More small business exporters will be entitled to a reimbursement of their overseas marketing costs from July 1 this year, following legislative changes to the export market development grants program.
More small business exporters will be entitled to a reimbursement of their overseas marketing costs from July 1 this year, following legislative changes to the export market development grants program.
The changes to the scheme, which is administered by export agency Austrade, will allow SME exporters with a turnover of less than $30 million per year and an overseas marketing spend of more than $15,000 to claim reimbursement for expenses such as trade fairs, seminars and promotional literature.
The changes include removal of an export earnings test, meaning exporters are no longer required to meet a threshold level of export sales to claim support.
Under the former system, after two grants had been awarded, exporters had to maintain a level of sales to retain their eligibility.
For companies manufacturing overseas, stringent rules regarding ‘Australian content’ have been abolished.
Instead, the new criteria require a significant net benefit for Australia from the sale or supply of product.
Other newly eligible companies include those with intellectual property that is licensed by a subsidiary overseas, with a new clause permitting companies to claim expenses when intellectual property and know-how is managed by a third party.
Also under the new structure, promotional expenses incurred by one company for a product that is owned by a related company within the same group may be recouped.
Formerly, if one company paid for promotion and another owned the product, neither was eligible for a grant.
According to small business consultancy Thee & Me Consulting Pty Ltd director, Bev Francis, the changes will allow many previously ineligible businesses to claim expenses for their exporting activity.
“The studies that Austrade has done in the past have shown most exporters put their grants into more export promotion, so therefore I think it will encourage them to fund greater promotion and level of brand awareness,” she said.
A former Austrade consultant, Ms Francis said the scheme would help companies get results from their export sales more quickly.
She said the changes would be of particular benefit to companies exporting their IP, such as software developers, which had previously been excluded due to having an overseas subsidiary.
Companies that subcontracted their manufacturing overseas would also benefit from the changes.
Ms Francis said grants for trade fairs and promotional material, such as free samples, would be popular.
Austrade’s total EMDG pool in 2007-08 will be $159.28 million, with about 400 companies in WA expected to claim a grant under the scheme.
Other changes include increasing the claimable overseas visit allowance, from $200 to $300 per day, and limiting the eligibility of cash payments to $10,000 per application scheme.
While the legislation came into effect in June 2006, exporters will be allowed to apply for a reimbursement grant from July 1 this year for expenses incurred in financial year 2006-07.
The claimable amounts range from $300 per day, for an overseas visit, up to $200,000 for appointing an overseas representative.
Austrade EMDG division general manager Margaret Ward said the changes to the EMDG scheme were intended to address some anomalies in the system.
“We are expecting an increase in demand, in terms of increased applications, and I would expect that one change alone, on overseas market visits, would lead to some increase in the average grant claim,” she said.
Ms Ward said 3,813 applications had been received in financial year 2006-07, while the average grant in the 2005-06 financial year was $39,000.
