The Australian government has released draft legislation to exclude R&D activities connected to gambling from eligibility under the Research and Development Tax Incentive.
The legislation, which also covers tobacco and nicotine products, continues with a date of implementation of 1 July 2025, the same date that was proposed for the exclusion in the Mid-Year Economic and Fiscal Outlook (MYEFO) papers last year.
The proposal responds to growing concern about public funds supporting industries associated with addiction and long-term health risks.
Officials argue that taxpayer-funded incentives should not facilitate innovation that could exacerbate these harms.
The exclusions are intentionally broad, covering R&D linked to online and land-based gambling, wagering platforms, gaming machine technologies, and any tobacco or nicotine products, including emerging alternatives.
Government documents accompanying the draft legislation state that subsidising advancements in these sectors is inconsistent with national health objectives and could undermine efforts to reduce addiction prevalence.
A targeted exception will remain for projects conducted solely for harm-minimisation purposes, ensuring research aimed at combatting problem gambling or mitigating tobacco-related health impacts continues to receive support.
The draft measures implement commitments made in the Mid-Year Economic and Fiscal Outlook 2024-25, which highlighted the potential for gambling-related R&D to worsen addiction behaviours and noted that tobacco-adjacent innovation inherently increases exposure to products linked to chronic disease.
The report also detailed budget pressures facing the government. Structural deficits are forecast to widen, and national debt is projected to reach A$1tn by the 2025/26 financial year.
This creates a pragmatic rationale for tightening incentive programmes and focusing public expenditure on areas aligned with broader health and economic priorities.
New data from the Australian Tax Office provided additional impetus for reform.
Gambling companies claimed nearly A$90m in R&D tax credits during the 2021/22 financial year, a figure policymakers described as misaligned with the programme’s purpose.
Officials noted that allowing such claims could inundate the system with projects offering limited public benefit while diverting resources from sectors regarded as national priorities, such as medical research, clean energy, and advanced manufacturing.
Relevant and impacted entities across the research, health, and gambling sectors are now assessing how the proposed exclusions may affect investment pipelines and compliance obligations.
The government has invited submissions on the draft legislation until 30 January 2026, allowing industry groups, public health organisations and research institutions to provide input before the final bill is introduced to parliament.
The consultation period is expected to help elucidate technical boundaries within the exclusions and ensure harm-minimisation research is clearly delineated from commercial development.
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