Australian gambling companies will no longer receive tax breaks for R&D, a program designed to encourage innovation and growth across industries.
The removal of the breaks, outlined in the Mid-Year Economic and Fiscal Outlook (MYEFO) documents and scheduled to be implemented from 1 July 2025, reflects the government’s growing concerns about the social and health impacts of the sector.
The MYEFO documents highlight that gambling R&D can “exacerbate addiction and related harms”, while tobacco-related activities contribute to increased health risks.
It also says that excluding these activities will ensure that the government does not subsidise R&D related to harmful products.
The decision to exclude gambling and tobacco-related R&D from the tax breaks comes amid increased scrutiny of how public funds are used to support private sector innovation.
The Australian Taxation Office (ATO) recently revealed that gambling companies have claimed almost A$90 million in R&D tax breaks for the 2021/22 financial year alone.
The biggest beneficiaries were established operators Tabcorp, which claimed A$39.5 million, and Aristocrat, which received A$22.2 million.
Other claimants included Ainsworth Game Technology (A$15 million) and PointsBet (A$9.95 million), with others claiming smaller amounts.
Treasurer Jim Chalmers has been a vocal advocate for reforming access to government tax breaks, particularly for industries that contribute to social harm.
“Tax concessions should serve the public interest, supporting innovation that improves lives and drives sustainable growth,” Chalmers said in a statement. “It is not appropriate for industries that exacerbate addiction or harm public health to benefit from these programmes.”
The exclusion of the gambling and tobacco industries from R&D tax incentives is part of a wider government push for fiscal responsibility as Australia faces a $27 billion federal budget deficit.
MYEFO forecasts that the deficit is expected to grow in the coming years, with public debt likely to reach $1 trillion by the 2025/26 financial year.
The government’s move to tighten eligibility criteria for R&D concessions is seen as a step towards addressing these financial challenges, while ensuring that public funds are allocated to projects with a clear public benefit.
Critics of the gambling industry have welcomed the announcement, highlighting the significant social costs associated with problem gambling.
Advocacy groups have long argued that the industry’s access to government funding through tax credits is at odds with efforts to mitigate gambling-related harm.
The inclusion of R&D tax credits in the sector has been controversial, with many questioning whether such requirements actually promote innovation or primarily serve as a financial advantage for companies.
The decision also underlines the government’s commitment to transparency in the distribution of public funds. As part of a new initiative aimed at strengthening accountability, the ATO will now publish annual R&D tax credit data two years after the end of the relevant financial year.
The latest data for 2021/22 provides a detailed breakdown of which companies have benefited from the scheme and by how much. This increased transparency is expected to allow for greater public scrutiny and strengthen the integrity of the program.
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