New South Wales Formalizes New Online-Betting Tax

New South Wales Formalizes 10% Point of Consumption Tax for Online Betting

Australia’s New South Wales has formally announced a new point-of-consumption (PoC) tax for online-betting.

New South Wales officials have formally released the state’s budget for the 2018-19 fiscal year, which includes an online-betting “point of consumption” (PoC) tax to be set at 10% for all wagers involving NSW residents, including those of the major Australian city of Sydney.

The new rate goes into effect on January 1, 2019, and is designed to make operators licensed in other Australian states — primarily the country’s Northern Territory — share revenue generated from NSW punters.

NSW becomes the latest Australian state to implement a PoC tax, after considering a rate as high as 15% during earlier budget negotiations. Queensland, Western Australia, and South Australia all opted for the higher 15% rate when their own PoC levies were announced, while Victoria selected a more moderate 8% rate. Each of these states has targeted revenue flowing into the coffers of numerous international sportsbook operators that have set up shop in the Northern Territory, which offers flat-rate licensing and other tax benefits.

Revenue increase and Tabcorp/Tatts protection

The new PoC tax is designed to achieve two objectives, in recapturing the lost tax revenue generated from the state’s online bettors, while also protecting the two prominent and homegrown Aussie books, Tabcorp and Tatts, that are merging and that are licensed in New South Wales.

Prior to the PoC tax’s upcoming implementation, Tabcorp and Tatts had been NSW’s sole sources for revenue from legal online gambling. Being able to assess the Northern Territory operators is expected to bring in AU $40 million (about €25.4m or US$29.6 during the last six months of the upcoming fiscal year, which runs through June 2019.

In the 2019-20 fiscal year, the first in which the PoC tax will be in effect for the entire 12 months, authorities expect to generate AU $100 million (about €63.6m or US$73.9m) in revenue. A 2% slice of that revenue is earmarked for NSW’s racing interests as an operational surcharge, though other Aussie sports interests, such as Australia’s National Rugby League, are also lobbying for a slice of the newly baked tax pie.

NSW officials affirmed that Australia’s old gambling-tax regime was made obsolete by the online gambling era and that it left Tabcorp solely footing the bill.

“In practice,” reads an excerpt from the New South Wales government consultation paper on the issue, “wagering tax on racing and sports betting is currently only paid by Tabcorp, the NSW retail wagering and totalizator licensee. All other bookmakers, including on-course bookmakers in NSW and corporate bookmakers that are licensed in other states and territories, do not pay NSW wagering tax. The place of consumption or location of a wagering customer, whether in NSW or another state or territory, is of no relevance to the way wagering taxation is currently imposed in NSW.

“Historically, wagering has taken the form of in-person transactions in a retail outlet such as a TAB or at an on-course bookmaker, and the existing taxation model reflects this. However, considerable growth in online wagering in recent years has displaced the need for wagers to be placed in-person, and online wagering is not captured by the current wagering tax framework. That is, in the case of online wagering, there is now a disconnect between the location of wagering activity, the jurisdiction where the profits from wagering are being earned, and taxation revenue from wagering.”

10% the “right balance”

NSW Treasurer Dominic Perrottet justified not only the implementation of the PoC tax but the 10% rate as well, in announcing the changes. “The introduction of a PoC tax is an important step to ensure that we are leveling the playing field given the wagering tax paid by onsite operators,” Mr. Perrottet said.

“We think 10% strikes the right balance and that online corporate bookmakers should contribute their fair share.

“However, a 15% additional tax on top of GST and race field fees would be an excessive burden on players in the market. We will review our 10% rate in 18 months and also keep a close watch on how other states progress with their PoC tax.”

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