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Public Policy Ruling 1999/2

  Austrade Rulings

Assessment principles for performance arts or ‘cultural’ exporters claiming expenses associated with overseas touring losses.


The EMDG Act provides for applicants to be able to claim ‘free samples’ expenses where a product (good or service) is given away free of charge to a foreign resident. Some ‘cultural’ exporters (bands, orchestras, theatre companies, dance companies etc) promote themselves to overseas clients by undertaking overseas tours where they give away free services. A more common practice is for the performance arts exporters to promote themselves by travelling around overseas to perform services for a loss.

This Ruling addresses two main issues that arise when performance arts exporters incur expenses on promotional overseas visits.

  • What constitutes an eligible ‘free sample’?

  • How will Austrade assess claims from those performance arts exporters who do or who may in the future receive some income in relation to overseas promotional tours for which any EMDG expenses are claimed? In particular, it looks at how Austrade will apply section 46 of the EMDG to treat any income received in relation to these overseas tours.

Section 46(1) of the EMDG Act requires that Austrade should deduct from eligible expenses any amounts of income received by the applicant in the course of carrying out particular promotional activities.

This Ruling only addresses performance arts exporters who are promoting services. Austrade Guidelines relating to the eligible of ‘free samples’ expenses for intellectual property exporters are different to those that apply to goods and services exporters (refer to guideline 5.7.24). Performance arts exporters who promote intellectual property, for example, music recording rights, should therefore seek an in-principle opinion about the eligibility of any proposed overseas promotional tours.

This Ruling does not address the question of what range of expenses are claimable as ‘free samples’ (item 4 in the s.33 table) expenses. The question of what is claimable is a substantiation question and each applicant should be able to demonstrate that its expenses directly relate to providing samples.


What constitutes an eligible ‘free sample’?

To qualify as a free sample, Austrade requires that the applicant must receive no income for the claimed overseas tour activity and if this is the case, expenses can be assessed at item 4 of the section 33 table in the EMDG Act. The tour must also be conducted for the purposes of promoting an eligible income stream.

Austrade will not assess an activity to be a ‘free sample’ where any of the following types of income is received or is receivable.

  • Performance income

  • Contras/offsets (eg. Free accommodation) for the tour where the overseas recipient of the services directly or indirectly gives the applicant a non-cash benefit in return for providing the services.


Applicants may sometimes travel overseas to provide ‘free samples’ (as defined above) for one overseas tour promoter but also to separately perform income generating concerts either as a self-promoter or for a different tour promoter. In this case, Austrade will separate out the activities. Austrade will allow the expenses of overseas free performances as ‘free samples’ where there is a demonstrated basis to do so.


How will Austrade assess claims from ‘cultural’ exporters who undertake loss-making promotional overseas tours?

The circumstances where Austrade will consider allowing the expenses associated with loss-making overseas tours will be where:

  • The overseas tour is for an ‘approved promotional activity’ and is made primarily to promote future business. Applicants would need to substantiate this by showing, for example, that reviews of its shows are used to promote future business or that they are seeking overseas promoters to stage future shows.

  • The applicant can show that it budgeted for a loss in its overseas tours and that its intention was to promote future export business by being prepared to tour for the loss. That is, Austrade will not accept that a visit is for an approved promotional activity where an intended commercial tour resulted in a subsequent and unbudgeted loss.

Austrade will examine the income/expenses for an overseas tour and calculate the loss percentage factor.

Income will be all income and may include:

  • Performance income

  • Govt grants

  • Sponsorship income

  • Travel allowances from any overseas person

Expenses will be all expenses that directly relate to the tour and would include expenses of advertising the tour. It would not include overhead type expenses including administrative or management expenses.

Where an applicant is directly reimbursed for an expense (such as subsidised air fares) or where it receives free accommodation, Austrade will deduct this reimbursement before calculating the loss factor.



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