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Upgraded export grants scheme dodges budget knife

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Upgraded export grants scheme dodges budget knife   article image

The Federal Budget slashed and burned its way through a swathe of industry support programs.  

However, the popular and well-targetted Export Market Development Grant (EMDG) has come through unscathed. It has even retained the improvements that were added in April this year.  

Companies spending money to grow their exports of goods, services or intellectual property are eligible to claim a 50 percent rebate on those expenses, up to a maximum of $150,000 cash rebate per claim.  

Under the upgraded EMDG program, the initial non-grant threshold has been reduced (from $10,000) to $5,000, and companies can now claim a total of eight times (previously seven).  

Over the lifetime of a company, that’s a total of $1.2 million in cash rebates that can be claimed based on eligible expenditures.  

The EMDG program gives companies up to three years (two EMDG claim years) to build their export revenues, before sales performance criteria is applied to subsequent claims.  

The performance test starts from Year 3 and limits the grant payable. This ranges from 40 percent of export sales in Year 3 down to 5 percent in claim Years 7 and 8.  

One of the strengths of the program is that it is rigourously audited by AusTrade, maintaining its integrity for the long term. This is one of the reasons that it is nearing its 40th year as a successful, targeted industry incentive.  

Why you should engage a professional  

However, this rigorous auditing is also a good reason for companies to engage the professional services of specialist EMDG consultancies to navigate the complexities of the eligible entitlements.  

Figures published by AusTrade in April 2014 showed that the “slippage” rate – the difference between the orginal claim and the final payment after AusTrade’s audit adjustments – had grown to 23 percent in the 2011-12 year for self-prepared claims.  

By contrast, slippage rates for the top quartile of “Quality Incentive” consultants are typically less than 4 percent. Austrade’s online claim system can also be extremely frustrating to navigate and use, and is the subject of ongoing complaint.  

The payments are made in two tranches, the first being a guaranteed minimum (currently $60,000), and the balance being paid from the pool of funds remaining after the payment of the first tranche.  

The EMDG program is currently underutilised and there is likely to be funds left over from the of $132 million available for EMDG payouts for 2012-13.  

Application numbers have been declining and this is an opportunity for those seeking to pursue export for the first time.  

Applications for 2013-14 EMDG claims open on July 1, so now is the time to consider whether your company is entitled to quick cash benefits for its export development activity.  News_Deadline looms for R&D Incentive_Dave Sammut

*Dave Sammut is a consultant with Rod Campbell & Associates, specialists in the preparation and lodgement of EMDG grant applications. 

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