Betting companies in the Australian Capital Territory (ACT) will have to pay a 15 percent point-of-consumption tax from January 2019 following a recent government decision.

Tax.

A new point-of-consumption tax on betting revenue in the Australian Capital Territory will come into effect this January. (Image: business-reporter.co.uk)

Announced as part of the territory’s 2018/2019 budget, the new tax will work in a similar way to the one introduced by South Australia on July 1, 2017.

Under the new regime, operators will pay a levy on net betting revenue generated within the state.

In simple terms, operators will have to record bets made on harness, horse and greyhound racing as well as wagers made on sports, entertainment and political events by customers in ACT.

State Betting Revenue to be Taxed

The new tax is expected to generate $2 million in annual revenue and match the provisions expected in other Australian territories.

“The introduction of this tax will bring the ACT into line with multiple other Australian jurisdictions which are also in the process of implementing point of consumption tax arrangements,” reads the ACT government’s 2018/2019 budget.

ACT’s point-of-consumption tax will come into effect before other Aussie states, including Victoria, Queensland and Western Australia. Of those yet to implement their own tax system, Victoria looks set to be the most attractive for gaming operators.

Although the conditions haven’t been formally introduced, a May 15 announcement by Victoria’s Treasurer Tim Pallas noted that the rate will be set at 8 percent. If this proves to be the case, operators may be inclined to offer better incentives for players in Victoria.

New Levies to Help Tabcorp

Irrespective of any potential wrinkles in the system, the proliferation of state taxation will “level the playing field” according to Australian ministers. With most betting operators being based in the Northern Territory where tax rates are low, the government owned Tabcorp has been at a disadvantage.

However, despite the desire to create a fairer system, there has been some concern that Tabcorp may be worse off under Victoria’s planning tax changes. After Pallas announced his plans, he was forced to reassure those in the industry that it wouldn’t be bad news for the betting company.

Under the current system, Tabcorp pays a 6.5 percent general tax. However, when Victoria’s system comes into effect, the payments will increase in theory. Regardless of this, analysts have suggested this won’t negatively impact the betting operator.

“Tabcorp will also incur a 1.5 per cent increase in its average tax rate in Victoria but could see an offset — possibly through lower industry product fees — for tax already paid through its retail licence,” UBS analyst Matt Ryan told The Sunday Moring Herald as the news broke on May 15.

With ACT announcing its 15 percent point-of-consumption tax, other territories will likely follow suit in the coming months and usher in a new era for the Australian betting industry.

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