The Digital Games Tax Offset (DGTO) was introduced from 1 July 2022, giving eligible companies developing digital games in Australia access to a 30% refundable tax offset on their total Qualifying Australian Development Expenditure (QADE) above $500,000 in the application period.
What counts as QADE in DGTO?
Eligible QADE generally includes employee remuneration, contractor costs, and other development expenses directly tied to the creation of the game. It excludes items such as termination payments, leave payouts, and software subscriptions not directly linked to development.
For Australian game developers, the DGTO is a significant incentive that supports the growth of the local industry. But to access the offset, your application needs to be comprehensive, accurate, and backed by strong documentation.
At LDB, we have been involved with the DGTO since its introduction – both from the applicant’s side and as an assessor. This unique perspective means we understand how assessors review applications and what can make or break an approval.
How to apply for the DGTO
Applications for a DGTO certificate are lodged via the Office of the Arts website and can be saved and resumed before submission.
Once submitted, the process typically involves an initial assessment by the Office of the Arts, followed by a review from an Independent Game Development Consultant. During this review, applicants may be asked for additional details or clarification of expenditure. The application is then considered by the DGTO Advisory Board, which issues a certificate confirming the QADE determination if successful.
How long does a DGTO application take?
The assessment process can take 12-16 weeks from submission to certificate issuance. Applicants should factor in the lodgement deadline for their company tax return and apply early to avoid delays.
Timing of applications and tax return lodgements
The timing of DGTO applications can have a major effect on cash flow. For instance, if a game is released on 5 July 2025 and a certificate is issued, the offset must be included in the 2026 financial year tax return, which is lodged in the 2027 financial year. This could mean waiting up to 18 months before receiving the refund. Game studios should carefully consider release dates and tax return lodgement deadlines to avoid funding gaps.
Considerations for inclusions in your application
Strong documentation is critical. Every contractor invoice should be included – sample selections are not sufficient – and invoices must show the correct dates, game title, and a description of works. Workcover premium notices and ledgers should detail costs and apportionments. If contractors were engaged, you’ll also need confirmation that work was not subcontracted outside Australia.
Remuneration apportionment process
Assessors scrutinise how remuneration is allocated to QADE. Employees may work across multiple titles or perform tasks that are not eligible. General estimates such as “50% eligible” are not accepted. Instead, applications need to include accurate payroll data that clearly apportions time to eligible development activities supported by records such as timesheets or activity logs.
For influential employees such as directors or shareholders, eligible remuneration is capped at $65,000 including superannuation per financial year. This cap applies even when those individuals dedicate more time or incur higher costs, and evidence is still required to show the expenditure relates to development work.
Common mistakes in DGTO applications
From our experience, common mistakes include:
- Including non-eligible costs, such as third-party software subscriptions or generic development assets
- Adding termination payments or large leave payouts
- Incorrectly including superannuation on the $65,000 cap for influential employees. The cap includes superannuation.
- Submitting applications without timesheet evidence, even where employees work solely on one title
- Claiming contractor costs incurred outside Australia, which are specifically excluded
Can overseas contractors be included in DGTO?
No. Costs must be incurred in Australia. Work subcontracted outside Australia is not eligible under the scheme.
Tips for a smoother DGTO process
Studios can improve their chances of success by planning ahead. For multi-year applications, remember that the $65,000 cap for influential employees applies per year, not across the entire project. Consider the impact of game release dates, as they influence when refunds are received. And while applications should be detailed, providing concise and well-organised information is far more effective than overwhelming assessors with unnecessary data.
How LDB can assist with DGTO applications
At LDB, we’ve supported game development studios across Australia with DGTO applications and also worked as independent assessors reviewing submissions. This gives us a unique perspective and the expertise to guide studios through the process with confidence.
Our services include:
- Preparing QADE calculations, including reviewing timesheets, logs, payroll and apportionments
- Preparing and lodging DGTO applications
- Reviewing draft applications before submission
- Liaising directly with the Office of the Arts to resolve queries
By working with LDB, studios can reduce the risk of rejection, streamline the process, and maximise the benefit of the DGTO.
Partner with LDB for your DGTO application
The DGTO is a powerful opportunity for Australian game developers to grow their projects and strengthen cash flow. But navigating the process is complex, and mistakes can cause costly delays.
Our team of accountants and advisors in Blackburn, Melbourne, work closely with game studios to ensure DGTO applications are accurate, compliant, and successful.
Call us today on (03) 9875 2900 or get in touch online to speak with an LDB adviser about your DGTO application.
Or you can follow LDB on LinkedIn for insights on grants, tax incentives, and tailored support for the game development industry.
