The Export Market Development Grant (EMDG) is Changing

Historically the Export Market Development Grant (EMDG) has functioned as a re-imbursement scheme for businesses spending money to develop export markets. As a result, you used to apply after you have spent the money.

From 1 July 2021, the EMDG has been redesigned into true grants program with businesses applying up-front and eligible businesses may be able to apply under a number of different programs or tiers.

The key eligibility requirements for business, is that the business has an ABN, has turnover of less than $20 million and has a plan to market eligible products to overseas countries other than New Zealand.

Eligible Products

Eligible Products can be goods, services, events, intellectual property, know-how and software. In respect of goods these need to be primarily Australian. Services include tourism services within Australia provided to foreign persons. Non tourism services can include services provided in Australia as long as certain conditions are met and the services are not specifically excluded. Events can include online events if held by an Australian business. For software the work to develop the software needs to be substantially done in Australia. Remember, getting a foreign person or business to spend money in Australia may qualify as an eligible product.

Eligible Expenses

Eligible Expenses are those expenses incurred in respect of a promotional activity undertaken for the purposes of marketing an eligible product in a foreign country, and the business has a designated connection to the eligible product. Designated connection effectively means you own or have a licence to the goods. Or you provide the service.

Eligible promotional activities

Include:

Maintaining representative in foreign country.
Short trips to foreign countries (maximum claim for 21 days per trip).
Payments to consultants to research into the market in the foreign country for the eligible product; or undertake promotional activities to market the eligible product in the foreign country.
Short trips in Australia in order to undertake activities that relate to marketing the eligible product to potential foreign buyers of the eligible product (maximum claim for 21 days per trip).
Foreign Buyer Visits.
Promotional and advertising material.

Excluded Expenses

Includes:

Capital expenses
Staff remuneration in respect of someone ordinarily employed in Australia by the business

How much will you receive under the EMDG?

Firstly, these are matched grants. For every dollar grant, you need to match this with another dollar of spending. For example, if your grant is $10,000 and you spend $20,000, you will get $10,000 in grant funds. If your grant is $10,000 and you spend $12,000, you will get $6,000 in grant funds. Also, if your grant is $10,000 and you spend $24,000, you will only get $10,000 in grant funds.

Secondly, there is not an unlimited pool of money available under this program. If the value of all the approved grant applications exceeds the pool, each grant application will be scaled back. You could apply for $10,000 but only be approved for $8,000.

The process for receiving a EMDG

From 1 July 2021, the process for receiving a grant will be as follows:

You apply for a grant before you spend money on promotional activities.
Once all applications have been assessed, Austrade offers a grant agreement to each eligible applicant.
You enter into a grant agreement with Austrade. You then undertake your promotional activities as agreed in the grant agreement.
You request milestone payments in accordance with your grant agreement.
Your grant agreement will set out when your milestone payments should be made and what you need to do in order to receive these payments.

How to Apply

Austrade has not yet opened up the application process (as of 5 May 2021). Once opened, Austrade expect to accept applications for just 4 to 6 weeks.

What to do next?

If you are currently exporting, or plan to export in the near future, you should start to plan now for what money you would like to spend in the 2021-2022 year in respect of marketing your business to overseas countries other than New Zealand. That way once the new EMDG applications open, you will be in a position to quickly lodge your application.

Otherwise, once the applications close, you may not get a second chance to apply in respect of the 2021-2022 year and will need to wait until some time in June or July 2022 to apply again.

If you want some help, contact me below.

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