What is the Export Market Development Grant?

Here is a quick video on how the EMDG works:

What is EMDG

 

The EMDG, sometimes known as the Export Grant, is exactly that, a cash based government grant to give a super boost to Australian entities looking to sell their Australian products or services overseas.

The Australian Government understands that exporting is a costly endeavor and therefore have implemented an excellent mechanism to financially incentivise exporting entities.

At a high level the benefit of making an EMDG Grant claim would be:

  • 50% cashback benefit on eligible overseas marketing spend
  • Maximum benefit of $150,000 per claim
  • 8 years of claims available making a total maximum benefit of $1,200,000
  • 8 different eligible expense categories

Who is the Export Market Development Grant For?

The EMDG is a programme 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.

key

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:

  • Face interview at the applicants premises
  • Telephone audit
  • Email audit to check documentation
  • Combination of all three.

 

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.

 

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

The following entities can apply:
  • Any Australian individual
  • Partnership
  • Company
  • Co-operative
  • Statutory corporation
  • Trust
EMDGbanner

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: 

  • Made in Australia or, 
  • Goods that are made outside Australia but where the sale of such goods results in a ‘significant net benefit’ to Australia. 


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: 

  • Tourism services &
  • Non-tourism services ( except for the supply of any schedule 2 exclusions of the EMDG Guidelines)

 

Eligible tourism services are those services that are

  •  supplied in Australia, 
  • contain sufficient Australian input (again ensuring the ‘significant net benefit’ from the services) and
  • Listed in Schedule 1 of the EMDG Regulations. 

 

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:

  • Migration services
  • Legal services
  • Financial services regarding assets held in Australia
  • Prostitution, pornographic & illicit material and illegal services

 

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:

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

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

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

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:

  • 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)
RimonCXOin

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:

  • part of your entitlement in an initial payment equal to the initial payment ceiling amount shortly after Austrade has processed your application, and
  • a second tranche payment at the end of the financial year.

 

Second tranche payment

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

  • the amount of your provisional grant entitlement above the initial payment ceiling amount
  • a payout factor that Austrade will determine at the end of the financial year based on the amount of funding remaining in the EMDG budget once initial payments have been made to all recipients

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:

  1. were incurred by a related business entity
  2. relate to business with the Democratic People’s Republic of Korea (North Korea) and New Zealand
  3. are not promotional (such as product development/refinement, sourcing and financing)
  4. were incurred by you when you were not a resident of Australia
  5. relate to after-sales activities
  6. have or will be subject to reimbursement by a third party (other than EMDG)
  7. relate to an illegal or unlawful activity
  8. are commissions or discounts
  9. 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.

Eligibility assessment

02.

Claim and Expenditure submission

03.

Audit

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

The Application Process

Rimon guide you through every step of the process

 

The EMDG Application Process

Common EMDG Questions We Receive:

How much money can you expect to receive?
+
Can expenses paid by an overseas entity in the group be claimed?
+
How many financial years can be claimed in 1 claim?
+
Are all EMDG claims audited?
+
Do I need a consultant to submit the Export Grant?
+
Is the EMDG a grant or tax incentive?
+
Is the EMDG subject to GST?
+
Is the EMDG subject to Income Tax?
+

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:

  • Compliance

    • 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
  • Your Time

    • 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
  • Individuality

    • 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
  • Enjoyment

    • Work with a team that makes the journey even better!
    • Life is a ride, enjoy the journey
    • Lets share our journeys together

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.

Contact Us