Changes to Australia’s news media bargaining laws

The Charge is applied by reference to corporate groups. Revenue and user tests apply across corporate groups, and members of each group are jointly and severally liable for the Charge where it applies.

Significant social media or search service 

The Charge will apply to a service (which includes a website) if it is “significant social media or search service”. A service is in this category if it: 

1. is a social media service or search service (subject to exceptions in the rules); and 
2. one or more members of the group provided the service on the last day of the group’s 12-month financial reporting period ending during the relevant financial year; and
3. the average monthly active users of the service during the group’s previous 12-month reporting period exceeds:
   1. for a social media service – 5 million or a higher number prescribed by the rules; or 
   2. for a search service – the higher of 10 million or a number prescribed by the rules.

For the purposes of the above tests, a person is an active user in a month if that person accesses the service from within Australia at least once during that month.

Social media service

“Social media service” is defined to expressly exclude important categories of service that might otherwise be caught.  A “social media service" is defined as an “electronic service” which meets certain criteria. 

“Electronic service” is defined so as to expressly exclude broadcasting and datacasting services as defined in the Broadcasting Services Act, and to include services that either allow end-users to access material using a carriage service, or deliver material to persons with appropriate equipment to receive it by means of a carriage service. 

The criteria that an electronic service must meet to be a social media service are as follows:

1. the sole purpose or a significant purpose of the service is to enable online social interaction between two or more end-users; 
2. the service allows end-users to link to, or interact with, some or all of the other end-users;
3. the service allows end-users to post material on the service.

As noted above, broadcasting and datacasting services are excluded. The “social media service” definition also expressly excludes:

1.  services that have the sole or primary purpose of enabling end users to:
   1. communicate by means of messaging, email, voice calling or video calling; 
   2. play online games with other end-users; 
   3. share information (such as reviews, technical support or advice) about products or services; 
   4. supporting the education of end-users; 
   5. supporting the health of end-users; 
2. services that have a significant purpose of facilitating communication between: 
   1. educational institutions and students or students’ families; or
   2. providers of health care and people using those providers services. 

Advertising material on the service and the generation of advertising revenue from the provision of advertising material on the service is to be disregarded when determining the purpose of the service in accordance with the tests above.

Search Service

“Search Service” is defined as an electronic service (which exclude broadcast and datacasting as noted above), that satisfies the following conditions: 

1. the service is an internet search engine service;
2. the service enables searches of the internet broadly, rather than just searches of a limited database, or to compare prices for particular goods or services (or goods or services in a particular sector);
3. the service neither solely nor primarily uses large language models (LLMs). A service is not however excluded if it merely uses LLMs to summarise or interpret results.

The Charge will apply to a corporate group if it provides a significant social media or search service in the relevant financial year (see above) and its relevant Australian digital advertising revenue from Included Services in the 12-month financial reporting period ending during the relevant financial year exceeds the relevant threshold, which is currently A$250 million. 

The amount of the Charge is calculated by multiplying a base by the rate set out in the NBI Bill which is currently 2.75 per cent. The base is the sum of the service groups’ relevant Australian digital advertising revenue for the base year, and is subject to adjustments where an included service is operated by a different corporate group for part of the relevant period. 

The Charge payable by a parent entity for a group can be offset by eligible expenditure of members of the group if eligibility criteria are met.

The key eligibility criterion is that the service group must have new eligible expenditure for the financial year in relation to at least eight different news business corporate groups. The Competition and Consumer Act 2010 (Cth) (CCA) contains registration requirements for registered news business corporations including a content test, an Australian audience test, and a professional standards test.

As explained in the summary in the Bill, “Eligible expenditure is consideration provided to registered news businesses: 

1. For the production, or to support the production, by the news businesses of news content; or 
2. In connection with news content produced by the news businesses being made publicly available online by the service group.”

The offset is calculated by working out the total new eligible expenditure of the members of the parent entity’s service group in relation to each news business corporate group and multiplying the total by the applicable percentage. The applicable percentage for small or medium news businesses is 200 per cent and for other news business corporate groups, 150 per cent.

The offset is non-refundable. However, if the parent entity is entitled to an offset for the current financial year, any excess eligible expenditure can be carried forward to a later financial year.

The anti-avoidance provisions have been legislated to deter schemes that reduce the charge or increase amounts of charge offset to give entities benefits. The provisions will apply if the sole or dominant purpose, or principal effect, of a scheme is to give an entity a charge benefit from the scheme directly or indirectly and the scheme has been entered into on or after 1 January 2025.

The Commissioner may make a declaration to negate the effect of the avoider’s charge benefits by stating either or both, the amount of charge that would have been payable and the amount of charge offset. For the purposes of making the declaration, the Commissioner may disregard the scheme.

The Government will not retain any revenue raised from the Charge. Instead, it will be distributed to news businesses through the News Journalism Payment Scheme established by the Payments Bill. An amount of 10 per cent will be made available for making grants. The Scheme will be administered by the Secretary of the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts. 

The “payment share” formula is calculated by multiplying the approved capacity claim and the amount allocated to the payment period, the product is then divided by the total scheme capacity for the payment period.

There are also weighting factors for eligible editorial workers in three weighting categories: 

1. small to medium business; 
2. regional or remote; and 
3. diverse communities. 

Under the News Journalism Payments Scheme, participants can make claims for payment based on the participant’s eligible editorial capacity, which is the extent to which the participant employs journalists and similar eligible editorial workers in eligible editorial roles.

“Eligible editorial worker” is defined as an individual who works primarily in an eligible editorial role and performs that work primarily in relation to core news content that is to be published online by a registered news business in relation to which the corporation is endorsed.

“Eligible editorial role” is defined as a role that primarily involves discovering, investigating, verifying, recording or reporting core news content or exercising editorial control in the production of core news content and excludes certain roles such as narrators, anchors, presenters, sports commentators and others.

“Core news content” is defined as content that reports, investigates or explains issues or events that are relevant in engaging Australians in public debate and in informing democratic decision-making or current issues or events of public significance for Australians at a local, regional or national level.

Ten per cent of Scheme funding may be made available for the making of grants.

Half of this amount is for making payments to “eligible entities”, which are individuals, partnerships, trust or bodies corporate other than corporations for the purpose of section 51(xx) of the Constitution. Grants may be made to eligible entities for producing core news content. It also provides for grants to eligible grant recipient corporations in relation to production of core news content.

Grants may also be made to the Australian Associated Press (AAP) ‘for the purpose of supporting the activities of the AAP in relation to news journalism, including the AAP’s wholesale newswire service’.