Digital Games Tax Offset (DGTO)

Purpose and Program Overview

The Digital Games Tax Offset (DGTO) is an Australian Government initiative launched as part of the “Digital Economy Strategy”. Its primary intent is to strengthen Australia’s digital games industry and expand employment opportunities for creative talent.

The program also aims to improve the industry’s international competitiveness and attract foreign investment to Australia’s digital games sector. It supports the development, ongoing development, and porting of digital games within Australia.

The DGTO is a refundable tax offset, meaning eligible businesses can receive a direct payment even if they have no tax payable. It helps Australian game developers invest in their projects, contributing to the growth of a key creative industry.

Key Grant Details

• Grant amount or funding range: A 30% refundable tax offset on eligible qualifying expenditure.
• Application open and close dates: Applicable to eligible expenditure incurred from 1 July 2022. Applications for certificates are ongoing.
• Eligible industries or business types: Companies investing in the development of eligible digital games.
• Required co-contributions: Not applicable, as it is a tax offset based on expenditure.
• Location/state/territory applicability: Applies to qualifying Australian development expenditure.

Priority Sectors

The DGTO specifically targets the digital games industry in Australia. It supports companies involved in the development, ongoing development, or porting of digital games.

Funding Scope

• Minimum and maximum amounts per stream: The minimum qualifying expenditure for an eligible game is $500,000. The offset is capped at $20 million per company (or group of connected or affiliated companies) per income year. This cap corresponds to approximately $66.7 million in eligible expenditure.
• Categories or streams of funding: The DGTO provides a single refundable tax offset. There are three types of certificates: Completion Certificate, Porting Certificate, and Ongoing Development Certificate, which relate to different stages or types of game development.
• Project timeline or eligible funding duration: Not a project-based grant with fixed timelines. The offset applies to eligible expenditure incurred on or after 1 July 2022.

Eligibility Criteria

• Business structure or size: Companies investing in game development. Specific details on business structure (e.g., Pty Ltd) or size (e.g., SME definition) are not explicitly stated, but the offset applies to companies.
• Registered business location: Not explicitly stated, but implies an Australian company incurring Australian development expenditure.
• Minimum/maximum turnover: Not specified.
• Insurance or compliance obligations: Not specified, but compliance with Australian tax laws is required to claim the offset.
• ABN/GST status: Not explicitly stated, but standard for Australian businesses claiming tax offsets.

Eligible Activities and Expenses

The DGTO supports qualifying Australian development expenditure on eligible digital games. This includes:

• Expenditure incurred during the development of a new digital game.
• Expenditure related to the ongoing development of an existing digital game.
• Expenditure associated with porting a digital game to another platform.

The game must meet specific eligibility criteria as outlined in Division 378 of the Income Tax Assessment Act 1997.

Assessment Process

The DGTO is an entitlement-based tax offset for eligible games and expenditure, rather than a competitive grant program.

• Key evaluation criteria:
  • The game must meet the eligibility criteria outlined in Division 378 of the Income Tax Assessment Act 1997.
  • The game must be certified by the Minister of Arts.
  • A minimum of $500,000 in qualifying expenditure must be incurred for the game.

The application process involves applying for a certificate online, which the Digital Games Tax Offset Advisory Board then assesses. If deemed eligible, the Minister for the Arts issues the certificate. This certificate is then used to claim the offset as part of the company’s annual Australian tax return. Provisional certificates can also be sought to assess likely eligibility.

Recent Updates of the Digital Games Tax Offset

The Digital Games Tax Offset became applicable to eligible expenditure incurred on or after 1 July 2022. It forms part of the Australian Government’s ongoing “Digital Economy Strategy”.

Application Tips

Consider these points for your application:

• Ensure your digital game project meets the minimum qualifying expenditure of $500,000.
• Familiarise yourself with the specific eligibility criteria outlined in Division 378 of the Income Tax Assessment Act 1997.
• Apply for the relevant certificate (Completion, Porting, or Ongoing Development) through the online portal.
• Consider applying for a provisional certificate to confirm likely eligibility before incurring significant expenditure.
• Consult with a tax professional or the Australian Taxation Office for advice on claiming the offset in your tax return.

Where to Get Help

Consider consulting with a professional grant specialist, such as Pattens Group. We offer initial assessments to review your business’s eligibility and evaluate how well your project aligns with the grant’s objectives. You can also visit relevant government websites for application templates and further guidance.