A pay-out factor of 29.24% means that clients who were approved for the maximum grant allowable of $150,000 only received $72,159. Clearly, this reduces the benefit of the EMDG program for applicants with grants payable over and above the first tranche payment (which is $40,000 and always paid at 100%).
Is the EMDG program still worthwhile?
Austrade has confirmed that the first tranche payment for the 2018 grant year remains unchanged at $40,000. As such, for smaller claimants, the EMDG program benefit remains unchanged. That is, the benefit of claims up to $40,000 (requiring $85,000 of eligible expenditure) remains unchanged – first tranche payments will be paid at 100%, thus the benefit of a maximum first tranche payment is still a cash benefit of 50 cents in each dollar spent.
If you are a larger EMDG applicant, it may be beneficial to limit your claim to $85,000 of eligible expenditure, if appropriate. In this way, both your business and our EMDG consultants will be able to focus on documenting your larger and non-contentious expenses, with the guarantee of receiving the full $40,000 first tranche payment. We will be undertaking in-depth discussions with our clients to assess their optimal EMDG strategy going forward.
The second tranche pay-out factor for the 2018 grant year is, as yet, unknown, and will not be announced until the end of June 2019. However, with more and more applicants accessing the EMDG program each year and with the Federal Government refusing to follow the Australia 2030 recommendation of increasing EMDG funding by $5 million, we would expect the pay-out factor to be the same, if not lower than the 2017 grant year.
What is Glasshouse Advisory undertaking to address this situation?
Glasshouse Advisory was very disappointed to see such a low pay-out factor. We will be lobbying Minister Steven Ciobo for increased funding to the EMDG program. As previously noted, this was supported by the recent Australia 2030: Prosperity through Innovation report. The report confirmed the effectiveness of the EMDG program and supports an increase in the budget to the program.
What if my 2017 claim has not been audited and paid yet?
As per the 2016 EMDG program, Austrade once again has been unable to finalise all 2017 claim audits before the end of the financial year. As such, we have been advised that quite a few applications will not be audited and finalised until possibly August 2018.
The benefits of lodging your 2018 EMDG claim early
Despite the fact that Austrade will spend the early months of the 2019 financial year finalising some 2017 EMDG applications, Austrade has communicated to us that early lodgers can still expect a quick turnaround for applications lodged in July, August and September 2018. This means early lodgers should see their claims audited and the first tranche payment received in 6 to 8 weeks of lodgement.
If you would like to discuss your EMDG lodgement options and strategy, to maximise your EMDG claim and reduce the workload associated with preparing the claim, please contact your Glasshouse Advisory EMDG Consultant.