Export Market Development Grant: Change is coming

With both the existing scheme and the new reform model in operation at the same time, applicants will have to submit two applications for EMDG if they want to access both programs. Even though travel has been restricted by the pandemic in the last 14 months, there are a raft of other eligible costs that you can claim under both programs. Grant Thornton is across these, and has historically been granted QIP status by Austrade – so we understand the details of the program and seek to create robust claims that meet the eligibility requirements lodged and paid as efficiently as possible.

The existing reimbursement model will be looking back at costs incurred up until 30 June 2021 and will close after this date. It will be replaced by a go forward grants model. However, it will be open for extended submissions from 1 July 2021 through to 28 February 2022 for Austrade Approved EMDG Consultants such as Grant Thornton. This means that an approved consultant, we can process and support your FY21 application for reimbursement following the self-lodger and non-approved consultant deadline in November.

Under the reform model, while nothing is currently set in stone as the law is yet to be passed by Parliament, we expect applications will open for submissions for a 15 week period commencing in August. The biggest change is that these grants will fund forecasted costs from 1 July 2021 prospectively over a multi-year period; it will no longer be a retrospective application model.

The most notable change that will affect current and potential EMDG recipients under the new reform model is the reduction of the turnover threshold, which is dropping from $50m to $20m. Therefore, entities with a turnover of $20m or more will no longer be eligible to receive funding under the new EMDG scheme. This means this year will be their last chance to access funding for eligible export marketing activities.

To help you prepare for final submissions under the reimbursement model, and understand what the program will look like from 1 July 2021 onwards under the new reform, we have summarised the obligations under both programs below.

Reimbursement Model – Final year of legacy EMDG program

Preparation is key

With the 1 July 2021 EMDG opening date fast approaching, we encourage applicants to get prepared and lodge early. Now is the time to start compiling relevant information to avoid lengthy delays awaiting an audit from Austrade or rushing to the final deadline in February.

Timing

Applications submitted from July to October last year were reviewed before the end of November. Austrade receives very few applications during this time and their staff has a greater capacity to audit and approve applications – creating an opportunity for you to lodge early and receive faster approvals.

Something worth considering is submitting an application both under this reimbursement model and under the reform model, which will likely run from July. Austrade will then be working to implement the grant agreements under the new reform model (as it is an upfront grant agreement) during their usually quiet period under the reimbursement model.

Setting yourself up for early lodgement

This heavily audited program requires documents such as invoices and bank statements, which will need to be provided to Austrade. Providing such documents – especially for a first-year applicant (covering two financial years) – can be quite intensive. The sooner you are across what you can claim, the easier it becomes to keep track of costs and identify necessary documents.

To ensure you cover all relevant requirements, give us a call. We can go through your business's eligibility for the program, eligible expenditure paid and the process of an EMDG application. Talking to us prior to the end of financial year allows us to advise you on potentially prepaying costs to maximise your claim – in particular as this will be the final opportunity to recoup costs under this reimbursement model.

Maximising your claim within the rules

We can help you identify whether you are eligible for the 2021 program, and opportunities to maximise your return. The reimbursement model runs on a ‘cash basis’, meaning if you have received an invoice that isn’t showing as paid on your business’s bank or credit card statement as at 30 June 2021, these costs will not be able to be claimed. 

We suggest taking the following action by 30 June 2021, where possible:

• reimburse any staff member that has paid an overseas marketing expense you are looking to claim;
• pay any outstanding IP costs (remembering the cap of $50k); and
• pay any other outstanding eligible costs that you would be looking to claim.

Please get in touch below to discuss the best steps for your business this lodgement season.

Reform Model – Upfront grant agreement

In our new reform model overview article, we outlined the changes ahead and what these will look like. To date, Austrade has provided little clarity to both consultants and applicants on what this new application process will look like.

Below we have outlined what is likely to happen moving forward based on information currently available. We will be releasing further updates once the information becomes available from Austrade (likely from mid-June).

What to expect

We understand that from 1 July 2021, the process for receiving a grant will be as follows:

• grants will be applied for before spending money on promotional activities;
• once all applications have been assessed, Austrade offers a grant agreement to each eligible applicant;
• a grant agreement is entered into with Austrade, then undertake promotional activities as agreed in the grant agreement;
• milestone payments are given in accordance with the grant agreement; and
• the grant agreement will set out when each milestone payment should be made and what is required in order to receive these payments.

For this first transitional year, some spending may occur prior to receiving the milestone payment, with the submissions being made ‘in year’ and likely finalised after July 2021. We know organisations may experience some disruption to their cash flow at that time. But this will only be temporary, as moving forward, the submissions will be made in April – well in advance of anticipated spending for the following financial year period.

The mechanics of how the grant will operate, and how EMDG will transition from the existing reimbursement model to a grant payment model, are currently under development.

As the law is not yet passed by the Federal Parliament, we will keep you updated as to when it is passed and if any changes to the above rules are made.

In short, these updated rules make the process simpler for applicants, who will benefit from increased certainty through upfront funding – and therefore more confidence in pursuing offshore and export activities.

For more information or support around your EMDG applications, please get in touch below: