Changes to the Export Market Development Grant Program
The Export Market Development Grant program (EMDG) is a Federal Government grants program for Australian businesses. It is targeted at small to medium sized Australian export or export-ready businesses to encourage increased marketing and promotion and foster growth in overseas markets.
From 1 July 2021, there will be a number of changes to the EMDG program and the way in which it is conducted.
New EMDG legislation and drafted guidelines have recently been released. Under the new rules, businesses will be able to apply and receive funds prior to incurring their export expenses. Under the old program, businesses sometimes had to wait up to 3 years for funds to be paid out.
It is undeniably positive news that funds will be available in advance of spending. However, we would note that less money overall is available to businesses under the new program – $770,000 is now available over 8 grant years, whereas $1 million was available under the old program. Additionally, businesses with turnovers of less than $50 million were previously able to access the grant funding, and that has been reduced to $20 million for the new program.
What do the drafted Guidelines tell us?
The draft 2021 EMDG Guidelines are more detailed than the legislation. These drafted guidelines are currently available online for review and commentary. Major changes to the guidelines are detailed below:
Export Market Development Grants Process:
For the first year of operation, the new grants opportunity will open 16 August 2021 and close 30 November 2021. This will be in relation to the 2022, 2023 and in some cases 2024 tax years (see “what are tiered agreements” below for further details).
The process to apply under the new EMDG program is:
- Similar to the current process, grants will be submitted via the online application form.
- Austrade will assess your grant application and enter into a grant agreement with successful applicants. This agreement will outline terms and conditions of the grant and the amount of funding.
- The applicant begins the agreed marketing and promotion activities.
- There will be milestone reporting throughout the program. Payments will be made following these reports, in accordance with the grant agreement.
- Evidence to establish you are an eligible person or business,
- Balance Sheet and Profit and Loss Statement,
- Evidence to establish your product is eligible,
- A plan to market. This should discuss why your business intend to market your product overseas, how your business will measure success, what is your overall budget for each financial year, what demographic will your marketing target and what marketing activities will you undertake.
Reporting and Milestone Payments:
Annual payments will be made once milestone reports have been submitted and approved. Milestone payments will only be made if milestone reports have been deemed satisfactory by Austrade – not dissimilar to the current audit process. The grant agreement will specify when your business is required to provide these milestone reports. Sample templates will be provided.
What are the tiered agreements?
Grants will now be available in three tiers to support businesses in different export stages:
Tier 1 is for businesses new to exporting. Within this tier, businesses can claim up to $40,000 per financial year for two years.
Tier 2 is aimed at businesses currently exporting and looking to expand their export marketing activity. Within this tier, businesses can claim up to $150,000 per financial year for three years.
Tier 3 is for businesses currently exporting, seeking to expand exporting activities and planning to make a strategic shift in the marketing of eligible products in a foreign country.
Has there been any change to what expenses can be claimed under the program?
The types of expenses that are eligible for funding remain largely unchanged. However, in addition to expenses able to be claimed under the old program, the following will also now be available under the program:
- Short trips within Australia of up to 21 days continuous travel to undertaking activities related to marketing.
- Training expenses for the purpose of developing the skills of the person in marketing eligible products in foreign countries.
What if I had export expenses in the 2021 financial year?
There will be a period of overlap between the old program and the new. If your business paid eligible expenses during the 2021 financial year, the “old” EMDG program will still apply, with applications opening on 1 July 2021. We understand that on this same date the new program will also open, with eligible businesses able to lodge grant applications under the “new” EMDG program. Confirmation of this and further details regarding the operation of the new program are expected shortly.
If you require any further assistance, The Macro Group team is available to assist you. When more information on the program guidelines becomes available, we will post again to further outline the new program and the mechanics of how it will operate.