Government to introduce 30 per cent Digital Games Tax Offset

The games industry is among the early winners of next week’s Federal Budget, which will include a 30 per cent Digital Games Tax Offset.

Announced today as part of a $1.2 billion Digital Economy Strategy outlined by Prime Minister Scott Morrison and the Minister for Superannuation, Financial Service and the Digital Economy, Jane Hume, the rebate is designed to support Australia “taking a greater share of the $250 billion global game development market”.

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.

It comes seven years after the Australian Interactive Games Fund was terminated as a result of funding cuts to Screen Australia announced in the 2014 Budget.

The sector has since experienced widespread growth, both domestically and internationally, surpassing $4 billion in annual sales within Australia.

Its prominence led the South Australian government to extend the state’s 10 per cent post-production, digital and visual effects (PDV) rebate to cover video game development last year, becoming the first state government to do so.

Interactive Games and Entertainment Association (IGEA) CEO Ron Curry, who penned an open letter to then Minister for Communications and the Arts, Mitch Fifield in 2017 about the federal government’s need to greater acknowledge the games industry, expected the benefits of today’s announcement to be multi-faceted.

“It will spur the creation of brand new Australian game development studios, give existing Australian studios the support they need to take on ambitious new projects and accelerate their growth, plus attract further blockbuster AAA studios to Australia, all of which will create game development jobs in every state,” he said.

“This new federal investment will underpin a new wave of Australian video game development, leading to even more amazing Australian-made games to take to the almost $250 billion global video games market – which is arguably the largest entertainment market in the world – and bring new Australian voices and stories to a truly global audience.”

While the full details of the incentive have yet to be released, there may also be a boost to studios outside the gaming industry that use video game technology for hybrid projects that are closer to the realms of TV and film.

Mod founder Michela Ledwidge, whose company has supplied real-time and virtual production services for a range of different projects throughout the past decade, told IF the support could potentially have a “huge impact” on the work they do.

“The industry has spent many years lobbying for this, so it is great news,” she said.

“Obviously, it will depend on how a game is defined, but it bodes well for lots of experiences that previously haven’t been able to provide investors with a proper return.

“There hasn’t been this sort of financial framework available for projects that are closer to film and TV but use video game technology.”

The Federal Budget will be handed down on Tuesday, May 11.