Export Market Development Grants
There are many reasons to explain why exporting becomes more and more important for Australian companies. Saturated local markets, intense competition, the prospect of increasing sales, diversified sources of revenue to reduce risk and balancing growth, minimizing the effect of seasonal fluctuations in sales, just to name a few.
According to Bentleys Voice of Australian Business Survey of SMEs, only 19% of businesses surveyed operate in markets other than Australia and New Zealand. Why is this? It may be because they do not want to incur the excessive overseas marketing expenses and the perception that exporting is only for the large international companies. The Australian Government has introduced Export Market Development Grants (EMDG) to support businesses exporting overseas.
The EMDG is administrated by Austrade and is a key Australian Government financial assistance program for aspiring and current exporters. Australian entities (including individuals), who are carrying business in Australia with an annual income of less than $50 million and have spent at least $15,000 on eligible export promotion activities, may apply for EMDG. Subject to funds available in the scheme, each applicant may receive a grant of up to $150,000 per application, to a maximum of eight annual grants.
So how does EMDG work? It is fairly straightforward that the grant will be calculated as 50% reimbursement of eligible expenses, less the first $5,000. For example, if you have spent $50,000 on eligible export marketing expenses during the year, then the reimbursement would be ($50,000 - $5,000) x 50% = $22,500. Eligible expenses refer to the expenditures on specific export promotion activities and are classified from the nine categories below:1. Overseas Representatives
Being the costs that you pay to have an overseas representative act on your behalf on a long-term basis to market/ promote your product.2. Marketing Consultants
This is about the costs of engaging an arms-length consultant to undertaken export market research of marketing activities.3. Marketing Visits
For your costs of travel during the marketing visit, including airfares, taxi fares, departure taxes, etc. An allowance of $300 per day would also be provided while you are overseas to help defray accommodation, entertainment and living expenses.4. Communications
The communication costs to promote your product, such as fax, emails and phone expenses. And if you do not claim your actual communication expenses, you will receive an automatic 3% addition to your grant.5. Free Samples
The costs of providing free samples of the product you are promoting for export.6. IP Registration & Related Insurance
This refers to the costs of granting, registering or extending rights under foreign laws in relation to eligible intellectual property.7. Trade Fairs, Seminars, In-store Promotions
This includes the external costs directly related to participating in an international trade fair, seminar, in-store promotion, international forum, private exhibition, or similar activity.8. Promotional Literature & Advertising
This is about the other external costs of promotional material, such as brochures, videos, advertising and website development.9. Overseas Buyers
This refers to the costs of bringing potential buyers who are non-residents to Australia for an eligible promotion purpose.
As you can see, the abovementioned would almost cover all the associated costs for export marketing. Other key facts about EMDG during the 2015 financial year include:
Globalization is one pathway for creating business growth. We recommend you consider this opportunity and start thinking about exporting. For further details or if you require any assistance for your grant applications, please talk to us.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly.
We therefore recommend that our formal advice be sought before acting in any of the areas. This document is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.
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