The Tasmanian Government officially announced a new Point Of Consumption (POC) betting tax months ago. Now, it has revealed the new 15% POC officially comes into force on January 1, 2020.
Point of Consumption, or POC, tax was first created by the United Kingdom Gambling Commission (UKGC). The UKGC is the gambling regulator in the United Kingdom. Several gambling companies moved their headquarters from the UK to countries such as Malta in a bid to avoid taxes. The UKGC had other ideas, however, and created the POC tax for any offshore operator.
POC tax is due when an offshore company generates profit from a player in the country performing the taxation. Tax rates started at 15% when the UK first introduced POC tax on betting in 2014. The UKGC wants to increase this to 21%. UKGC aims to generate more than £1.2 billion (AUD$2.26 billion) in tax revenue over the next five years.
Is POC on Betting New to Australia?
Six other territories have a POC betting tax; Tasmania is the seventh. South Australia introduced a 15% POC in July 2017 with Queensland following with the same in October 2018.
Four more territories jumped on the bandwagon in January 2019. Australian Capital Territory and Western Australia has a 15% POC. New South Wales opted for a 10% levy, with Victoria starting its POC at only 8%.
Like in the UK, any gambling operator wishing to offer its services to Australian customers has to pay the POC tax. Now the Northern Territory is the only Australian territorial government without a POC.
Decision Not Well Received
Responsible Wagering Australia has criticised the move, stating it will harm the Tasmanian racing industry. Chairman Nick Minchin slammed the 15% rate which he calls one of the highest taxes on wagering in the world.
Minchin said, “This tax is almost double that introduced by Victoria’s Labor Government and the Tasmanian Liberal Government now holds the dubious honour of taxing Tasmanians at a higher rate than any other Australian state.”
“The 15% Point of Consumption Tax introduced in South Australia threw a handbrake on that State’s racing industry and has almost brought it to its knees. Prize money has been cut, field sizes have shrunk, participants have fled interstate and jobs have been lost in South Australia. Starting off a much lower base, the Tasmanian Government has today put that same handbrake onto Tasmanian racing and thrown its future into massive uncertainty,” Minchin added.
“The evidence is now well-settled when it comes to the deleterious impact of these punitive taxes on racing and jobs. That is why it is so disappointing the Tasmanian Government has ignored the evidence and decided to hit ordinary Tasmanians with this new tax,” according to Minchin.
Tasmania to Benefit $5 Million Per Year
Tasmanian officials should see a $5 million increase to their coffers each year thanks to the new POC. According to Treasurer Peter Gutwein, the local racing industry will receive the extra funds.
“It is expected that additional revenue from this initiative will generate around $5 million per annum, with the net benefits to be appropriately shared with the local racing industry.”
Gutwein also revealed the face value of free bets are not be subject to the POC. Furthermore, companies do not have to pay tax on the first $150,000 generated from Tasmanian gamblers.
“Following consultation with industry stakeholders, it has been determined the Point of Consumption Tax will be set at a rate of 15 per cent of the net wagering revenue of betting companies, and will exclude the face value of free bets provided to bettors. This rate is consistent with most other jurisdictions and there will also be a tax-free threshold of $150,000 in betting turnover.”