Last year, the UK Gambling Commission invoked a Point of Consumption (POC) Tax on all operators locally licensed to conduct online gambling. South Australia (SA) is now planning to implement a similar taxation model that could see Australia’s online casinos contributing an estimated $47 million to the SA government’s coffers annually.
The exact POC tax rate has not yet been officially decided upon, but could be as high as 40%; well above the 15% tax rate imposed in the UK. It will apply to all of Australia’s interstate online casinos and other gambling websites based outside, but catering to residents of, South Australia.
The SA government breached the topic of inciting a POC tax back in February, but it wasn’t until mid-April that discussions on the matter became serious. Officials said the idea was to impose a higher standard of regulation, while conducting much needed renovations to the state’s tax system.
According to documentation provided by the SA Treasury, approximately 74,000 residents are currently gambling at online casinos based throughout Australia. However, those operators are only responsible for paying a nominal $1,500 fee each year that allows them to accept SA customers.
In a statement to an Australian newspaper, The Advertiser, South Australia’s Treasurer, Tom Koutsantonis, explained that a POC tax on online casinos’ revenue is only proper. “It is important that online gambling operators pay taxes considering that they are generating profits based on betting activity of South Australians.”
A report from the Treasury delivered an illustration of how much the new online casinos tax could generate for the state. Based on a suggested rate of 40% taxation, it was estimated that SA would absorb $47 million a year. That amount would be added to the current $390 million SA is already collecting from land-based gambling operators in the region.
Operators of local pubs and clubs are fully on board with the plan to tax online casinos. They have argued for years now that the tax rates are choking their profits, making it incredibly difficult to compete with internet-based gambling websites who are not currently paying any taxes to the state.
Enhanced Compliance for Online Casinos
At present, interstate online casinos that are licensed in SA are required to submit revenue reports to the state. But those reports are self-generated by the operators. Mr. Koutsantonis said a new process will be prescribed to ensure a procedure of “audit and compliance which would be much more reliable.”
He said there are already officials working to establish the new process, and that it could eventually become the standard for all Australian states. SA intends to “report back to the other states mid this year and discuss how such a model might work nationally.”
Laws of Online Casinos in South Australia
Australian states have definitive laws regarding the operation of online casinos. In South Australia, it is illegal to base operations within the state and accept SA players. However, online casinos based in other Australian states are permitted to accept SA players so long as they are licensed by the SA government to do so.