games industry is gaining momentum, and the federal government is stepping in to keep that momentum going. With the introduction of the Digital Games Tax Offset (DGTO), local game developers can now access a 30% refundable tax offset on qualifying Australian development expenditure (QADE).

This landmark initiative is designed to turbocharge investment in the industry, support homegrown talent, and help Australia become a powerhouse in global game development.

What Is the DGTO?

The DGTO is a federal tax incentive that allows eligible companies to claim 30% of their QADE as a refundable offset. The goal? To free up capital for innovation, high-quality production, and international growth.

With over 405 gaming companies across Australia employing more than 3,200 skilled professionals and generating over $200 million annually, the DGTO is poised to take the sector to the next level.

Who Can Claim the Offset?

To be eligible for the DGTO, a company must:

• Be primarily involved in developing digital games for commercial release

• Incur at least $500,000 in QADE per completed project or income year

• Be Australian-resident or operate through a permanent establishment in Australia

What Counts as Qualifying Expenditure?

QADE includes:

• Game design and programming

• Animation, artwork, and audio production

• Testing and quality assurance

• Wages paid to Australian employees directly involved in development

• Payments to Australian contractors or service providers

DGTO and Industry Growth

The DGTO isn’t just about tax benefits, it’s about economic transformation. This incentive is expected to:

• Attract foreign investment

• Support traditional and Web 3 gaming projects

• Create new jobs for developers, designers, and creatives

• Solidify Australia’s position as a leader in global game development

Administration and Support

The DGTO is jointly administered by the Australian Taxation Office (ATO) and the Office for the Arts. Companies must obtain certification from the Minister for the Arts to claim the offset. The scheme also aligns with various state government support programs, creating a powerful nationwide incentive structure.

DGTO for Corporate Groups

Companies within a consolidated group or multiple entry consolidated (MEC) group can still benefit from the DGTO. The head company must apply for the certificates and submit the claim. Note: A cap of $20 million per income year applies to connected or affiliated entities.

Revocation and Review Rights

DGTO certificates can be revoked if eligibility is no longer met or misrepresentation occurs. In such cases, the offset must be repaid. If a certificate is refused or revoked, businesses can challenge the decision through the Administrative Appeals Tribunal (AAT).

Final Thoughts

The Digital Games Tax Offset is a strategic leap forward for Australia’s gaming industry. It lowers financial risk, attracts global players, and paves the way for long-term growth. If you’re a digital game developer, now’s the time to explore how the DGTO can support your next big project.

Need help understanding your eligibility or preparing your DGTO claim?

Get in touch with Dolman Bateman, your expert advisors in navigating game-changing tax strategies.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.