Home > Legal & compliance > NSW increases point of consumption tax rate to 15% after Tab pressure

NSW increases point of consumption tax rate to 15% after Tab pressure

| By Robert Fletcher
The New South Wales (NSW) government has announced a rise in point of consumption tax (POCT), with operators in the Australian state to face an increased rate of 15%.
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NSW introduced a 10% POCT rate in January 2019 as a way of closing a loophole in existing laws whereby most online bets were not taxed, meaning the state was missing out on tax revenue.

The POCT applies to the location where the bet was placed, rather than where the operator that accepted the wager is located, meaning that all operators active in NSW are subject to paying tax in the state, regardless of the licence registration location of the operator.

The rise in POCT rate from 10% to 15% was announced as part of the NSW 2022-23 state budget and will come into effect from 1 July this year. The reform is expected to increase revenue by AU$740.0m (£420.5m/€490.0m/US$515.6m) during the four years to 2025-26.

“Aligning the POC tax and the betting tax, including effective fixed odds betting tax and totalisator betting tax at 15% will provide competitively neutral tax rates between betting products, regardless of the gambling operators or whether the betting activity is online or in person,” the budget said.

Land-based operator Tabcorp welcomed the higher rate, describing it as a further positive step toward industry reform. The operator said it also greeted news of the government’s intention to review the wagering tax regime, regulation and industry funding in the coming years.

The operator had recently joined a body that lobbied for higher rates for the online sector.

Tabcorp will receive transition payments over an 18-month period from the commencement of the tax changes to ensure it is ‘no-worse off’ relative to its current tax obligations as a result of the higher rate.

“Today is a positive step forward in levelling the playing field in NSW,” Tabcorp managing director and chief executive Adam Rytenskild said. “Online bookies will pay a greater share of wagering tax which can be invested back into the local racing industry and ensures a fairer system.

“We welcome the NSW government’s announcement. Online betting has changed substantially since the Tab’s licences were issued and this is an opportunity to better align with the modern economy.

“The Queensland government has recently announced reforms to create a level playing field and NSW is now a step closer to a level playing field.”

Earlier this month, Racing Queensland had announced a new 5% levy on online bookmaking, effectively increasing the POCT rate to 20%. The organisation said this would harmonise the tax rates of online operators doing business within the province with Tabcorp.

There are also plans to broaden the betting tax to include free and bonus bets as well as increasing the proportion of betting tax revenue that goes directly to the racing industry from 35% to 80%.

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