Australia: Export grants: $200,000 per year

Last Updated: 7 December 2010
Article by Krish Patel

The Export Market Development Grants (EMDG) scheme aims to bring benefits to Australia by encouraging the development and expansion of foreign markets for Australian goods, services, intellectual property and know-how. Specifically, the EMDG scheme encourages small and medium sized Australian businesses to develop overseas & export markets. The scheme is administered by Austrade and supports a wide range of industry sectors, products and the export of intellectual property and know-how outside of Australia.

In our view, the EMDG scheme is an important and critical tool for Small & Medium Enterprises (SME) in the current global competitive environment, where Australia can really only successfully compete with high value, low volume products and innovations.

Broadly, the EMDG scheme reimburses up to 50% of expenses incurred on eligible export promotional activities to any overseas market (except New Zealand – not regarded as an eligible market) with a cap of $200,000 (for the 2009-10 year) for a maximum of 8 years.

EMDG applications for the 2009-10 year (1 July 2009 – 30 June 2010) must be lodged by 30 November 2010. Additionally, it should be noted that no extensions are granted. Therefore if you are eligible, you will needto act promptly.

Overview of EMDG Eligibility (2009-10 year)

To be eligible, the business must:

  • be an Australian individual, partnership, company, association, co-op, statutory corporation or trust that has carried on business in Australia during the year
  • have income of not more than $50 million in the grant year (2009-10 financial year)
  • have incurred at least $10,000 on eligible export expenses (first time applicants are entitled to combine 2 years worth of expenses).

Additionally, the eligible product must be either:

  • a good that is made in Australia or made outside Australia but have a significant economic benefit to Australia; or
  • a service, except those relating to migration, adoption, welfare, real estate in Australia, general legal, adult entertainment, or student accommodation

What can be claimed?

Expenditure relating to specific export promotional activities undertaken during the income year can be claimed.

There are nine categories of promotional activities that can be claimed:

  1. Overseas representatives all reasonable costs that you pay to have an overseas representative act on your behalf on a long-term basis to market/promote your product (to a maximum of $200,000).
  2. Marketing consultants the cost of engaging an arms length consultant to undertake export market research or marketing activities (a maximum of $50,000 can be claimed under this category).
  3. Marketing visits the cost of travel during the marketing visit e.g. airfares (conditional), taxi fares, departure taxes, etc. An allowance of $300 per day is claimable for overseas marketing visits to help defray accommodation, entertainment and living expenses.
  4. Communication the costs of communication to promote your product. If you do not claim your actual communication expenses, you will receive an automatic 3% addition to the claim.
  5. Free samples the cost of providing free samples of the product you are promoting for export.
  6. Trade fairs, seminars, in-store promotions the cost of participating in an international trade fair, seminar, in-store promotion, international forum, private exhibition, or similar activity.
  7. Promotional literature & advertising external costs of promotional material, such as brochures, videos, DVDs, advertising and website development.
  8. Overseas buyers the cost of bringing potential buyers who are non-residents to Australia for an approved export promotion purpose (up to a maximum of $7,500 per buyer visit or to a maximum of $45,000 per application).
  9. Registration and/or insurance of eligible intellectual property payments made to third parties, e.g. patent and trademark attorneys, for the grant, registration or extension of the period of registration of intellectual property for countries other than Australia or New Zealand.

How the EMDG will be paid

Once assessment of your application has been completed, your provisional grant entitlement will be calculated. Your grant will then be paid under a split-payment system which ensures that spending under the EMDG scheme is kept within budget, and that all eligible applicants receive a grant. Under this split-payment system, grants are paid in two rounds

  • round 1: an initial payment of grant entitlements up to the initial payment ceiling amount ($27,500 for the 2009-10 grant year & generally paid within 4-8 weeks of a claim lodged before October); and
  • round 2: a second tranche payment of grant entitlements above the initial payment ceiling amount (before the end of the lodgement year).

For example, if total eligible expenses were $55,000, the provisional grant entitlement would be $22,500 (being $55,000 less $10,000 and 50%). A minimum grant of $5,000 applies. As noted above, the maximum grant for eligible applicants is $200,000, subject to funds available in the scheme.

What to do next?

Applications for this year's round of grants opened 1 July 2010 and will close 30 November 2010, although it is in the business's interest to get the claim in as soon a possible after 1 July to maximise cash-flow. Additionally, it is worth noting that no extensions are granted. Therefore if you are eligible, you will need to act promptly.

Going forward - 2010/11

Financial Year Going forward, the $200m EMDG scheme has been revised to keep within its allocated budget. A number of notable changes include the reduction of the maximum grant to $150,000 (down from $200,000), the reduction in the maximum number of grants available for an individual recipient from 8 years to 7 years and an increase the minimum expenses threshold from $10,000 to $20,000

We were disappointed that the Federal Government chose not to boost the EMDGs $200m budget to maintain its effectiveness. Consecutive Federal Governments have either neglected the scheme or changed it so often that exporters have questioned whether there is a real commitment to increase Australian exports.

In our view, the current Federal Government should have 'taken the bull by the horn', indexed the $200m and simplified the scheme to bring it back to life and thus ensure its effectiveness to exporters.

One important and pertinent question that needs to be addressed going forward is whether the EMDG program could be deemed a 'subsidy' and fall foul of the trading principles of the World Trade Organization (WTO). Therefore, we recommend anyone eligible for the EMDG should apply now!

This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2009 Moore Stephens Australia Pty Limited. All rights reserved.

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