The Australian government has published a draft legislation, proposing to remove gambling, tobacco and nicotine products from receiving Research and Development (R&D) tax incentives. Lawmakers want to ensure that taxpayer funds are not utilised for subsidising any research and development that can aggravate serious health risks, addiction or associated harm. The draft bill will take effect from July 1, 2025.
Australian Government Prohibits Gambling R&D Using Taxpayer Funds: Key Insights
- The draft legislation broadly covers research and development related to online and land-based gambling, gaming machine technology, wagering platforms, tobacco, and nicotine products.
- Lawmakers note that taxpayer funds should not be used to support innovation that is detrimental to public health. Documents accompanying the draft highlight that subsidising studies in these sectors does not align with national health goals.
- An exception will apply to harm minimisation studies related to gambling, tobacco and nicotine products. Industry stakeholders have begun evaluating the impact of the new bill on compliance requirements and investment timelines.
Government Takes a Firm Stance Against Tax Benefits for Advancements Detrimental to Public Health
Australia’s Minister for Financial Services, Dr Daniel Mulino, in a press release on Tuesday, December 8, announced a draft legislation prohibiting gambling and tobacco-related activities from being eligible for the Research and Development Tax Incentive. Mulino sought public opinion on the draft bill, and the submission window will remain open until January 30, 2026.
The government had announced the changes in the Mid-Year Economic and Fiscal Outlook 2024–25 (Appendix A) in December 2024. The draft law aims to block subsidies for research and development initiatives that feature products detrimental to public health. The changes will take effect for the income year starting July 1, 2025. This initiative is part of the government’s broader efforts to regulate gambling in the country.
In October, the Victorian Gambling and Casino Control Commission (VGCCC) published its annual agenda and upcoming projects, ensuring transparency. Authorities have also banned the use of social media by teens under 16 from Wednesday, December 10. This will help protect the younger generation from exposure to gambling- and tobacco-related advertisements.
The draft legislation broadly applies to R&D related to online and land-based gambling, betting platforms, gaming machine technologies, tobacco, and nicotine-related products. Lawmakers believe that the taxpayer’s money should not fund innovation that can increase the risk of addiction or harm public health in the long run. Documents supporting the draft bill highlight that subsidising research in these sectors does not align with the government’s broader national health goals.
Harm Minimisation Research Remains Eligible for R&D Tax Incentive
The draft legislation exempts harm minimisation studies related to gambling and tobacco use. The draft law reads:
Gambling services, gambling, or gambling-like practices may nevertheless be eligible core R&D activities or supporting R&D activities where the activity, whether core or supporting, is undertaken for the sole purpose of harm minimisation. Harm minimisation may relate to different forms of harm in this context, such as financial harm or the harmful health effects of gambling.
Activities related to tobacco, including nicotine products, may nevertheless be eligible core R&D activities or supporting R&D activities where the activity, whether core or supporting, is undertaken for the sole purpose of harm minimisation. An activity related to tobacco is conducted for a harm minimisation purpose if the activity is conducted for the sole purpose of generating new knowledge about:
- the therapeutic use of therapeutic goods, including new knowledge about the development of those things (as defined in the Therapeutic Goods Act 1989) for minimising harm from a thing mentioned in paragraph 355-25(2)(j); or
- ceasing the ingestion or transfer of nicotine into the human body.
Australia’s R&D Tax Incentive program plays a significant role in boosting innovation and shaping the nation’s economic future. The program incentivises private organisations to undertake R&D activities that may not have been conducted otherwise.
The draft legislation comes in the wake of the Australian government facing a significant fiscal deficit. By the end of the 2025-26 financial year, structural deficits are projected to widen, and the national debt is expected to reach A$1 trillion (roughly €571 billion). Officials are emphasising the need to focus public expenditure toward sectors that align with national goals, such as clean energy, manufacturing, and medical research.
Gambling regulations are presently evolving in Oceania. Neighbouring New Zealand is in the midst of a major transition toward a regulated online gambling market. In July, New Zealand’s Minister of Internal Affairs, Brooke van Velden, proposed the Online Casino Gambling Bill in Parliament. The Bill focuses on player safety, tax collection, and greater oversight of gambling operators.