Who is the Export Market Development Grant For?
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:
Who is Eligible to Apply for the EMDG Grant?
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
- Any Australian individual
- Statutory corporation
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)
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?
Two Types of Submission Deadline:
|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:
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.
Fashion Exporter Unit Trust
|Total Foreign Eligible Spend||420,000|
|Expenditure after deduction||415,000|
|50% of Expenditure||207,500|
|Final EMDG Benefit Full Claim||150,000|
EMDG Benefit Example 2, Partial 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:
Skateboard Sole Trader
|Overseas Sales Staff||130,000|
|Marketing Trips & Flights||20,000|
|Total Foreign Eligible Spend||215,000|
|Expenditure after deduction||215,000|
|50% of Expenditure||105,000|
|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:
- Tranche 1: an initial payment of up to the initial payment ceiling amount
- Tranche 2: a second-tranche payment of above the initial payment ceiling amount (subject to available funds)
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:
- were incurred by a related business entity
- relate to business with the Democratic People’s Republic of Korea (North Korea) and New Zealand
- are not promotional (such as product development/refinement, sourcing and financing)
- were incurred by you when you were not a resident of Australia
- relate to after-sales activities
- have or will be subject to reimbursement by a third party (other than EMDG)
- relate to an illegal or unlawful activity
- are commissions or discounts
- are in payment of an Australian tax, levy or charge (except Australian departure tax)
- relate to any form of pornographic material with a classification equivalent to the X-rating for films
Documentation Required To Submit Claim:
Claim and Expenditure submission
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
- Foreign Exchange Proof
- Boarding Passes
- Email proof of meetings
The Application Process
Rimon guide you through every step of the process
Common EMDG Questions We Receive:
The reimbursement by the scheme spans between $5,000 - $150,000.
8 separate submissions are available totalling a maximum benefit of $1,200,000
Expenses need to be incurred by the claiming Australian entity.
Payments made by a foreign entity in the group can be claimed but the expense needs to have been incurred by the Australian entity and the Australian entity needs to have funded the payment to the foreign entity.
Generally with structures such as these expert advice should be sought.
In a first year claim the claimant can claim 2 financial years worth of eligible expenditure.
2nd year claims and onwards the claimant may claim 1 financial year’s worth of expenditure.
Yes, all EMDG submissions are audited. However audit levels vary and often a claimant will not know that there claim was audited before approval
It is likely that a claimant will be aware of 3 - 4 audits of their claims over the 8 claims permitted.
No, a claim can be done on one's own.
However, the law and guidelines are complicated and one should spend a significant amount of time familiarising themselves with these laws and guidelines before attempting a submission.
The EMDG is a grant and not a tax incentive.
The benefit is not derived via the tax return and the grant is not regulated by the ATO.
No, EMDG is not subject to GST
What We Do.
At Rimon we focus on 4 main areas when it comes to working with you on your R&D Tax Incentive and Export Market Development Grant claims:
- Your compliance regarding EMDG is our concern
- We live and breathe the EMDG and R&D Tax Incentive
- Our team are leaders in our field, and you will feel just that as you work with us
- Let us worry about the EMDG so you can concentrate on your business
- We do the work, from beginning to end
- Attention to detail and efficiency is what you will experience with Rimon
- Share your magic with us, so we can understand you better
- Our team will communicate your magic to get the best results
- Each one of our clients are treated like an individual, and they feel the specialised service
- Work with a team that makes the journey even better!
- Life is a ride, enjoy the journey
- Lets share our journeys together