EMDG eligibility and performance measures

EMDG eligibility

What is EMDG?

The EMDG scheme, administered by Austrade, is the Australian Government’s principal financial assistance program for aspiring and current exporters.

What can you claim?

You may claim for expenditure on specific export promotion activities undertaken during the grant year. For your first grant you may claim expenses incurred over the last two financial years.

Are you eligible to apply?

If you are an Australian individual, partnership, company, association, co-operative, statutory corporation or trust carrying on business in Australia you may apply for EMDG provided you meet certain requirements.
You should investigate your eligibility to receive an EMDG if you’ve:

• Had annual income of not more than $50 million during the grant year and
• pent at least $10,000 on eligible export promotion activities during the grant year.

If you’re a first time applicant, you may combine two consecutive financial years’ expenses in the first EMDG claim to meet the $10,000 threshold. Further eligibility details can be found in the 2008-09 grant year eligibility checklist.

What will you get?

You may be entitled to a grant of up to 50% of your eligible export promotion expenditure over the $10,000 threshold ie:

• If you incur $100,000 of eligible expenditure your grant entitlement will be $45,000 ($100,000 - $10,000 x 50%).

A minimum grant of $5,000 and a maximum of $200,000 apply in relation to the amount that can be claimed annually under the scheme.

The new performance measure

As part of the 2008 legislative changes to the EMDG scheme, an EMDG performance measure was introduced.  This performance measure applies to applications lodged from 1 July 2009. The following article outlines the requirements of this performance measure and what you need to provide in order to satisfy it.

NB. It does not apply to applicants who have received less than two grants or Approved Bodies or Approved Trading Houses.

What is the performance measure?
If you have received two or more grants, you must satisfy the requirements of the performance measure in order to receive subsequent grants. In order to do this, you must choose from two different options - Option A and Option B - and state this in the 2008-09 grant year application form.  You may make a new choice each grant year but you cannot change your choice after your application has been received by Austrade.

Option A – Export Performance Test

Under this test applicants will receive the lesser of:
(a) 50% of (total eligible expenses less A$10,000)*; and¨
(b) the relevant % of export earnings depending on how many grants you have received*.

* Subject to the maximum legislated grant amount of $200,000.
These percentages are as follows:

Example
Applicant has already received 7 grants.

Total 2008-09 eligible expenses = $200,000
Total 2008-09 export earnings = $400,000

Based on its eligible expenses, the applicant’s provisional grant entitlement is $95,000.

Because the applicant is applying for its 8th grant, its grant entitlement will be the lesser of the $95,000 amount and 5% of its export earnings, i.e. $20,000.

The applicant will be entitled to a grant of $20,000.

Option B – Australian Net Benefit Requirements

Applicants that meet these requirements will be entitled to receive a grant calculated as 50% x (total eligible expenses less A$10,000). A minimum grant of A$5,000 and maximum of A$200,000 applies.

N.B. Applicants that do not meet the requirements of Option B will not be entitled to receive a grant and will not be able to revert to Option A.

Under the Australian net benefit requirements, Austrade will consider:

(a) the size of the commercial return received, or receivable, from the applicant’s international business activities in the grant year. You must provide the applicant’s audited statement of income, including the income received, or receivable, by the applicant from international sources for the grant year; and the year following the grant year.

(b) the applicant’s financial position. You must provide the applicant’s audited profit and loss statement and audited balance sheet for the grant year and the year preceding the grant year

(c) whether the applicant has the financial resources to maintain its international business activities.  You must provide the applicant’s business plan, including the applicant’s international marketing strategy

(d) whether the applicant’s international business activities generate or will generate substantial economic benefits for Australia in each of the following areas:

• employment in Australia
• new capital investment in Australia
• introduction of new technologies in Australia
• new value-added operations in Australia.

You must provide a statement that details the economic benefits generated or that will be generated in the above areas.
The supporting documentation listed above must accompany your application at the time of lodgement with Austrade otherwise Austrade may not accept your application.

NB. A reference to:

(a) an audited statement of income;

(b) an audited profit and loss statement;

(c) an audited balance sheet is a reference to a document that has been audited by a person who is a registered company auditor for the Corporations Act 2001.

Source: AusTrade

To discuss your eligibility contact Brendan Brown by calling our office on 03 9869 5900 or email us for further information.