In July 2017, South Australia introduced the first Point of Consumption Tax on gambling operators in a bid to create a level playing field in the industry. Throughout last year, more states followed suit, including Victoria, New South Wales, Western Australia, Queensland and ACT.
Under the new laws that came into effect on January 1st, operators now have to pay tax on revenue that was generated from within the state that the bets were placed (and not from where the gambling operator is licensed). The objective is to avoid giving operators that are licensed in lower-tax states an advantage of those who aren’t.
Differing Tax Rates
While the original intention of the Point of Consumption tax was to ensure a level playing field, the fact of the matter is that the tax frameworks differ from state to state, in particular in the tax rate, the calculation of taxable revenue and the tax-free threshold.
Queensland, for example, set a 15% rate on taxable wagering revenue in excess of $300K in each year, while Victoria’s Gambling Regulation Amendment Act, dictates that operators are liable to pay 8% of net wagering revenue of more than a million dollars each year.
New South Wale’s tax rate has operators paying 10% of gambling revenue of more than $1 million, but its net wagering revenue is calculated according to the betting operator’s category.
The Effects of POC Tax
It will take some time to understand how the new Point of Consumption tax will affect Australian betting operators, but most analysts agree that many of them will find themselves in a position that more than 50% of their profits will be payable in taxes and levies. It is clear that only the largest and strongest betting operators will survive such brutal taxation. Operators are aware that their profits will fold drastically and some, such as William Hill, have pulled out of the Australian market altogether as a result.
The disparity between states’ tax rates means that operators will have to understand their obligations in every state and how they should be calculated. It may make it difficult for them to comply with all their tax obligations, not to mention the time-consuming element of the process.