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Claiming the export market development grant

Joe Kaleb - Tax Expert
Wednesday, October 05, 2011

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Businesses that are incurring marketing costs overseas to generate an income stream in Australia may be entitled to a cash refund of up to $150,000.

Export market development grants (EMDG) are paid to Australian businesses that export goods and services. The scheme is designed to encourage SMEs to promote Australian goods and services to the world. Applicants have until the end of November 2011 to put in their claim for 30 June 2011.

Eligibility

To receive an EMDG the business must:
  • Be promoting its product for export.
  • Have income under $50,000,000.
  • Have incurred eligible expenses exceeding $20,000.
  • From the third claim onwards, satisfy either Option A – the Export Performance Test or Option B – Australian Net Benefit Requirement.
  • Previously claimed six or less EMDG grants.
  • Applications must be received by 30 November 2011. 

Eligible expenses

Expenses that relate to the business marketing its goods or services are eligible. These are:

  • Overseas representation
  • Marketing consultants
  • Marketing visits
  • Communications
  • Free samples
  • Trade fairs and promotional events
  • Promotional literature & advertising
  • Overseas buyers
  • IP registration & related insurance

Ineligible expenses

  • Expenses where you are acting as an agent in the export of goods or services
  • Expenses of a capital nature
  • When the applicant is a non-resident of Australia
  • Expenses relating to trade with New Zealand
  • Expenses which are reimbursed
  • Expenses disclosed after the application is submitted
  • Expenses over $10,000 paid by cash
Documentation

It is important for the applicant to keep very clear and accurate records, as Austrade spend a great deal of time auditing EMDG recipients, particularly first-time claimants. Expenses which have not been paid cannot be claimed in that year, and where the expense is ‘prepaid’ it is important that the prepaid component is not claimed until the service has been provided.

Refund amount

Each applicant can claim an EMDG up to a maximum of $150,000. This amount is based on their eligible expenses or gross export earnings.

The grant is paid out in two tranches – the first $50,000 that the applicant is entitled to is paid out once the application is processed. Any unpaid balance owing to the applicant will be paid out the following June in the second tranche of payments, subject to available funding from the government. The government has committed $150 million to the scheme for the 2011 financial year.

Conclusion

For business owners who are currently exporting, or considering exporting, the EMDG rebate is a good incentive to start marketing their business to foreign buyers. Only the costs associated with marketing the goods can be claimed. Although the requirements are strict, the grant can be of significant benefit to SMEs.

This article was written by Mariana von Lucken of HLB Mann Judd (NSW) Pty Ltd and is provided courtesy of the small business tax and management information portal http://www.australianbiz.com.au

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

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Published: Wednesday, October 05, 2011


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