In a recent meeting with EMDG consultants, Austrade flagged some proposed changes to Australia’s Export Market Development Grant (EMDG) program.
Austrade recently placed a notice in the Australian Financial Review confirming these changes will be implemented from the grant year commencing 1 July 2016.
These changes include:
Under the existing EMDG program, applicants can claim a range of expenses associated with communicating with representatives or business contacts regarding the promotion of their product or service in overseas markets. Due to the level of documentation associated with claiming this expense, most applicants opted for the ‘3% of claim’ default position for this category of expenditure.
Austrade recognises that the costs associated with communicating with overseas representatives or business contacts are declining, due to channels such as Skype and emails. Austrade has taken the decision to remove this category of expenditure from the EMDG program. This is effective for grant years commencing 1 July 2016.
Under the existing EMDG program, applicants can claim reasonable expenditure attributable to the actual cost of providing samples to a potential overseas based customer. Such samples must be an exact version of the product that would be provided under a sales agreement and must be provided completely free of charge. Under the current program, there is no limit to this category of expenditure, except the maximum amount able to be claimed under the entire EMDG program, i.e. $305,000 in expenditure, to generate a maximum grant of $150,000.
As a result of recent amendments to the EMDG program, the category of expenditure is limited to a cap of $15,000. However first year applicants that include the 2016 grant year will be exempt from this expenditure cap.
The current EMDG program enables applicants to claim a range of expenses related to overseas marketing trips. These include airfares, ground transfers, Visa costs, travel insurance, departure taxes, etc. With respect to the costs associated with meals and accommodation on such eligible overseas marketing trips, Austrade provides a daily allowance of $300 per person per day. This allowance negates the need to keep details of these expenses.
Changes to the EMDG program have increased this daily allowance from $300 per person per day, to $350 per person per day. However this increase is at the expense of removing the eligibility of in-country travel costs such as taxis, bus travel, etc. In-country air travel is an exception and will still be eligible under this category of expenditure.
The new EMDG provisions have introduced wording to the ‘Promotional literature & advertising’ cost category to specifically allow electronic materials.
One final amendment to the program relates to funding. Under the current EMDG program, expenditure related to the administration of the program came from the EMDG budget. This reduced the amount of funding available for EMDG claimants. Changes to the program allow Austrade to draw its EMDG administration costs from other Austrade programs, which means more funding for EMDG claimants for the upcoming grant year (2017).
Further, funds from other Austrade sources, i.e. other programs, can now be assigned to the administration of the EMDG program. This should increase the funds available to EMDG applicants, as administration costs can be sourced outside of the budget for the EMDG program.
If you have any questions as to how the changes to the grant program may impact your EMDG application, please contact our experts below.