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Industry Criticizes South Australian Wagering Tax

by Mary Swire, Tax-News.com, Hong Kong

28 June 2016


The Australian Wagering Council (AWC) has warned that the South Australian Government's proposed place of consumption tax on betting companies is untenable in practice.

The Government has announced plans to introduce a 15 percent place of consumption tax on the net wagering revenue (NWR) of betting companies offering services in the state, effective from July 1, 2017. All bets placed in South Australia with Australian-based companies will be liable for the tax. A tax-free threshold of AUD150,000 (USD111,144) NWR per year will apply.

Responding to the announcement, Ian Fletcher, Chief Executive of the AWC, said: "This tax will significantly impact the ability of Australian licensed wagering providers to operate in the South Australian market and give a free kick to unlicensed offshore operators, who are merely a mouse click away and who pay no tax in Australia. The unintended consequences of a place of consumption tax will adversely affect government, consumers, and racing and sporting bodies. It is untenable in practice."

He added: "AWC members already have existing financial obligations in the form of federal taxes (including the goods and services tax), state licensing fees, and product fees – effectively a form of direct tax – paid to racing and sporting bodies. The imposition of a 'place of consumption tax' would significantly increase the taxation burden."

According to Fletcher, many of the advantages of Australia's product fee arrangements will be lost under the new regime.

He explained: "Offshore operators pay no government tax and no industry tax in the form of product fees, so the revenue to government, racing, and sport will actually decrease with an increase in offshore wagering activity. Australia's unique product fee arrangements mean, not only do licensed online wagering operators deliver effective direct revenue to racing and sporting bodies, but the integrity and information sharing arrangements between the parties help protect racing and sport from match-fixing and corruption, ensuring Australians can wager with confidence."

TAGS: tax | goods and services tax (GST) | Australia | tax thresholds | fees | offshore | gambling | licensing | tax rates | trade association | trade | services

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