Digital Games Tax Offset – Draft Released Including Clarification of Interaction with R&D Tax Incentive

May 4th, 2022

Originally announced last federal budget was a refundable offset for digital games, to strengthen the digital games industry and develop local capability.

Last month, the treasury published the Exposure Draft Explanatory Materials.

The Digital Games Tax Offset (DGTO) proposes to insert a new division into the ITAA 1997 to provide a 30% refundable tax offset for eligible businesses that spend a minimum of $500,000 on qualifying Australian development expenditure related to the development of eligible games from 1 July 2022.

Noted within the draft is a list of specific exclusions, which has clarified that there is not a crossover with the R&D Tax Incentive:

  • Specific exclusions:
    • 1.74: Any expenditure (even if it satisfies the general test) that:
      • is claimed for the purposes of another tax offset, including for the purposes of section 355-100 (tax offsets for R&D); or
      • gives rise to notional deductions for the purposes of section 355-205 (about deductions for R&D expenditure); is excluded. Similarly, expenditure claimed for the DGTO cannot also be counted towards the R&D intensity test.

Such exclusions were anticipated.

The DGTO may however allow companies to access a tax offset for expenditure that does not qualify under the R&D Tax Offset.

Click here for more R&D Tax news and information.

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