Australian game developers will soon be able to access a 30 percent tax offset after legislation sailed through the lower house.

The Treasury Laws Amendment (2022 Measures No.4) Bill 2022 includes the introduction of the Digital Games Tax Offset (DGTO), which will provide a 30 percent tax incentive to local video game developers working on projects worth $500,000 or more.

The bill was waved through the House of Representatives this week and sent off to the Senate Economics Committee for review. The committee is due to report back on the omnibus bill by late January.

Once passed, it will be the first federal policy of its kind, and one of the most generous tax incentives for games development in the world.

The offset will apply to specific development, porting or ongoing development costs rather than the indirect costs of running a studio, and will be capped at a $20 million offset per company per year.

The games tax offset was announced by the former Coalition government in the 2021-22 budget, and expanded in the 2021-22 Mid-Year Economic and Financial Outlook.

While the bill won’t be passed until at least February next year, any eligible expenditure from the start of the 2022-23 financial year will be eligible for the offset.

Interactive Games and Entertainment Association CEO Ron Curry welcomed the introduction of the bill, saying it will help to rapidly grow the local games sector.

“By backing and introducing the legislation into Parliament, the Albanese government has provided certainty and growth opportunities for our highly creative and technically-skilled industry,” Curry said.

“The Australian game development sector has embraced this opportunity. The job creation, revenue growth and international investment in game development will further cement and enhance Australia’s reputation for delivering quality content internationally.

“In particular, it will create a new generation of creative 21st century Aussie tech workers.”

Noting the games tax offset has bipartisan support, Curry called for the “swift passage” of the bill.

“The Office for the Arts and the Treasury have run a very effective consultation with industry and we expect the dialogue and education to continue as the DGTO rolls out,” he said.

“The DGTO, coupled with the many state government digital games funds and rebates, means that Australia has some of the most aggressive video game industry incentives available globally.

“We expect to see many multinational companies expand their operations to Australia and contribute to a thriving and sustainable game development ecosystem.”

The DGTO will cost the government $34.9 million over four years from 2021-22.

As part of the scheme, the Arts Minister will issue a certificate to games development companies each financial year determining the amount of eligible expenditure on development, porting and ongoing development costs.

The company must have spent at least $500,000 on these costs to qualify for the tax rebate.

Assistant Treasurer Stephen Jones, who introduced the bill to Parliament, said it will “support the emerging digital games sector”.

“The DGTO will strengthen the Australian digital games industry, expand employment opportunities for digital and creative talent, enhance the industry’s international competitiveness and make Australia more attractive for foreign investment,” Jones said.

The progress on the games offset was welcomed by a range of local game developers.

Blowfish Studios founder and managing director Benjamin Lee labelled it a “huge milestone” for the sector.

“If utilised to its fullest it will enable Blowfish to create more jobs around the country as we continue to build the world’s best blockchain games,” Lee said.

The announcement of the tax offset has assisted games companies in planning for the years ahead, and expanding significantly, Dark Shadow Studio founder and managing director Casey Thomas said.

“Since the announcement of the DGTO, my studio and I are in high spirits and are able to plan and budget for not only the exponential growth of new staff members within our studio but look at projecting into international exportation.

“Since my recent trip to India to speak at the India Game Developers Conference, it has opened so many new opportunities that until experienced, we would never really have considered,” Thomas said.