Australia Considers Removing R&D Tax Incentives for Gambling Industry
Proposed Changes to R&D Tax Incentives in Australia
The Australian government is considering new legislation that would exclude gambling-related activities from eligibility for Research and Development (R&D) tax incentives. This draft legislation, submitted on July 1, is pending presentation to parliament. Along with gambling, the proposal also targets tobacco and nicotine-related products, aiming to halt public funding toward industries linked to addiction and long-term health harms.
Reasons Behind the Proposal
The government introduced this proposal to address growing public concerns about the use of taxpayer money to support sectors perceived to contribute to addiction and negative health outcomes. Officials argue that taxpayer-funded incentives should not be directed towards businesses that may exacerbate problems like gambling addiction or tobacco-related illnesses.
Scope of the Exclusions
The proposed exclusions cover a wide range of gambling activities including online and in-person gambling, slot machines, and bookmakers, as well as tobacco and nicotine products. The legislation is intentionally broad to encompass various related products and R&D efforts. However, it explicitly permits research designed to mitigate the harmful effects of smoking or to develop treatments for gambling addiction.
Government documents highlight that financial support for R&D in these sectors could undermine public health goals and conflict with efforts to reduce gambling addiction and smoking-related diseases. A budget report from the previous year indicated that R&D funding in gambling might actually increase addiction risks, while similar funding in tobacco-related industries correlates with a higher chance of chronic illnesses.
Economic Context and Government Priorities
Australia faces a challenging budget outlook, with the Mid-Year Economic and Fiscal Outlook for 2024-25 projecting continued deficits. The country’s national debt is forecasted to hit AUD 1 trillion by the 2025/26 financial year. In this context, there is increased pressure to reduce funding for incentives perceived as less beneficial and redirect resources toward healthcare and economic growth.
New statistics from the Australian Tax Office revealed that in the 2021/2022 financial year, wagering companies claimed nearly AUD 90 million in R&D tax credits. Officials worry that continuing to allow such claims could encourage investment in projects that yield limited public benefit, thereby diverting funds from more critical sectors.
Next Steps and Public Consultation
Industry groups, public health advocates, and research institutions have until January 30, 2026, to submit feedback and influence the final form of the legislation. Stakeholders are closely monitoring the potential impact of these changes to understand how it may affect their operations and funding opportunities.
