Tax offset a potential game changer for video gaming

The Interactive Games and Entertainment Association (IGEA) has made a recommendation to the Federal Government’s inquiry into Australia’s creative and cultural industries that a 30 per cent tax offset is put in place to encourage productivity and help local producers secure a greater share of international contracts.

The recommendation has been widely supported, with the Australian Small Business and Family Enterprise Ombudsman Kate Carnell saying that it would be a means to ensure Australian producers are internationally competitive in an industry that is comprised of many high-growth potential small businesses and start-ups.

“The video game production industry was worth about $250 billion globally in 2019, but the Australian sector earned a mere $114 million of that,” Carnell said. “Internationally, we are seeing video game production industries in countries that offer tax incentives such as Canada, the UK and New Zealand securing substantially larger slices of the pie.”

Carnell cited Canada, which offers a digital media tax credit on labour and certain marketing expenditures, with its video game development industry employing more than 27,000 full-time workers and generating $3.8 billion in revenue.

“Australia compares poorly with [fewer] than 1300 full-time workers in the video-game production sector and earning less revenue that New Zealand. While the federal government invests $750 million annually in arts and culture, the video game sector continues to fall through the cracks,” Carnell said.

The IGEA estimates that Australia has the potential to create a $1 billion industry in game development, providing export revenue and employing an additional 10,000 full-time workers with the right support.

“A tax offset for game development, similar to the incentives given to the screen production industry would be an excellent start,” Carnell concluded.

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