FAQ about the Game Developers Sector Rebate (GDSR)
The New Zealand Government has introduced a 20% Game Development Sector Rebate to help grow Aotearoa New Zealand’s interactive industry. We want to make sure it benefits as many game developers as possible, so this is your chance to tell the Government whether the proposed rebate works for you or what should be changed.
Feedback on the proposed rebates features is open from 9am on the 15th June2023, through to 6 July 2023
Frequently Asked Questions about the Proposed Rebate
What date do I have to give feedback before?
You have three weeks to provide feedback – it is due on 6 July 2023. We want to get the rules right so it benefits as many Kiwi game studios as much as possible.
What exactly is a rebate?
A rebate is not a tax credit or tax offset. Rather, a rebate is a cash grant that you can apply for from the Government, after you have spent your own funds on eligible activity.
With a rebate, economic activity and jobs are encouraged first, and the Government only pays the 20% rebate for actual activity that can be proven to have happened (with an application or sometimes audit).
This does mean there can be a lag between doing the activity and receiving the rebate – possibly 12-18 months delay. For example, on 1 April 2024 next year you can apply for this year’s activities (from 1 April 2023 two months ago until 31 March 2024 next year), but it may take a few months to process the application with payment expected by 30 June 2024.
Will the amount I claim be deducted from my annual income tax?
No, this is not a tax credit. The amount you claim in your application form on 1 April each year will be assessed and then the rebate grant will be paid to you by 30th June each year.
What kind of businesses count? What kind of games count? What kind of game development activity counts?
These are the key questions covered in the consultation document.
We want the rebate to cover as many types of game development as possible, so check that it works for you and think of any edge cases. Are any common activities or expenses missing?
What consultation has there already been?
The NZGDA has been lobbying the Government for a game development incentive for many years. During 2022 and 2023, NZGDA board members have had several meetings with various previous and current Ministers. Since 2020, we have been working with MBIE and other tech industry groups on the Government’s Digital Technologies Industry Transformation Plan (ITP), which is the umbrella policy that the GDSR rebate and CODE are part of. Following its confirmation in Budget 2023, NZGDA Board members and CODE representatives were consulted on the first draft of the proposed rebate rules and now want wider feedback.
What does the NZGDA Board think of the proposed rebate?
The NZGDA will make our own submission suggesting various tweaks, but are keen to hear your feedback too. Share your submission with us at firstname.lastname@example.org and join our webinar to discuss.
Naturally we think it is great that the Government has recognised the potential of our sector and budgeted $40m annually for this rebate scheme. We are pleased that the rebate will support growing indie teams as well as larger studios.
Some key features of the rebate are based on feedback the NZGDA and some studios have already provided. Many of these reduce the paperwork or better suit how games are made. For instance, only one application for a business will be required rather than multiple applications for each game project. The application will be annual, rather than when projects are ‘complete’. The eligible activities take into account that game developers may wear multiple hats simultaneously, rather than being based on fixed job titles. We’ve learned from similar overseas schemes and encouraged the Government to make our rebate broad and relatively easy to administer. For instance, it’s simpler than the Australian DGTO rules.
What can I do with the 20%?
It is flexible. Businesses can choose how they spend their money – as long as it is on the eligible activities listed. Some studios may choose to hire 20% more people, take 20% longer to polish a game, do more R&D, bid for work-for-hire projects at a lower rate or increase salaries. We don’t expect it to be the same for every studio.
What happens if I spend $249,999?
You would receive no rebate, as this is below the minimum qualifying expenditure of $250,000 per year. However, if you spent $250,000 you would be eligible for a 20% rebate of $50,000.
How does this differ from the Australian Digital Games Tax Offset (DGTO)?
The DGTO is a 30% refundable tax offset available to eligible games developers that spend a minimum of A$500,000 on qualifying development expenditure in Australia from 1 July 2022. The offset is capped at $20 million per company.
To claim the DGTO, the developer must first apply to the Arts Minister for a completion, ongoing development or porting certificate. As a tax offset (not a rebate or grant) the qualifying Australian expenditure is generally deductible for company income tax purposes first and then a tax refund can be applied for. There are significant differences between the eligible activities in the NZ and Australian schemes.
How does this differ from the NZ Screen Production Rebate?
The 20% rebate rate and the minimum qualifying expenditure of $250,000 is the same as Post, Digital and Visual Effects (PDV) activity in the NZ Screen Production Rebate (NZSPR). 20% is also what international film productions are eligible for. However, unlike film, there is no separate, higher rate for domestic games that feature significant New Zealand content. The NZSPR is granted when a project is completed, which can be hard to define for games and doesn’t suit live games or games-as-a-service models.