Just some context on the Australian classification system.
It's not censorship, they stopped censoring things in the 80s. It is purely a classification process.
You can't however sell media that has not been classified. That's on every state and territory's statutes.
The classification board, a federal body, has some particular rules e.g. no depictions of rape or sexual assault.
Refusing classification for breaking these rules usually means they want a written justification from the distributor/producers for why you need to break those rules, e.g. it's essential to the story, it is low impact, it is done in an unrealistic or comic way, etc.. The board just needs something they can use to justify allowing something to break the guidelines e.g. Irreversible has a depiction of rape that is essential to the plot of the movie so it was allowed to pass.
Now rape was banned in the early 80s due to the large volume of porn depicting sexual assault that many community groups arced up about. In the 90s depictions of incentivised criminal activity and drug use was banned due to right wing political outrage. Games like GTA would get around it by claiming it was done in an unrealistic manner for humorous effect and that the game punished you for criminal activity by sending the police after you. Bioshock got round the incentivised drug use by claiming you were acquiring super powers and not injecting illicit drugs.
Hotline Miami 2 featured rape and the distributor didn't argue their case so was refused a classification.
Regardless if the distributor doesn't argue their case the classification board's hands are tied.
