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Grant for Australian Exporters: A Look at The EMDG
The Export Market Development Grant (EMDG) can provide reimbursement of up to 50% of your export promotion expenses. For Australian small and medium sized businesses, this can be a great boost to overseas marketing efforts.
If you are looking for support as you expand overseas, the EMDG is a grant for Australian exporters. Here are a few basics about the grant to get you started.
What is the EMDG?
The Australian Federal Government provides reimbursement to eligible export businesses with promotional expenses of at least $15,000. It is administered by Austrade, and provides reimbursement for expenses above a $5,000 threshold. The aim is to help small- and medium-sized Australian businesses develop export markets, thereby boosting Australian industries.
The scheme is for products being marketed overseas, and there are key criteria that need to be met by applicants.
Last year over 3,500 SMEs accessed the EMDG scheme, which supported exports of over $3.8 billion. In 2018-19, the highest number of applications in nearly a decade was received. There were 4,019 applications for reimbursement from Australian businesses.
The grant can be accessed up to eight times per company.
Eligibility for the EMDG
This grant for Australian exporters does come with some conditions.
Eligibility for access to the grant considers promotion activities undertaken during the financial year prior to the application period. For your first application, the previous two financial years (combined) can be considered.
We’ve listed below the range of requirements outlined for this grant. Don’t be overwhelmed, however – have a read through and you may well find your business fits the guideline.
- The business must have:
- income of not more than $50 million in the grant year
- incurred at least $15,000 of eligible expenses under the scheme (first-time applicants can combine two years expenses)
- principal status for the export business – you must own the product you are promoting (some exceptions apply, such as non-profit export-focused industry bodies)
- promoted the product for export, where the product is:
- a good made in Australia
- a good made outside Australia where Australia will derive a significant net benefit from its sale overseas
- a service, except those specified as ineligible in the EMDG regulations
- a tourism service
- an event held in Australia
- an intellectual property right that mainly resulted from work done in Australia
- a trademark first used in Australia, or which has significantly increased in value from its use in Australia, or
- know-how that mainly resulted from work done in Australia
- In addition, the business must have promoted one of the following:
- the export of goods or most services
- inbound tourism
- the export of intellectual property and know-how
- conferences and events held in Australia
There are eight categories of items that can be claimed:
How much can you claim via the EMDG?
The available rebate is calculated on your eligible expenditure above $5,000, at 50% of cost.
EMDG Funds Receivable = ((Eligible Expenditure) – $5,000) x 50%
For example, you may calculate your total eligible marketing expenses to be $55,000. The provisional grant would then be ($55,000 – $5,000) x 50% = $25,000.
There is a minimum grant spend of $15,000.
The maximum grant per company is $150,000 (per application), up to eight times. This is subject to available funds (which depends on the available funds from the government, and how many applications are received in the relevant year). In April 2019, the Australian government announced an increase in funding, to better support Australian businesses promoting products and services overseas. This increase is in the amount of $60 million over three years from 2019-20.
Do note that EMDG grants are assessable for income tax purposes.
As far as payments, they are made in two phases. The first payment is made after your application is approved, in an amount up to the initial payment ceiling (announced in June year). If your provisional entitlement is below this ceiling, you’ll receive the full amount during this first round of payments. In 2019-20 (2018-19 grant year) the initial payment ceiling is $40,000.
If your entitlement is above the ceiling, your second payment will be received at the end of the financial year. These payments are based on the amount of remaining funding in the EMDG budget. As a result, you may not receive the entire provisional amount (if there is insufficient funding available during the second round of payments). In 2019-20, the second payout is expected to significantly increase, due to the Government’s commitment of an additional A$60 million in the 2019-20 budget.
After the first two years in which you apply for the grant, your business must satisfy EMDG performance measure requirements in order to receive subsequent grants. In essence, you must be earning revenue (or be able to show evidence for future revenue) from export activities. This can be applied under one of two options;
Option A – The Export Performance Test
Option B – The Australian Net Benefit Requirements
- Under option A – the Export Performance Test – Austrade will calculate your provisional grant entitlement as the lesser of:
- 50% (of total eligible expenses, less $5,000)
- A percentage of export earnings, depending on how many grants you’ve received. The percentage is indicated as follows:
Under Option B – the Australian Net Benefit Requirements – applicants must meet certain requirements in order to be able to continue to receive grants. These requirements consider the applicant’s financial position, past or likely commercial return, reasonable prospects for future success, and likely economic benefits to Australia.
In your application you must choose one of these options (from year 3 onwards) and, if the chosen option returns a failed application, cannot change your choice.
How does the EMDG Process work?
The first step for businesses looking for EMDG funding is to apply for the grant. In 2019, applications open on July 1 and the submission deadline is 2 December 2019. If you are using an approved consultant to make your application, the deadline is extended to 3 March 2020. Austrade does not, by law, accept incomplete or late applications.
- The steps to apply include:
- Review the EMDG Eligibility Checklist to ensure your business is eligible
- Ensure you have an AUSkey (a secure electronic key used by businesses to access government online services). These are available to businesses with an Australian Business Number (ABN).
- Complete and submit the online application. If you are submitting your own application, you will be required to complete an Applicant declaration as well.
Following the submission of your application, Austrade will check to ensure all the relevant information has been received.
They will then assign an EMDG assessor, who will be in touch once they’re ready to process your application. Assessment of your application may involve a phone call, or a visit to your business premises, to verify documentation and your application details.
You might consider engaging an EMDG consultant, if you’d like professional assistance with the process. Consultants play an important role, promoting awareness of the EMDG scheme, lodging applications on behalf of businesses and supporting the assessment process.
Previous Success Stories
There are some iconic and recognisable names that have previously accessed this grant for Australian exporters with great success. You may recognise some of these.
freelancer.com is the largest single freelancing marketplace in the world, supporting both small and large scale businesses with an international pool of skilled talent. Austrade has assisted freelancer.com with networking events and introductions, as well as awarding the EMDG seven times. The Grant has assisted in establishing offices all over the world.
hivery.com combines Artificial Intelligence (AI) and machine learning to help FMCG companies access mass amounts of data to improve ROI . The HIVERY team accessed the EMDG, which helped them reduce risk in marketing and sales efforts in Japan and the USA.
Cleverman is an Australian drama television show, with Aboriginal themes and crew. It has achieved great success both domestically and in international markets. Supported by the EMDG, the production company has used funding for marketing visits and trade fairs.
Overall the Export Market Development Grant is a significant initiative maintained by the Australian Government and Austrade. It can be a great help to small and medium sized businesses with overseas operations, and is well worth your consideration. Don’t forget – if your business is eligible, you can claim this grant up to eight times.
Fullstack helps Australian exporting business obtain government grants like the EMDG. Should you require professional assistance reach out to our team.
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, agencies and entrepreneurs.