Gambling & Tobacco Exclusions
The following text is taken from the Government’s most recent Insider alert email dated 1/7/26.
It summarises the recent legislative changes made to the RDTI:
“Amendments to the Income Tax Assessment Act 1997 excluding R&D activities related to tobacco and gambling from the R&D Tax Incentive (R&DTI) are now law.
This exclusion applies to income years starting on or after 1 July 2025.
R&D activities solely aimed at stopping or minimising harm, such as addressing addiction, will remain eligible for support provided these activities meet the legislated criteria for core or supporting activities.
Gambling-related R&D
- Gambling-related R&D may still be eligible to receive support under the R&DTI, if it is undertaken for the sole purpose of minimising harm to a person, or, more broadly, the Australian community.
Tobacco-related R&D
- Tobacco-related R&D may still be eligible as core or supporting R&D activities under the R&DTI, if it is:
- related to the development of a therapeutic good which aims to minimise harm from tobacco use, or
- intended to stop the ingestion or transfer of nicotine into the human body.”
In previous MJA Updates, we have talked through the concerns we had about the introduction and passage of this legislation. These concerns are divorced from any personal views we may hold about the products offered by the two industries.
At the heart of the concerns were the consultation process undertaken by the Government with respect to the draft legislation. MJA made a submission covering a range of issues as did other third parties. We are not aware of any follow up from the regulators regarding these submissions and the measures were passed without significant reform.
It is to be hoped that the recently announced Budget changes (which have attracted much adverse commentary in the marketplace) will be put through a rigorous and transparent consultation process that canvasses the views of all stakeholders and avoids the stigma of being labelled a ‘box ticking exercise.’
Change at MJA
After 39 years at MJA (including 37 years as a Partner), Kris Gale has exited the partnership. Kris has been a longstanding and passionate advocate for business innovation in Australia and has made a significant contribution to promoting, shaping and supporting the effective operation of the R&D tax program for Australian innovators. He is staying on at MJA as an independent contractor, working exclusively for MJA, with a view to continuing the work on the current issues we are concerned with including the prevailing regulatory environment and the implementation of new legislation associated with the 2026 Budget.
In Memoriam
It is with great sadness that we recognise the recent passing of Michael Johnson, the founder of MJA.
Michael established the business in 1983 and was consulted by the Government in the 1985 design and introduction of the RDTI forerunner, the R&D Tax Concession. He developed a site-based consulting methodology that remains the cornerstone of MJA’s approach today. He pioneered many flexible workplace practices that have become commonplace in the business world.
After his departure in 1999, Michael always maintained a keen interest in the fortunes of MJA. He was a man who possessed an insightful mind and an immense sense of humour. His unwavering belief was that the purpose of work was profit with fun. Vale Michael. And thank you.
Should you wish to discuss any aspect of this article, do not hesitate to contact MJA.