The Australian Government has a financial assistance program that helps businesses in Australia export their goods and services. This is called the Export Market Development Grants (EMDG) scheme. This scheme, administered by Austrade, encourages small and medium-sized businesses in Australia to expand their markets through exportation.
If you would like to find out how the EMDG scheme works, how these grants can benefit you, and if your business is eligible to apply, read on for our detailed guide.
How does the EMDG Scheme work?
Every eligible applicant can access up to eight grants of up to $150,000 (subject to available funds). These grants reimburse 50 percent of the expenses your business has incurred for eligible export promotion. To be eligible, the expenses have to be above $5,000 and the total expenses need to be at least $15,000.
Grant years coincide with the financial year. Applications must be submitted in the following financial year for expenses incurred during any year. Any business making its first application can include expenses for the two preceding years.
Who is eligible for the EMDG Scheme?
The EMDG scheme is restricted to small and medium-sized businesses in Australia, with a turnover of less than $20 million. Your business has to export or promote goods that have been made in Australia to buyers overseas. Goods made outside Australia can be included in this as long as Australia gains a significant net benefit from its sale.
Certain service based businesses will also be considered upon application. These include:
- Australian tourism services
- Legal services that relate to Australian law
- Australian real estate
- Immigration services
- Intellectual property from work done in Australia
- Trademarks first used in Australia
- Events held in Australia.
Austrade works with many stakeholders. For example, they work with consultants who help businesses prepare claims for these grants, industry associations linked to export, and sector-specific organisations. If you want to claim these grants, you need to have a MyGovID. This will provide you with a distinctive Australian Business Number and identity for dealing with government agencies.
The business needs to be the principal rather than an agent for the export activity. Promotional expenses and marketing expenses must be over $15,000 in any financial year and above all there should be clear evidence of the expenses claimed for justifying the grant.
If the assessable income of your business is less than $20 million and you meet the rest of the criteria, your business is eligible for the grant. However, the application is reviewed by Austrade and can still be deemed ineligible.
What is considered eligible export expenditure?
Eligible export expenditures that qualify for these grants are:
- Overseas representation
- Marketing visits
- Marketing consultants
- Free samples
- Promotions made and trade fairs attended
- Expenditure on overseas buyers
- Expenses incurred on patents and trademarks, and the registration and insurance.
Make sure you don’t include any Australian taxes you’ve made while making this expenditure. You’ll also be required to produce documents related to the product’s export earnings for the promotional expenses that are being claimed for in grants. Grants received will be 50 percent of the valid accepted amount, and will become part of the assessable income of the business.
Documentation is a very important part of EMDG applications. These documents must follow the conventions for naming that are specified, and need to be preferably within 40 characters. Consultants appointed by businesses need to fill out a separate consultant declaration.
How much will I receive from the grant?
The maximum grant that any business can get in a financial year is $150,000. However, most companies receive an average amount of about $34,000.
At the beginning of each year, a payment ceiling is announced. If the eligible grant amount is below the payment ceiling, you’ll receive all of your payment in the first round. The second export grant payments are made at the end of the financial year.
A business needs time to break into the export market. Therefore, for the first two years grants are given at fifty percent of the eligible expenses, less the standard $5000. After the third year, you need to be exporting so grants can be related to the business that you generate through exports. After that, grants get limited to the lesser of the amount arrived at over the first two years — or as a percentage of the export earnings.
Why you should consider the help of a qualified consultant
There are many consultants who can help your businesses prepare claims for the EMDG scheme. Applications are quite detailed and time consuming so you’ll need to fill them out carefully to provide all the information requested. For example, vague or incorrect answers can lead to an immediate rejection of the application.
However, a reliable consultant specialising in EMDG grants will ensure you have a smooth application process. For example, they’ll know exactly what points need to be covered and will ensure your documentation is in good order.
If you have an eCommerce business in Australia and need help accessing the Export Marketing Development Grant to grow your online business, please book a time with an eCommerce Accountant. Contact Us to find out how we can help you with your grant applications.