Austrade unveils lucrative EMDG changes in light of COVID-19

Austrade has announced that in light of the COVID-19 pandemic, it will be making some significant changes to its flagship grant program: the Export Market Development Grant (EMDG).

For an overview of the EMDG offering, please click here.

Below is a summary of the three key changes unveiled by Austrade:

  1. 100 percent payout factor for second tranche

In addition to the $61 million injection announced in this year’s budget, Austrade announced that it would be pumping an additional $49.8 million into the EMDG fund for this financial year.

Historically, EMDG grants have been paid out in two tranches. The first payout is received by the applicant once the grant is approved by Austrade and is capped at $40,000.

If a business spent more than $85,000 of eligible expenditure, the balance of their grant entitlement is paid out in the second tranche which is released at the end of the financial year.

However, this second payment is prorated based on the amount of funds left in the EMDG pool, and normally ends up being far less than the maximum entitlement. For instance, the payout factor for FY2018 was 24.6 percent, which meant that if a business was expecting a second payment of $100,000 – they would have only received $24,600.

In its announcement introducing the COVID-19 changes, Austrade confirmed that this additional $49.8 million would bring the second tranche payout factor up to 100 percent, giving all successful applicants their full grant entitlement.

To put this extra cash in the hands of business owners sooner, Austrade also confirmed that it would be bringing the second tranche payout date forward from near 30 June 2021 to 31 March 2021.

  1. Removal of export performance test

For companies that are up to their third EMDG claim (and beyond), Austrade normally require for them to undergo an ‘export performance test’ that shows a clear return on investment from their overseas marketing efforts.

If a business cannot prove this return on investment by passing this test, it would need to provide an extensive and elaborate justification as to why this is the case. Failing to do so would make the company ineligible for the grant.

However, Austrade announced that for the 2020 financial year, applicants will not be expected to go through this export performance test and will be entitled to the full 50 percent reimbursement regardless.

  1. Cancellation fees deemed eligible

Austrade final change was that for the 2020 and 2021 financial years, it would be treating the costs associated with the cancellation of overseas marketing activities due to the COVID-19 as eligible expenditure.

Essentially, if a business had already paid for flights, conferences, or any other eligible activities that were meant to take place during this financial year or next, in the event that those activities are cancelled due to the coronavirus, any amount not reimbursed by the supplier will be claimable under the EMDG.

If you have any questions about these changes, or if you’d like more information about the EMDG program overall, feel free to get in touch and our team will be delighted to discuss your queries.

ben@catalystsolutions.com.au