SA Government Considers Proposal to Collect Taxes from Online Gambling Operators

In line with the South Australian (SA) Government's ongoing tax reform initiatives, SA Treasurer and Finance Minister Tom Koutsantonis announced that online gambling companies engaged in interstate betting operations, will soon be required to pay their fair share of gambling taxes. The announcement came after the SA Treasurer met this month with other state and territory treasurers. The discussions led to a decision allowing state and territory governments to impose charges based on a punter's location and not on the company's head office geographical location.

Treasurer Koutsantonis explained in his announcement that about 74,000 South Australians maintain Internet-based gambling account for 19 interstate betting operations. Yet none of the companies behind the online gambling activities transacted through those accounts pays any tax in South Australia.

He added that licensed clubs and pubs in SA remit gambling taxes. Such taxes contribute to the funds used by the State Government in providing essential services. This being the case, it is important to implement tax reform initiatives that will require online gambling operators to pay taxes as they are generating profits derived from the betting activities of South Australians.

The SA Treasurer went on to describe the existing set up, as one in which the SA government collects taxes only from SA-based gambling firms that provide work for South Australians. Currently, interstate online betting companies authorised to operate in SA pay a small amount of annual fee. The authorisation permits interstate betting operators to advertise as well as carry on with their betting operations within the SA jurisdiction.

According to Mr. Mr Koutsantonis, online betting services providers submit reports on the financial results of the online gambling business in South Australia, which is part of the government's present authorisation requirements. However, part of the planned tax reform will require the online gambling operators to submit financial information that has been determined by a process of audit when complying with such requirement. The reform aims to ensure reliability of the information provided by the online gambling firm, over the current self-reporting approach.

Actually, the proposed tax reform is a recommendation put forward by the Licensed Clubs Association of South Australia to the Department of Treasury and Finance as part of the ongoing tax review process. More popularly known as Club SA, it is a non-profit association providing support to South Australia's Licensed Club Industry.

Through the association's CEO Mike Penfold, the group asserts that online gambling options constitute an estimated 10 per cent of the gambling market. As it is, the for-profit companies behind the online gambling facilities draw away revenues from SA-based clubs and pubs. They do so without having to contribute taxes that could be used to fund public projects including programs that help problem gamblers.

The SA Club's submission includes a recommendation of setting tax at a rate of 40 per cent, on the premise that this would match the current profits generated by gambling businesses for South Australia. The submission reasoned that the rate would create numerous options for the SA Government.