Emerging Markets Development Grant
BUSINESS TAX FACT SHEET
Australian businesses are increasingly heading overseas for lucrative market opportunities, with more than 40% of total exports from Australia coming from small business.
Australian businesses are yielding the benefit of global interest in the safety, security and quality of Australian-made and Australian produced goods and services.
As SMEs look at the opportunities in International markets, now is the time to be looking at whether your business is eligible for the Export Market Development Grant (EMDG) scheme.
Open for applications between 1 July 2016 and 30 November 2016, the scheme has undergone a number of changes in recent years, with further changes to come for the 2016-17 application period.
If you're thinking about applying this year, now's the time to be start working on your application - preferably with an experienced EMDG consultant.
The EMDG offers financial assistance in the form of a grant for the cost of marketing and promoting your business overseas, covering up to 50% fo eligible expenses for costs above $5,000 up to a maximum of $150,000 provided that the total expenditure is greater than $15,000.
If your business has an annual income of less than $50 million during the grant year and you've spent at least $15,000 on promotion and marketing costs during that time, then it is likely you'll be eligible for the grant.
The typical turnaround time from application to result is approximately six weeks.
If you are an Australian individual, partnership, company, association, co-operative, statutory corporation or trust carrying on business in Australia you may apply for EMDG provided you:
- had an annual income of not more than $50 million during 2016-17;
- spent at least $15,000 on eligible export promotion activities during 2016-17. First time applicants may combine expenses incurred in 2015-16 and 2016-17 to meet this threshold;
- are the principal – you must own the product you are promoting (some exceptions apply); and
- promoted your product for export, and your 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 trade mark 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
Note, not all promotional expenditure and marketing costs are eligible.
It's worth discussing your costs with an EMDG consultant before they are incurred, however if you've already incurred the costs, the consultant can work with you to identify what is and isn't eligible.
One of the most important things a business can do is to be 'EMDG ready', i.e you should be able to answer the following questions:
- Are your products, services and IP ready for sale?
- Is the business the 'principal' party in the transaction?
- Has your expenditure been incurred and paid for in before the end of the claim period?
- Have the claimed expenses been incurred for approved promotional purposes?
- How is your business structured?
Where there are multiple legal entities in your business (or business group) there is potential for your eligibility for the grant to be affected. It's best to work with your accountant and EMDG consultant to understand what the impact may be.
The challenge is in the interpretation of the rules and how AusTrade applies them can be problematic.
It's not uncommon for applicants to get a detailed audit that aims to reduce the expenditure items claimed or reject a claim outright based on 'eligibility' issues.
While many SMEs opt to apply directly for the scheme, self-prepared claims often don't get the best result and if the application fails, you can't re-apply until the following year. Working with an experienced EMDG consultant to apply on behalf of your business, however, can result in a higher claim for your business. More than 75% of EMDG applications are lodged via a consultant.
For businesses that are applying directly, the deadline is 30 November. It typically takes up to six weeks for applications to be approved or rejected.
- Communications costs have been removed as an eligible expenditure category
- A limit of $15,000 has been placed on the free sample expenditure category (for claimants that are combining two years of expenditure, and one of these years is the 2015-16 financial year, no limit applies)
- The provision for the reimbursement of in-country travel (other than air fares) has been repealed and the amount of the daily allowance for overseas visits has been increased to $350 (from $300)
- The list of excluded expenses now includes those expenses relating to eligible promotional activities, things or eligible products that may have had a detrimental impact on Australia's trade reputation.
If you're thinking of applying for EMDG, contact us on 02 9957 4033 for a discussion about your particular circumstances, business and how to apply for EMDG.
Download PDF version: Emerging Markets Development Grant
Last updated July 2016. This factsheet is provided for information purposes only and is correct at the time of publishing. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.