With applications for the Export Market Development Grant (EMDG) now open, it’s time to make sure you get your full government refund for the FY17/18 period.
If your business exports a product or service internationally (with the exception of New Zealand and North Korea), an EMDG grant could mean thousands of dollars in cash for your business.
Let’s take a real-world example:
An Australian film production company decides to pay its staff to attend an international film expo in the United States, in order to promote the company’s key films to the US market. Once they factor in the cost of flights, accommodation, marketing materials for the conference– the total cost to attend is $50,000.
A successful EMDG application would look like this:
The government would deduct $5,000 from the total eligible expenses, then the claim is based on the remaining $45,000. Since EMDG reimburses 50% of the cost of eligible activity, the film production company would receive $22,500 in cash.
I’m sure you’re likely thinking – this sounds great, sign me up!
EMDG is a nice windfall for businesses, however being a government-based entitlement grant there are a lot of rules and eligibility criteria to account for.
Avant Group has worked with hundreds of businesses that are looking to claim this grant over the years, and have seen a number of common mistakes time and time again.
1. Choosing to do it yourself – especially as a first-time applicant: When you initially learn about EMDG, there will likely be a lot of terms and conditions you are unaware of. For example, did you know there’s a limit on how many consecutive days you can spend in an international market to promote your product or service? That Facebook advertising costs may be eligible? Or that there are markets that are not eligible for EMDG?
For a first-time applicant it pays to work with a government grant consultant, with experience in EMDG, to put your application together and step you through the process. A consultant can also make sure you are claiming everything you are eligible for and knows the evidence you must collect to prove it. On average, EMDG applicants that use a government grant consultant receive 20% more than if they hadn’t used a consultant.
Make sure to find a consultant that works on a Success Only Fee basis for EMDG, so you’ll only pay if your application is successful. Avant Group works on a Success Only Fee basis for all EMDG applications.
2. Thinking you won’t get audited: If you are claiming EMDG for the first time, there is a 90%+ chance you will be audited. Audit types can range from a small desk review to a site visit and dissection of every piece of evidence for your EMDG claim. For example, an Auditor may ask you where you were on a Monday afternoon during a trip to London – four months ago, plus expect you to provide the evidence to prove it.
This may sound intimidating – but it doesn’t have to be. If you know you have made legitimate claims and kept the evidence required, you will not have any issues.
However again – it pays to have a government grant consultant attend the audit with you, who will know what to expect and have all the evidence ready to present to the auditor. At Avant Group, if any of our EMDG clients are audited – we will attend the audit in person to support and manage the process at no extra charge.
3. Not keeping enough ‘contemporaneous’ evidence: Keeping ‘evidence’ of your EMDG expenses may not be a straightforward as you think. Let’s say you fly to Singapore for a meeting to discuss selling your product in Singapore, the cost of attending this meeting is likely to be considered eligible activity under EMDG.
However, it won’t be a simple matter of showing your flight itinerary. You will likely need to provide any emails or phone records that relate to the meeting, as well as keep any business cards exchanged to prove the meeting actually happened.
Photos are also a good idea to support your activity; such as pictures of yourself at an expo you are claiming expenses for.
4. Waiting until deadline to submit your application: EMDG applications open on June 30th every year and close November 30th of every year. You can apply right up to the deadline, however the later you claim – the longer you wait to receive your payment.
We often see clients who submit their claim within a month of the claim window opening, receive their payment in as little as two weeks. Whereas many companies that wait until November to claim, can be waiting for more than six months.
5. Not paying your invoices before claim time: The EMDG program operates on a cash accounting basis. You will only be able to claim EMDG expenses if you have actually paid for them before June 30th. This means that if you receive an invoice that is due after June 30th, you must still pay it before that date for it to be eligible for the next EMDG application. There are some rules around pre-payments so make sure you speak to the Avant Group team before you do so.
Ready to dive into EMDG? Applications are now open until November 30th, 2018. Avant Group offers Success Only Fees for all EMDG applications, plus all Austrade auditing is included at no additional cost.
For your obligation-free assessment of your EMDG eligibility, contact Avant Group on (03) 8640 0914 or email [email protected]