About the offset
The digital games tax offset (DGTO) is a refundable tax offset which allows eligible companies that develop digital games in Australia to claim 30% of their total qualifying Australian development expenditure (QADE):
- as certified by the Minister for the Arts
- incurred on or after 1 July 2022
- up to a cap of $20 million per company, per income year (this cap also extends to a group of companies that are connected or affiliated).
Law introducing the DGTO received royal assent on Friday, 23 June 2023. This has been added as Division 378 to the Income Tax Assessment Act 1997 (ITAA 1997).
For more information, see the Office for the ArtsExternal Link website.
Eligibility
To be eligible to claim the DGTO in an income year you must:
- be an Australian resident company with an Australian business number (ABN), or a foreign resident company that has a permanent establishment in Australia with an ABN
- obtain one or more certificates from the Minister for the Arts stating your eligibility for the DGTO and total QADE for the income year
- claim the offset in your company tax return for the income year.
Certificate from the Minister for the Arts
A company (or the head company of a consolidated group) may apply for a certificate from the Minister for the Arts for a:
- completion certificate – for development of a new game
- porting certificate – for a game ported to a new platform
- ongoing development certificate – for ongoing development of an existing game.
To apply for the certificate and to find out more about the eligibility criteria, go to the Office for the ArtsExternal Link website.
Consolidated groups and connected or affiliated companies
If you undertake the development of the game as a member of a consolidated group, or a multiple entry consolidated (MEC) group, the head company of the group may:
- apply for the certificate or certificates from the Minister for the Arts
- claim the DGTO in its tax return.
The annual $20 million cap applies to the offset for a single company and to the total amount of offset to which a group of connected or affiliated companies, or consolidated groups, would be entitled to.
When to claim the offset
If you meet the eligibility requirements to claim the DGTO, you should claim the offset when you lodge your tax return.
If you are waiting for a Certificate from the Minister for the Arts for an income year, you should lodge a request to defer lodgment of your tax return until you receive your certificate.
You should contact us if you have lodged a tax return for the relevant income year, but have either:
- not claimed the DGTO
- claimed the incorrect amount of DGTO.
Do not submit a claim for the DGTO as part of a request to amend your assessment without contacting us.
How to claim the offset
Once you have obtained a certificate from the Minister for the Arts, you can claim the DGTO in your company tax return on the calculation statement at label E - Refundable tax offsets.
The amount of the refundable tax offset you can claim for an income year is 30% of the sum of QADE specified in certificates issued to you for the relevant income year (subject to the $20 million cap across connected or affiliated companies).
Claiming the DGTO across connected or affiliated companies
You should ensure that if you have any connected or affiliated companies, the sum of all the DGTO amounts being claimed does not exceed $20 million in an income year.
If the total DGTO claimed by you and your connected or affiliated companies exceeds $20 million in an income year, the offset reduces to nil for all connected or affiliated companies.
If the $20 million cap in an income year is breached because of an inadvertent error made in determining whether another company is a connected or affiliated company, you should contact us as you may be able to lodge an amendment to vary the DGTO claim.
What to do if your certificate is revoked
Certificates issued by the Minister for the Arts can be revoked.
If this happens you will need to repay any amount of DGTO your company has received regarding that certificate.
Situations where the Minister for the Arts can revoke the certificate include:
- where the issue of the certificate was based on inaccurate information
- fraud or serious misrepresentation
- where the total of the company's QADE on the game is less than $500,000 in the relevant income year.
A decision made by the Minister for the Arts to revoke a certificate previously issued, or a decision to refuse an application for a certificate, are reviewable in the Administrative Appeals Tribunal (AAT).
Check if you can claim the digital games tax offset (DGTO) for costs incurred in developing digital games in Australia.