The South Australian government introduced in July 2017 Australia’s first Point of Consumption Tax (‘POC Tax’) on wagering operators; throughout 2018, Queensland, Victoria, New South Wales, Western Australia and the Australian Capital Territory have each followed suit to implement a similar POC Tax framework in those respective jurisdictions. The Northern Territory, however, has expressed opposition to the introduction of a POC Tax and Tasmania has remained silent.
Under the POC Tax, betting operators are required to pay tax on revenue generated from the state in which bets are placed, rather than from the state in which the operator is licensed.1
Although the introduction of POC Tax in a majority of Australian states and territories seeks to harmonise the tax regime for which wagering operators are subject in Australia, the POC Tax framework in each state and territory varies significant in respect of the of the tax-free threshold, tax rate and most notably, the calculation of taxable revenue.
This paper updates readers on the current position in regards to the implementation of a POC Tax in Australia.2
In June 2018, Queensland passed the Betting Tax Act 2018.
This Act introduces a QLD POC Tax, effective from 1 October 2018, under which betting operators are liable to pay 15% of taxable wagering revenue in excess of $300,000 in each financial year. The tax free threshold of $225,000 applies for the first financial year on a pro rata basis (1 October 2018 to 30 June 2019). The QLD POC Tax is payable monthly.
The taxable wagering revenue of a betting operator is its total wagering revenue, less total eligible payments. The taxable wagering revenue of a betting operator is calculated differently depending on the category of betting operator.
In September 2018, Victoria passed the Gambling Regulation Amendment (Wagering and Betting) Act 2018.
This Act introduces a Victorian POC Tax, effective from 1 January 2019, under which betting operators will be liable to pay 8% of net wagering revenue in excess of $1,000,000 in a financial year. The Victorian POC Tax will be payable monthly.
Net wagering revenue will be calculated differently, depending on the category of betting operator:
The Victorian POC Tax will be reviewed by the Victorian Treasurer, in consultation with the Minister for Consumer Affairs, Liquor and Gaming Regulation, Minister for Racing and the Victorian Racing Industry, within 18 months of its commencement. The purpose of the review will be to assess the implementation of the Victorian POC Tax and its impact on the Victorian Racing Industry (VRI).
The scope of the review will include the tax rate, the tax-free threshold, the VRI funding arrangements, the broad definitions and application of the tax and other policy and administrative considerations.
New South Wales
In October 2018, New South Wales (NSW) passed the Betting Tax Amendment (Point of Consumption) Act 2018.
This Act introduces a NSW POC Tax, effective from 1 January 2019, under which betting operators will be liable to pay 10% of net wagering revenue in excess of $1,000,000 in a financial year.
Net wagering revenue is calculated differently, depending on the category of betting operator.
The NSW POC Tax will be reviewed by the NSW Treasury within 18 months of its commencement.
Australian Capital Territory
In September 2018, the Australian Capital Territory (ACT) passed the Betting Operations Tax Act 2018.
This Act introduces an ACT POC Tax, effective from 1 January 2019, under which betting operators will be liable to pay 15% of net betting revenue in excess of $150,000 in each financial year. The ACT POC Tax is payable monthly.
Net betting revenue is the total amount of all bets placed with the betting operator (including fees and commissions), less the total amount of all winnings paid by the operator (including refunds and prescribed costs).
In December 2018, Western Australia (WA) passed the Betting Tax Assessment Bill 2018 and the Betting Tax Bill 2018. Both Bills are currently awaiting Royal Assent.
Together, the Bills introduce a WA POC Tax, effective from 1 January 2019, under which betting operators will be liable to pay 15% of taxable betting revenue in excess of $150,000 in each financial year.
Taxable betting revenue is the betting operator’s betting revenue less their eligible payments. Betting revenue and eligible payments are calculating differently, depending on the category of betting operator.
On 1 November 2017, the Tasmanian Labour Government expressed a commitment to introduce a POC Tax, if successful in the 2018 Tasmanian election. However, in 2018, the Liberal Party was elected as the majority government.
The current Tasmanian Government has not announced their position in relation to a POC Tax.
The Northern Territory (NT) Government is opposed to the imposition of a POC tax, given that it licenses most of the corporate bookmakers in Australia, and most bets are placed with those operators by residents in other Australian jurisdictions.
The NT has indicated that its preference would be for a POC Tax to be implemented as a national tax scheme.
Consequences of the Disparity in POC Tax
Now that the POC Tax has been introduced in most Australian states and territories, the scheme is likely to have significant practical implications for all betting operators licensed in Australia.
The introduction of the POC Tax means that, in combination with other existing taxation obligations, Australian licensed betting operators are likely to be in a position that over 50% of their profits will be payable in wagering taxes and imposts. Such a large tax liability is unique to Australia and may have significant consequences for the sustainability of both individual and corporate betting operators, as well as the wagering sector as a whole (with limited exceptions).
The variations in the POC Tax obligations for each Australian state and territory may also make it difficult for betting operators to ensure full compliance. Betting operators must ensure that they understand their obligations in each Australian state and territory, including how to calculate net wagering revenue for the purposes of each state and territory’s POC Tax regime, noting differences in regards to the inclusion or exclusion of free bets, commission and fees (amongst others). Betting operators will also need to be aware of the different tax-free threshold in each state and territory. Finally, different reporting obligations apply.
The introduction of the POC Tax has also resulted in upheaval in the racing sector – for example, there has been a strike by racing industry participants in Queensland to ensure a greater return of the revenues to the racing sector. Similarly, there is considerable commentary around the extent to which the introduction of the POC Tax in South Australia has been successful.
Addisons has been monitoring the progressive introduction of the POC Tax in each Australian jurisdiction and has a comprehensive understanding of the complex POC Tax obligations and the steps required to ensure that betting operators achieve full compliance with their obligations under the POC Tax regime.
1.While the POC Tax is payable by wagering operators in each state and/or territory in which bets are placed, wagering operators are also required to pay a bookmakers tax in the state or territory in which the wagering operator is licensed (as well as other taxes, including Australia’s goods and services tax).
2. For further information regarding the South Australian POC Tax, please see our focus paper: Pay Where You Play: Introduction in Australia of a Point of Consumption Tax for Wagering Operators.
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