The Federal Government has announced an expansion of its Digital Games Tax Offset.

The Federal Government will provide an additional $19.6 million over two years from 2023 to expand the 30 per cent Digital Games Tax Offset so that it covers ongoing development work—known as ‘live ops’—on digital games following their release.

Announced in the Mid-Year Economic and Fiscal Outlook, the funding comes after the rebate was included as part of a $1.2 billion Digital Economy Strategy outlined in May’s Federal Budget.

From July 1, eligible businesses will be required to incur a minimum of $500,000 per game on qualifying Australian games expenditure, while the maximum offset a game developer will be able to claim in each year is $20 million.

Since the Federal Government launched the DGTO at the budget, NSW and Queensland have broadened their post-production, digital and visual effects (PDV) rebates to include game development, joining South Australia, which became the first state government to extend its PDV rebate for games in 2020.

Minister for Communications, Urban Infrastructure, Cities and the Arts, Paul Fletcher, said expanding the offset will make Australia a more attractive and competitive destination for international digital games development.

“The global digital games industry is worth approximately AU$250 billion, which is why it’s critical that we promote the growth of Australia’s digital games development industry and increase its market share in a rapidly expanding global sector,” he said.

“Expanding activity eligible for a 30 per cent refundable tax offset will enable our local interactive entertainment sector to expand and foster skilled employment in an area in which significant numbers of young Australians are seeking to work.”

“This additional investment recognises that a lot of valuable and highly skilled work in the industry is devoted to the ongoing development of games, after their initial release.”

The announcement comes as new research from the Interactive Games & Entertainment Association (IGEA) shows the Australian video game development industry doubled its revenue to $226 million since 2016.

According to the Australian Game Development Survey (AGDS) 2021, the industry has recorded year-on-year revenue growth of over 20 per cent across the past three years, with 2021 generating an increase of 23 per cent, coupled with employment growth of 7 per cent.

IGEA CEO Ron Curry said the figures highlighted the need to harness growth within the sector.

“Five years ago, the Australian game development industry achieved $114 million in revenue and has grown exponentially since then to record over $226 million the last financial year,” he said.

“The figures prove the potential and adaptability of the globally reputable Australian video games industry, and we need to capitalise on this experience while we can.”

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