Australia: Export And Deliver

The Export Market Development Grants (EMDG) scheme is a Federal Government financial assistance program for aspiring and current exporters. Broadly, the scheme reimburses up to 50% of eligible expenses incurred in exporting goods and services overseas or bringing inbound tourists to Australia. A business can receive up to 7 grants of up to $150,000 per grant.

A business is eligible for the scheme if it has:

• gross income of $30 million or less during the year.

• incurred at least $15,000 of eligible expenses under the scheme (for first time applicants this can be incurred over 2 years).

• generally applicants must be exporting on their own behalf rather than acting as an agent for another business.

In order to be an exporter, a business must have promoted one of the following:

• the export of goods and services.

• the delivery of services outside of Australia.

• inbound tourism into Australia.

• exporting intellectual property and know-how.

• conferences and events held in Australia.

Austrade can also give approval for industry associations, joint ventures and trading houses to apply.

You can claim expenditure incurred in specific export promotional activities. These activities include:

• reasonable costs paid (up to $200,000) in having an overseas representative promote your product. This excludes non-promotion activities such as after sales service, warehousing etc.

• up to $50,000 for marketing consultants to undertake export market research or marketing activities.

• some of the costs of visiting the foreign market (airfares, taxi fares, $300 per day allowance for accommodation, entertainment and living expenses).

• communication expenses in promoting your product.

• free samples

• costs of participating in trade fares, seminars, in store promotions, international forums, private exhibitions or similar activities.

• promotional literature and advertising including website development

• costs of bringing overseas buyers to Australia up to $7,500 per visit and $45,000 per application (subject to strict rules regarding the purpose of the visit).

Certain types of expenditure cannot be claimed, including expenses that relate to business in New Zealand, expenses that will be reimbursed or were incurred by a related business entity, and expenses that relate to after sales service and commissions or discounts. Expenses must be substantiated.

A business can generally claim the EMDG for 7 years. Prior to 1 July 2006, the amount of eligible expenses that could be claimed was limited to a specified percentage of the business export income for the 3rd and subsequent years of the grants (i.e. years 3 to 7). This limit has been removed effective from 1 July 2006. You should reconsider your position if you have previously stopped applying for the grant because the export income rules made the EMDG ineffective.

The EMDG is a valuable incentive for exporters and aspiring exporters. If you think your business may be eligible for the EMDG please contact your local Moore Stephens firm.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.