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EMDG: What You Need To Know When Applying

Scale your business, they say. Sell more and you will grow, they tell you. Wonderful advice, in theory, but practically how do you actually do it? We all know that there are many ways to grow a business.

But, if you have a product or service that can be sold anywhere, then you should sell it everywhere!

Expanding your business into foreign markets is a fundamental growth objective. Simply understood, you are instantly opening up your market size by exponential factors. As is the case with all opportunities – money is required.

The Australian Government seriously supports Aussie entrepreneurs that want to export their products or services overseas.

The support is via the Export Market Development Grant (known as the EMDG).

It is our job to make sure that you continue to grow your business and don’t spend all your time looking for information.

With that very important goal in mind we have put together this “all you need to know” piece for when you want to apply for the EMDG.

Who is the Export Market Development Grant For?

The EMDG is a program aimed across all verticals and is industry agnostic.

The grant supports a wide range of industry sectors and products, including the export of intellectual property and knowhow as well as allowances for export of Australian products manufactured overseas.

AusTrade (the body governing the grant) wants to encourage small and medium sized Australian entities to develop export markets.

The grant is for Australian entities with Australian Products or Australian Services who are currently or aspiring to export their products or services to export markets.

Who is the Governing Body?

The Australian Trade and Investment Commission – Austrade – is Australia’s leading trade and investment agency.

They are experts in connecting Australian businesses to the world and the world to Australian businesses.

AusTrade is the governing body that administers the Export Market Development Grant.

How Does the EMDG Process Work?

Austrade will undergo an assessment for each application every year irrespective of whether the applicant has been audited previously. The audit assessment time can vary but generally spans over a week and is conducted in the following manner:

During the assessment process, Austrade will ask questions regarding the business, its operations and nature of the product/service the applicant is exporting.

Austrade will also ask questions to ensure the applicant is an eligible entity within the rules of the EMDG scheme and address any concerns they may have from the research they have conducted internally.

Once the audit is complete, the Austrade auditor will provide the applicant with comments/feedback on their findings from the assessment and the application is finalised when the assessor sends the official notice of determination.

What types of businesses are Eligible to make a Claim

To apply for the Export Market Development Grant, you are not required to be an incorporated entity. These entities need to have carried on export promotion activities during the year for which they seek an export grant

The following entities can apply:

Any Australian individual

Statutory corporation

Co-operative

Partnership

Company

Trust

What Are The Application Criteria?

To be eligible, 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 (some exceptions apply, such as non-profit export-focused industry bodies)

Grant Year

A grant year is the financial year (July to June) in which the dates of the expenses being claimed actually occurred.
Expenses incurred in a grant year must be claimed as part of the EMDG application submitted in the financial year immediately following (except your first application, which can include expenses from the two financial years immediately before the application).

What Is Considered an Australian Product or Service?

Products

Australian products as per S24 of the EMDG act are goods that are either:

The ‘significant net benefit’ test of S24(b) looks at various aspects of the business such as the location of business assets, design team, owners of the product and also at the significance of added value to the product being completed within Australia. A key contributing factor however, is to ensure that the sale of the goods generates or is likely to generate future economic benefits for Australia in the form of revenue and employment in order to be eligible as an Australian product.

Services

Eligible services are governed under S25 of the EMDG act and are organized into two categories, being:

Eligible tourism services are those services that are

There are key types of tourism services under schedule 1 that are eligible for EMDG include:

Transport services by land, water or air (excluding airport transfers)
Accommodation supplied to foreign resident tourists
Tours
Admissions for fees to tourist attractions and events
Rental of space at a convention/exhibitions
Restaurants
Casinos licensed under Australian law

Non-tourism services are all other services and can be supplied inside or outside Australia but must contain sufficient Australian input to ensure Australia derives the ‘significant net benefit’ from its service supply. This means that the services need to be delivered from the Australian team and restrictions on claims can occur if you have offshore contractors/employees delivering the service to your customers.

The ineligible ‘non-tourism’ services consist of the following:

Required Financial Structure

In order to consider eligibility for the EMDG the following 2 points (in addition to the above points) need to be to complied with:

Any eligible expenses need to have been physically paid in the financial period being claimed
The expenses that are being claimed need to be incurred in the Australian entity making the claim
Should there be foreign entities in the group, the expenses looking to be claimed under the Export Grant should not be incurred in that entity but rather in the Australian entity
It is best to consult an expert if there are multiple companies in the group

Two Types of Submission Deadline:

There are 2 different deadlines to consider:
Submitting yourself or with an approved consultant	Using an approved consultant only
30 November after the grant year (5 months after the grant year)	28 February after the grant year (8 months after the grant)

What Is the Benefit and How Is It Calculated?

The benefit of using the Export Market Development Grant is 50% of eligible foreign marketing expenses

This expenditure based benefit is applicable for the first 2 claims being made. Years 3 – 8 of claiming have certain revenue performance requirements where the claimant will be entitled to a benefit of the lower of 50% of eligible expenditure or a varying percentage of foreign revenue achieved. This benefit is paid in cash.

The formula used to calculate the EMDG benefit from an expenditure viewpoint is as follows:

(Eligible Expenses – $5,000) x 50% = EMDG Benefit

The maximum benefit is capped at a maximum of $150,000 per claim.

EMDG Benefit Example 1

Full Claim

Skateboard Sole Trader sells their awesome boards around the world. They want to expand into new countries but need a little cash boost. The EMDG is about to give them that boost!

Have a look at their benefit:

	Fashion Exporter Unit Trust
Eligible Expenditure
Google Adwords	235,000
Instagram	56,000
Facebook	74,000
Bloggers	20,000
Influencers	10,000
Photoshoots	25,000
Total Foreign Eligible Spend	420,000
Deduct $5,000	(5,000)
Expenditure after deduction	415,000
EMDG Rate	50%
50% of Expenditure	207,500
EMDG Cap	150,000
Final EMDG Benefit Full Claim	150,000

In this example, Unicorn to Be Pty Ltd doesn’t have any revenue. However, the main point to look out for is that the entity is in a loss. If Unicorn to Be had revenue but still had losses, the calculation would look very similar.

EMDG Benefit Example 2

Partial Claim

Fashion Exporter Unit Trust are expert social media and online Fashion sellers. Their clothes are designed in Australia but manufactured in China. They recently found out about the EMDG and wanted to know what their benefit may look like.

	Skateboard Sole Trader
Eligible Expenditure
Overseas Sales Staff	130,000
PR Consultants	45,000
Marketing Trips & Flights	20,000
Free Samples	20,000
Total Foreign Eligible Spend	215,000
Deduct $5,000	(5,000)
Expenditure after deduction	215,000
EMDG Rate	50%
50% of Expenditure	105,000
EMDG Cap	150,000
Final EMDG Benefit Full Claim	105,000

How Is The Benefit Paid?

The grant is paid under a dual-payment system which ensures that spending under the EMDG scheme is kept within budget and that all eligible applicants receive a grant. Under this dual-payment system, grants are paid in two tranches:

Initial payment

The initial payment ceiling amount is the maximum amount payable as an initial payment to eligible EMDG applicants. The initial payment ceiling is announced in June each year.

If your provisional grant entitlement is below the initial payment ceiling amount, you will receive your full entitlement in one payment shortly after Austrade has processed your application.

If your provisional grant entitlement is above the initial payment ceiling amount, you will receive:

Second tranche payment

The value of your second-tranche payment will be based on two factors:

Ineligible Expenses

As EMDG is designed to assist export marketing, it does not support expenses incurred for product development, production, distribution or certification.

Also, you cannot claim expenses that:

01

were incurred by a related business entity

02

relate to business with the Democratic People’s Republic of Korea (North Korea) and New Zealand

03

are not promotional (such as product development/refinement, sourcing and financing)

04

were incurred by you when you were not a resident of Australia

05

relate to after-sales activities

06

have or will be subject to reimbursement by a third party (other than EMDG)

07

relate to an illegal or unlawful activity

08

are commissions or discounts

09

are in payment of an Australian tax, levy or charge (except Australian departure tax)

10

relate to any form of pornographic material with a classification equivalent to the X-rating for films

Documentation Required To Submit Claim:

There are 3 distinct parts to an EMDG claim:

01.

02.

03. Eligibility Assessment

Typically documentation is not required in this section.

What is required is the ability to prove and discuss why the claiming entity meets the eligibility criteria discussed earlier in this article.

If there is a complex financial structure then documentation may be required to show the flow of funds and the recognition of expenditure in the correct entities

Claim and Expenditure Submission

Documentation is required in this section. Generally, if an entity has kept good legal and accounting records then documentation should not be a problem.

Types of documents that may be requested are:

Agreements with Overseas Representatives

Agreements with Marketing Consultants

Financial Statements

Bank Statements

Credit Card statements

Invoices

Foreign Exchange Proof

Visas

Passports

Boarding Passes

Itineraries

Email proof of meetings

What Is The Application Process

Rimon Guides You Through Every Step of the Process

01

Initial Assessment and Onboarding (1 - 2 weeks)

02

EMDG Workshop (1 week)

03

Claim Kickoff (2 weeks)

04

Claim Upload and Submission (1 week)

05

Audit (2 - 4 weeks)

06

Receive Benefit (1 week)

Contact us

No business or path to success and growth is the same. If you have a question, are ready to apply or would like to learn more, please contact us today.