Date posted: 10/05/2021 2 min read

Australian Federal Budget 2021-22 - Tax changes include depreciation of intangibles

The depreciation rules for intangible assets will change and there will be a 30% tax offset on digital games

In Brief

  • Business can now self-assess depreciation of intangible assets
  • A 30% tax offset will be allowed for digital games developers
  • More funding to encourage the uptake of e-invoicing

The Australian Government will invest almost A$1.2 billion in a digital economy strategy as part of this year’s Federal Budget. 

The tax initiatives will include:

  • A 30% tax offset for digital games developers that spend a minimum of A$500,000 on qualifying Australian games expenditure. Consultation with industry in mid-2021 will inform the criteria and definition of qualifying expenditure. Games with gambling elements or that cannot obtain a classification rating will not be eligible. The offset will be available from 1 July 2022 to Australian resident companies or foreign resident companies with a permanent establishment in Australia.
  • The Government will amend the income tax law to allow taxpayers to self-assess the effective life of certain intangible assets, rather than being required to use the effective life currently prescribed by statute. This amendment applies to patents, registered designs, copyrights and in-house software for tax purposes. This will apply to eligible assets acquired following the completion of temporary full expensing introduced in the 2020-21 Budget.
  • A review of the venture capital tax concession programs to ensure the programs are fit-for-purpose and support genuine early-stage Australian start‑ups. The programs in scope for the review include: venture capital limited partnerships, early stage venture capital limited partnerships, Australian venture capital fund of funds and investments made directly by foreign residents registered under Part 3 of the Venture Capital Act 2002. Public consultation will be undertaken in 2021.

But more than A$951,000 of this expenditure relates to grants and the expansion of government services such as:

  • A$301.8 million to enhance the My Health Record
  • A$200.1 million to overhaul myGov
  • A$124.1 million for a National Artificial Intelligence Centre led by CSIRO Data 61
  • A$111.3 million to accelerate the rollout of the Consumer Data Right
  • more than A$100 million to support digital skills
  • more than A$50 million to enhance cyber security in government, data centres and future telecommunications networks
  • A$35.7 million to support emerging aviation technologies such as drones
  • A$15.3 million to drive business uptake of e-invoicing
  •  A$12.7 million expansion of the Digital Solutions - Australian Small Business Advisory Service

Australian Federal Budget 2021-22

An opportunity for Australia to build a sustainable, productive and resilient economy.

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Government website - The Australian Government is empowering businesses to grow investment in digital technologies.

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