Tax Relief

The video games trade survives COVID-19 earlier than tax breaks

The Australian video game industry has largely withstood the economic impact of the COVID-19 pandemic, with most companies reporting either increased or stable revenues last year and nearly two-thirds planning to hire more staff, according to a survey of studios.

However, nearly a third of companies reported a loss in contractual revenue, and most suffered some negative business impact, with smaller studios suffering much more.

The industry is eagerly awaiting its first major aid package from the federal government in the form of a 30 percent tax offset on qualifying expenses from next July.

A survey of local studios conducted by the Interactive Games and Entertainment Association (IGEA) found that 62 percent of respondents reported stable or increasing revenue, compared to 33 percent for the same period last year.

Only 4 percent said they were planning layoffs and 63 percent planned to increase staff.

IGEA boss Ron Curry

“The latest IGEA survey results confirm that the Australian industry is experienced and well-positioned to benefit from the increasing popularity of games around the world,” said IGEA Managing Director Ron Curry.

A 30 percent tax compensation for digital games (DGTO) was included in the May budget and will come into effect from July 2022.

The move, Australia’s first government tax incentive for the video game sector, will allow eligible game companies that spend at least $ 500,000 on eligible Australian game spending to receive 30 percent refundable tax compensation.

The government will discuss the criteria this year, including eligible expenses.

“The launch of the DGTO in July 2022 gives security and confidence to our talented local market and companies looking to invest in Australia,” said Curry.

“The DGTO enables Australia to build a fully thriving local game ecosystem and ensure that game developers both lead and shape the new digital economy.”

According to the survey, the increase in sales corresponds to the size of the studio, with larger companies reporting more stable or higher sales compared to studios with fewer staff. Only 33 percent of studios with fewer than 14 employees reported stable or improved sales in the past year, compared to 62 percent overall.

Small independent studios were also more uncertain about their hiring decisions.

The IGEA survey showed that game studios have stayed with the hybrid working model and that 60 percent balance the time between office and home. Half of those surveyed said that working remotely had an impact on productivity and 10 percent said it had a significant impact.

Switching from teleworking also appears to have had flow effects for employment opportunities. A third of studios said they were recruiting talent between states, and more than a quarter were hiring overseas.

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