Eligible Australian businesses can claim up to 50% of expenses on approved overseas promotions of their Australian products or services under the Export Markets Development Grant (EMDG).
What is the EMDG scheme?
The EMDG scheme is an Australian Government financial assistance program open to small to medium enterprises (SME’s) who are engaging in promotional activities.
The Federal Government has recognised the impact of COVID-19 on Australia’s exporters and the tourism industry and as a result has announced an increase in EMDG funding of $49.8 million for the 2019-20 financial year.
Broadly, the EMDG reimburses up to 50% of eligible export promotion expenses above $5,000 provided that the total expenses are at least $15,000.
Who is eligible for the EMDG?
Any Australian individual, partnership, company or trust that has carried on export promotional activities during the financial year. To be eligible, the business must have:
- Income of not more than $50 million; and
- Incurred a minimum of $15,000 of eligible expenses under the scheme; and
- Promoted the export of goods or services, intellectual property and know-how; inbound tourism; or a conference or event to be held in Australia.
First time applicants are required to satisfy eligibility requirements, which include providing financial statements and background information on their business (products and/or services being offered).
What is the benefit?
Eligible entities can receive a reimbursement of up to 50% of eligible export promotion expenses above $5,000. Eligible entities can claim for a maximum of eight annual grants, capped to $150,000 (subject to funds available in the scheme).
The grant is paid by Austrade in two instalments:
- an initial payment up to a maximum amount determined by Austrade for each year once the application is approved; and
- a second tranche payment at the end of the financial year.
Following the recent boost to the EMDG scheme, arising out of COVID-19 stimulus measures, Austrade has announced that eligible entities will receive a second payment equal to 100% of eligible expenses for the 2019-20 financial year.
What expenses can be counted?
Broadly, expenses will be eligible if they have been spent by eligible entities to promote and develop Australia’s export markets. The following list is an example of expenses that may be eligible.
- Overseas representatives – costs in maintaining representatives (i.e. rent and salaries and wages).
- Marketing consultants – export planning costs, including market research and promotions.
- Overseas marketing visits – travel expenses spent to promote business overseas.
- Free samples – production costs of samples.
- Trade fairs, seminars and promotions – costs incurred to attend trade fairs, conferences.
- Promotional literature and advertising – production of promotional materials.
- Overseas buyers – costs incurred hosting overseas buyers, i.e. accommodation and meals.
- Registration and/or insurance of eligible IP – processing and advice services.
The following expenses are ineligible:
- Expenses incurred to trade with New Zealand and North Korea.
- Capital acquisition, maintenance and depreciation.
- Product research and advancements.
- Expenses that are reimbursed by a third party or alternative grant scheme (i.e. R&D tax incentive).
- Illegal activities.
Austrade has acknowledged that eligible entities may have spent money on promotional activities that have subsequently been cancelled as a result of COVID-19. Austrade will treat these activities as having taken place, meaning that eligible entities will be entitled to be reimbursed under the EMDG scheme for 2019-20 and 2020-21, provided of course the entity has not received a refund or insurance payout.
EMDG applications for the year ending 30 June 2020 should be submitted prior to 30 November 2020.
Documentation must be maintained that supports the amount and purpose of the export promotion expenses. The documentation is required to be submitted with the EMDG application.
What are the next steps?
Pitcher Partners can assist businesses in determining whether the key EMDG eligibility requirements are satisfied and identifying eligible EMDG expenditure. For more information, contact a Pitcher Partners representative to discuss your potential EMDG eligibility.