In the Mid-Year Economic and Fiscal Outlook, as outlined in the latest government update, a significant amendment will take effect starting July 1, 2025. Notably, expenditures on gambling and tobacco will no longer qualify for the Research and Development (R&D) tax incentive in Australia.
The R&D Tax Incentive has been a key policy, providing tax offsets to encourage businesses in Australia to invest in eligible R&D activities, promoting business growth and innovation.
The government justified its decision by emphasizing that activities linked to gambling might worsen addiction and related harms, whereas tobacco-related activities pose increased health risks. By excluding these sectors, the government aims to avoid subsidizing R&D that may contribute to such issues. However, projects solely focused on harm reduction, such as reducing addiction, will still qualify for support.
This policy change is projected to enhance government revenue by AU$12 million and cut expenditures by AU$8 million over a five-year span starting from 2023–24.
For this amendment to take effect, legislative changes are required. In the meantime, the Department of Industry, Science and Resources, alongside the Australian Taxation Office, will continue to manage the R&D program.
### Responsible Wagering Australia Challenges the Exclusion of Gambling
The decision has met with strong opposition from Responsible Wagering Australia, highlighting potential threats to local jobs, innovation, and investment within the Australian industry.
CEO Kai Cantwell argued that tax incentives should not target specific sectors and should remain free from governmental bias. By removing gambling from the incentive program, ongoing R&D endeavors in the industry face uncertainty.
Cantwell expressed concerns that this decision sets a harmful precedent, where tax policy could be manipulated in political negotiations, endangering any industry. The potential use of tax policy as a moral tool could undermine its role as a catalyst for economic growth.
Cantwell further stated that if he represented industries like fast food, alcohol, or fossil fuels, he would find this selective approach troubling. It jeopardizes the impartiality of the tax system and leaves businesses uncertain about which sector might be targeted next.
### Calls for Policy Reassessment
Cantwell warned that the ruling might push R&D jobs to countries with more favorable incentives, costing Australia significant R&D contributions and economic benefits. He urged the government to reassess the decision and collaborate with gambling enterprises to ensure safety for Australians and sustainability in the industry.
“The industry’s primary focus has long been consumer protection,” Cantwell remarked. “Regardless of government support, our commitment to investing in consumer safety remains unchanged. Australian tech and innovation continue to lead, contributing to both local and global growth.”
Cantwell concluded by urging the government to rethink this exclusion and engage deeply with industry players to ensure that tax policy fosters innovation, economic expansion, and employment.