Applications are now open for Round 2 of AusTrade’s revamped Export Market Development Grant (EMDG) scheme, for income years beginning 1 July 2022. Since 1 July 2021, the EMDG scheme changed from a reimbursement model to a grants scheme that is intended to provide upfront funding and greater certainty for applicants.
This article summarises the key changes and provides our tips for businesses when considering whether to apply for the grant.
Tiered grant system
One of the main changes to the scheme is the introduction of a tiered grant system:
|Tier||Suitable for||Grant details|
|Tier 1: Ready to export||First time exporters
|Maximum $40,000 per year for 2 years
|Tier 2: Expanding||Businesses already exporting that are looking to expand promotion activities
|Maximum $80,000 per year for 3 years
|Tier 3: Expanding and strategic shift||Businesses already exporting that are looking to expand promotion activities and make a strategic shift such as targeting a new market or new type of customer
|Maximum $150,000 per year for 3 years
Businesses applying for the Tier 1 grant will need to complete an “Export Readiness Tool” while businesses applying for Tiers 2 or 3 will need to submit a “Plan to Market” along with their application detailing how they will be expanding and/or implementing a strategic shift in the business.
Applicants can make up to eight EMDG submissions (as was the case under the previous scheme), but a $770,000 maximum funding cap has been introduced (i.e. the maximum funding a business can receive under the new scheme over the eight submissions).
Representative bodies (organisations that promote the interests of members from an industry looking to export their products) are entitled to grant amounts of up to $150,000 per year, with no limit on the number of times they can apply for the grant.
- Grant amounts are still subject to the pool of funds available to Austrade, who have advised they expect the likely maximum funding amounts for Round 2 of the scheme (for the 2023 financial year) to be as follows:
- Tier 1: $15,000 per financial year
- Tier 2: $24,600 per financial year
- Tier 3: $36,600 per financial year.
- Businesses can apply for the different tiers multiple times and do not need to move through the tiers consecutively. For example, a business may choose to apply first for the Tier 1 grant (two years) followed by the Tier 3 grant twice (six years) to come up with the maximum eight years allowed under the scheme.
- Businesses only need to apply once for each tiered grant, they do not need to submit a new application each year.
- Businesses should consider saving their submissions for the eight years they expect to have the greatest amounts of international marketing and promotion expenditure.
- Templates of the Export Readiness Tool, Plan to Market and other documents are available on the AusTrade website.
Applications for the 2023 income year (which sits under the new grants scheme) are processed as follows:
- The business submits a grant application
- AusTrade assesses the grant application
- The business and AusTrade enter into grant agreement that sets out the terms of the agreement and the funding amount.
- The business undertakes the agreed promotional activities.
- The business submits milestone reports throughout the grant year detailing the promotional activities conducted and costs incurred.
- AusTrade makes milestone payments throughout the grant year based on the costs incurred and agreed funding amount.
- Grant amounts are still subject to the pool of funds available to AusTrade, but the funding agreement should provide applicants with certainty of the grant amount they will receive.
- Businesses won’t know what their grant amount is until some months into the new financial year once all applications have been processed, so businesses should factor this into their cashflow forecasts.
Along with the introduction of a tiered grant system and a new application process, other changes were made to the EMDG scheme including:
- The $15,000 minimum spend requirement has been removed.
- The maximum turnover requirement to determine eligibility has been reduced from $50 million to $20 million and is assessed on standalone entity turnover, not group turnover.
- The expenditure caps on the different types of promotional expenditure have been removed, with just the one overall cap on the grant amount for each tier.
- The export performance test has been removed.
- The minimum time period to claim overseas representative costs has been reduced from 12 months to 6 months.
- Costs associated with training are now eligible expenditure for the tier 1 grant.
The new scheme is designed to be simpler and more streamlined for applicants. However, as many provisions have changed, businesses should seek assistance if they have questions.
Applications for Round 2 of the scheme close 4PM AEST on 17 August 2022, so now is the time to contact your William Buck advisor.