I had a phone call a while back from a colleague who had a client that had used up his full allotment of seven EMDG grants. At the time of writing this post, this was the maximum number of applications that an applicant could get paid.
The client was looking for ways to come back into the EMDG program. I explained to my colleague that Austrade would possibly look at applying Section 94 to any new application from the client.
This is an extract from the EMDG Act.
EXPORT MARKET DEVELOPMENT GRANTS ACT 1997 – SECT 94
Change in ownership of business etc.
(1) Subsection (2) applies if:
(a) at any time, a person (the previous owner ) carried on a particular business (the old business ) in Australia; and
(b) at a later time, another person (the new owner ) carries on:
(i) the business or a part of the business (the relevant part ); or
(ii) a business (the new business ) that, at that time, is similar to the old business, or a part of the old business (the relevant part ), carried on by the previous owner before that time, to such an extent that the CEO of Austrade is satisfied that the new business should be treated as a continuation of the old business; and
(c) the new owner applies for a grant in respect of a grant year.
Note: Decisions whether 2 businesses are similar are subject to guidelines determined by the Minister under section 101.
(2) For the purposes of this Act, the CEO of Austrade must treat particulars of the previous owner as being those of the applicant in the following ways:
(a) any eligible expenses incurred by the previous owner in the capacity of owner of the business (or of the relevant part) are to be treated as having been incurred by the new owner;
(b) if the CEO had decided that the previous owner met the grants entry requirements–the new owner is to be treated as if the CEO had decided that it had met the grants entry requirements;
(c) any grant, or advance on account of grant, paid or payable (whether under this Act or under the repealed Act) to the previous owner in the capacity of owner of the business (or of the relevant part) is to be treated as having been paid, or as being payable, to the new owner;
(d) any other aspect of the business (or of the relevant part) is to be treated as if it had been carried on by the new owner.
Note: For eligible expenses , repealed Act and grants entry requirements see section 107.
I know – my head hurts as well when I read it.
What it basically says is that if you have a business and it is receiving or has received grants in the past and you sell the business, the grants history passes with the business to the new owner. Sometimes in the the sales and purchase transaction, the issue of grants is not raised or disclosed and the purchaser is unaware that the business may have a previous grants history.
In the new online EMDG application form, the following questions are asked;
Q20 – Are you carrying on a business, or have you bought a business or a part of a business, or acquired significant assets from any other person/business that has or may have received an EMDG grant?
Q21 – Please enter the names of company directors or partners in the partnership.
Q22 – Have the directors or partners ever been involved with any other business that has previously applied for an EMDG grant?
Austrade will use the answers to the above questions and any other information they may have at their disposal to decide whether S94 should be applied and apply the previous grants history to the applicant.
If you read the Act and look at the questions, you will notice the emphasis on the word business. So if you think that shutting down the corporate entity that has a grants history and setting up a new corporate entity to carry on the business will allow you to reset the counter on your EMDG applications, think again. You will not have been the first to look at doing this and you will get caught out by Section 94.