EXPORT GRANT ESSENTIALS

FOR 2012 CLAIMS

GETTING STARTED

To be eligible to apply for an Export Grant you;

• Must hold an ABN
• Have a gross taxable turnover of less than $50 million
• Have incurred at least $20,000 of expenditure over a 2 year period
• Have current financial statements that demonstrate your business is viable
• Have a product or service of Australian origin

 How Much Is The Export Grant Rebate

• 50% of the amounts incurred in excess of $10,000
• Once you have spent $20,000, a grant of $5,000 becomes payable
• Austrade pay a maximum grant of $150,000. Because a fixed amount is allocated each year for grant payments ($200 million), the payment system is complicated.  An initial payment (currently $27,500) is made when your application is processed.  A further payment of any balance due is made at the end of the processing period, depending upon available funds.

 What Expenditure Qualifies

The rebate applies to export promotion and export market research (such as travel or engaging a consultant).  The rebate does not apply to product development, product delivery, cost of sale or administration expenses. 

 CATEGORIES OF PROMOTIONAL EXPENDITURE WHICH QUALIFY

 Overseas Representatives

The costs of running your own overseas representative office or paying an overseas representative qualify, other than capital expenditure.  A minimum 12 months representative contract is necessary.

Salaries, rent, vehicle hire, office expenses all qualify up to a maximum of $200,000 per year.

If the overseas representative is independent to you i.e. not a related company an additional $50,000 is able to be claimed (i.e. to a total of $250,000).

 Marketing Consultant

Independent arms length marketing consultants qualify up to $50,000 per application.  Consultants may be based in either Australia or overseas.  Their activities may include market research, advice on markets and pricing strategies, as well as direct promotion.

 Overseas Travel

For overseas travel, you are allowed airfares and all other transport costs i.e. taxis hire cars, together with a daily allowance of $300 per day, per person up to 21 days per trip.  First class airfares are discounted by 35%, otherwise all transport costs qualifies.  The daily allowance of $300 is in lieu of actual costs incurred for accommodation, meals and general living expenses.  If any part of any trip is not for export promotion (i.e. a holiday), that part of the trip will not be eligible for the rebate. Relatives travelling together must be directors or full time employees for 12 months prior to the overseas travel, for both travelers to qualify.

Communication Costs (phone, fax & email)

Most applicants elect the automatic 3% allowance e.g. if the total of your other claimed expenses is $100,000, then 3% i.e. $3,000 will be automatically allowed for communication costs. Alternatively, actual communication costs which relate solely to export promotion, can be claimed.

Product Samples

Product samples (at cost price to you) can be claimed.   The samples must be given away without charge to potential overseas buyers. Freight costs for the samples, do not qualify.

Trade Fairs, Seminars & Promotional Events

All costs paid to third parties to participate in a trade fair or to stage a promotional event or private exhibition qualify.  Any in-house internal costs (such as staff time) do not qualify.

Publicity & Advertising

Costs paid to external contractors to create marketing brochures, websites, electronic press kits, paid advertising or any other form of promotion qualify. In-house salaries, do not qualify.

Bringing an Overseas Buyer to Australia

Costs incurred in bringing an overseas buyer to Australia are eligible (excluding entertainment) up to;

• $7,500 per buyer per visit
• a maximum of $45,000 per application

Patent Trademark & Copyright Registration Costs

Costs paid to protect intellectual property in overseas markets may be eligible, if it can be established the costs were incurred for export promotion and not solely for intellectual property protection. This category of expenditure is now capped at $50,000. Insurance against costs to be incurred protecting intellectual property in foreign market may also be eligible. Please consult us regarding these expenses. 

Goods Manufactured Offshore

If you have undertaken design and research in Australia but manufacture offshore, you may still qualify for export grant rebates.  To do so, your ‘mark up’ on goods sold, must exceed 50% and you must have employees in Australia. Austrade look to the size of your ‘footprint’ in Australia to establish whether the net benefit to Australia from your activities is sufficient.

Related Companies

If overseas marketing is undertaken by a related company in your group, this may be eligible.  Please discuss this with us.

Export Earnings Test – Year 3 Onwards

Your Export Grant entitlement from your 3rd grant payment onwards, is subject to a ‘cap’ based on export earnings. The EMDG payment will be initially based on eligible expenditure (i.e. expenditure less $10,000 x 50%), however your grant payment cannot exceed the following percentage of export earnings:

Year 3 – 40%
Year 4 – 20%
Year 5 – 10%
Year 6 – 7.5%
Year 7 – 5%

Maximum Number of Claims

The maximum number of claims is 7.

Exclusions from Export Grant Eligibility

• Any expenditure not paid (on a cash basis) by 30 June
• Commissions
• Capital expenditure
• Salaries (except for overseas representatives and product samples)
• GST or Australian taxes
• Any marketing to New Zealand
• Any cash payments in excess of $10,000
• Any expenditure or export earnings which are not in your financial accounts and/or tax returns

Additional Points

• Any marketing costs initially incurred by a third party licensee (such as a distributor) which are charged back against your revenue/royalties, can be claimed upon recoupment.
• Where a promotional event/trade fair is held in Australia (such as Australian Fashion Week), if overseas buyers attend the event, part of your participation costs may be eligible.
• If you create marketing items which are used locally and internationally (such as a website, business cards, electronic press kit etc), the proportion which relates to overseas marketing can be claimed.

Important things to remember

Unless the company claiming the Export Grant expenditure has also claimed the same expenditure as a tax deduction, the expenditure is non-claimable. If payment of the expense has occurred through a related party such as a director or related company, this expenditure will be claimable provided that;

• The export grant claimant has the expenses in its profit & loss and tax return
• That the payment has been confirmed as a loan to the applicant and appears in the balance sheet of the applicant as a short term liability from the related party.