For many years, the Federal Government has supported and encouraged businesses to expand their exporting potential by providing cash rebates known as the Export Market Development Grant (EMDG).
Recent changes to the EMDG came into effect on 1 July 2021, moving the EMDG from a reimbursement scheme to a grant program, which means it’s now an upfront eligibility grant program.
It’s important to note that this grant isn’t limited to businesses with established export lines; it is also available to those investigating or looking to start their export journey.
So if your business has moved online and you now have a global reach, or you’re looking to dip your toes in a foreign market, this might be one for you!
Here’s a breakdown of how the program changes will continue to help businesses tackle and support exporting through its new application process.
What Are The Changes To The EMDG Program?
Under the revised EMDG program, eligible entities with a turnover of less than $20 million will be able to apply for grants of up to $770,000 over eight years (years do not need to be consecutive) to cover up to 50% of eligible export promotional activities.
The most significant change to the EMDG program is that it is now a forward-funding, upfront eligibility-based grant program instead of a retrospective program. This means that applicants apply for the grant based upon the forecasted promotional costs of their business over the next 2-3 years.
Successful applicants will not automatically be awarded the maximum grant of $150,000 – businesses will need to apply for the grant under their yearly grant entitlement. The EMDG yearly grant entitlement will determine the amount applicants will receive, whether they will be entitled to $40,000, $80,000 or $150,000.
What Is The EMDG Yearly Grant Entitlement?
Your maximum grant entitlement for any particular year will be based upon your eligible tier. You can apply for any tier level that suits your business and do not have to proceed through the tiers in any particular order. The tiers are as follows:
Tier 1: Applicants who are new to exporting can receive a maximum grant of $40k per grant year for up to 2 years.
Tier 2: Applicants who are continuing to export can receive a maximum grant of $80k per year for up to 3 years.
Tier 3: Applicants who are making a strategic shift (e.g. a new product or new market) can receive a maximum grant of $150k per year for up to 3 years.
What Are The Eligible EMDG Expense Categories?
Eligible cost categories remain similar to the previous scheme. Below is a summary of the eligible cost categories:
- Overseas representatives that are based overseas for more than 6 months.
- Sales and Marketing travel of up to 21 days per trip per traveller (including airfare, accommodation, meals and transport).
- Promotional and Advertising Material created for the export market, including the cost of producing and or translating marketing materials such as brochures, social media marketing, Google advertising, the design and production of ads/brochures, or the design and development of an international website.
- Consultation expenses to research foreign markets for an eligible product or promotional activity in a foreign country.
- Trips within Australia of up to 21 days to support marketing activities to foreign buyers.
- Overseas buyer visits internationally or within Australia (for up to 21 days), so you can undertake promotional activities to market your eligible products to a foreign buyer.
- Soliciting for Business in Foreign Countries, for example attending trade shows or conferences.
- Offering Free Samples – expenses relating to the actual cost of providing product samples free of charge, including postage or freight to deliver samples overseas.
- IP Costs: Registering or extending patents and trademarks internationally, including legal fees.
- International Business Training: Undertaking training or mentoring to assist you or your staff in improving the way you market your eligible products or services overseas.
How Do You Apply For The EMDG Program?
To apply, applicants are required to submit a Plan to Market, which will include a promotional expense forecast for each financial year across the eligible categories (as listed in the section above) and a strategic promotions roadmap. Once all applications have been assessed, Austrade will offer successful applicants a grant agreement outlining their total grant amount and each of the milestones required to receive their EMDG grant.
If you’re unsure whether your business is export ready, our Strategic Business Advisory team is equipped to assist in reviewing your businesses’ export capabilities and or suggest what needs to be done to make your organisation export ready.
Applications for FY22 will close on 17 August 2022. If you would like some guidance in understanding more about the grant and if you qualify or require assistance forecasting your export expenses, please reach out to our Tax and Business Advisory teams.