What To Expect From the New EMDG Grant
The EMDG grant is designed to help all companies, including SMEs, partake in promotional export activities. The EMDG grant may have changed slightly in structure but its intention is the same: to provide Australian small businesses with the opportunity to compete with the world’s best.
For small businesses, being able to promote your goods and services overseas is a significant opportunity. However, exporting comes with a range of costs that often prevent businesses from taking this next important step.
The EMDG grant is designed to help all companies, including SMEs, partake in promotional export activities. The Australian Government recognises that these activities are often out of the reach for businesses with a limited budget and so provides a generous reimbursement for approved companies.
While this program is designed to help individual businesses, it is also an acknowledgement by the Government regarding the importance of exportation. The more Australian companies that manage to break into the overseas market, the better for the country’s broader economy.
How have the rules changed?
Last year, the structure of the EMDG grant changed. Prior to 30 June 2021, companies were able to claim promotional expenses after they had been spent. From 1 July 2021, approved businesses were given upfront funding. This switch was designed to provide added certainty and help companies budget for their promotional export activities.
Under these new rules, there are three tiers of grant payments that SMEs can apply for:
Tier 1 — Ready to Export:
- Designed for first-time exporters
- Runs for 2 years with a maximum grant of $40,000 per financial year
Tier 2 — Exporting and Expanding:
- Designed for businesses that are exporting and expanding upon promotional export activities
- Runs for 3 years with a maximum of $80,000 per financial year
Tier 3 — Export, Expanding, and Strategic Shift
- Designed for businesses that are exporting, expanding, and making a strategic shift in their operations
- Runs for 3 years with a maximum grant of $150,000 perth financial year
Further legislative information can be found by consulting the Export Market Development Grants Rules 2021.
How to apply
First up, if you have never applied for any type of grant or government assistance package before, it is well worth seeking professional advice. While some programs, like the EMDG grant, require you to provide all the relevant information up-front, others operate in the form of a tax rebate. Unless you have an established system for keeping track of purchases and payments, you could be in a spot of bother come the end of the financial year. Regardless of the type of grant you are applying for, start by consulting a tax professional.
To be eligible for the new EMDG grant program, you must:
- Have a turnover of less than $20 million for the 2020–21 financial year
- Be an ‘Australian person’ (the definition of which can be found in the above linked legislation)
- Have an Australian Business Number (ABN).
It is not only your business that needs to meet certain eligibility requirements: the activities you plan to undertake will also be scrutinised. These activities must fall under one of the following categories:
- Maintaining a business representative in a foreign country
- Undertaking trips to a foreign country
- Undertaking trips within Australia
- Engaging a consultant to research and perform promotional activities
- Conducting foreign buyer visits
- Providing free product samples
- Producing promotional collateral
- Funding intellectual property rights.
An experienced tax and grants consultant can help you plan and articulate your export activities to ensure they meet these guidelines.
The application process itself is reasonably extensive. It requires you to prepare numerous documents that prove your business and activities are eligible and that your company will truly benefit from export funding. The entire process, from preparation to payment, can be summarised as follows:
- Prepare your grant application. This will include internal documents, explaining why you are undertaking promotional activities, what you hope to achieve, and how you will measure success.
- Submit the online application, including all relevant documents.
- Austrade offers a grant agreement to all eligible applicants. This agreement includes the tier of payment you will receive, how many years of funding will be provided, and the grant amount. It will also outline milestone requirements that must be followed to ensure you are meeting your reporting obligations.
- You receive payments as outlined in your agreement.
How to get help
While the eligibility requirements for the EMDG grant are fairly broad, you still need to prove to Austrade that your business will truly benefit from the funds. Putting together a competitive application takes time and experience, which is why many SMEs choose to work with a tax professional on this task.
Whatsmore, if you know that you could benefit from this type of funding but are struggling to calculate and articulate where the money would be best spent, a tax and business advisor can help you draw up detailed plans to really capitalise on this opportunity.
The EMDG grant may have changed slightly in structure but its intention is the same: to provide Australian small businesses with the opportunity to compete with the world’s best. Speak to a tax accountant today to learn more.