Translationz Pty Ltd and Australian Trade and Investment Commission

This matter concerned an application by Translationz Pty Ltd (the Applicant) for review of a decision by the Australian Trade and Investment Commission (the Respondent) regarding eligibility for export market development grants. The dispute centred on whether certain promotional activities and expenses incurred by the Applicant were eligible for grants under the Export Market Development Grants Act 1997 (Cth) (the EMDG Act), particularly in relation to sales made by a related US company, Tzcorp. The case was heard by Mr A. Maryniak QC, a Member of the Tribunal.

The primary legal issues before the Tribunal were whether the promotional activities undertaken by the Applicant were for an approved promotional purpose, whether Tzcorp was a "related entity" for the purposes of the EMDG Act, and how to apportion expenses where sales were made by Tzcorp, a foreign corporation. Specifically, the Tribunal had to determine if the contractual arrangements between the Applicant and Tzcorp effectively re-characterised Tzcorp's sales as those of the Applicant, thereby making them eligible for grants, or if Tzcorp's status as a foreign corporation rendered its sales ineligible under section 37 of the EMDG Act. The Tribunal also considered the Applicant's submissions for re-characterising ineligible earnings and speculative apportionment methods, which the Respondent contended were not based on objective facts.

The Tribunal reasoned that Tzcorp, a US-based company, was appointed to sell the Applicant's translation services outside Australia. As Tzcorp was a foreign corporation, its sales were ineligible under the EMDG Act. The Tribunal found that the payment arrangement between the Applicant and Tzcorp did not alter the nature of these overseas sales or Tzcorp's status as a foreign corporation, and therefore did not give the Applicant "principal" status in respect of these sales. The Tribunal concluded that an inextricable link must exist between eligible promotional activity and the approved promotional purpose, as required by section 37 of the EMDG Act. The Tribunal rejected the Applicant's proposed methods of apportionment and re-characterisation as speculative and not supported by evidence.

Consequently, the Tribunal found that the apportionment proposed by the Respondent was the correct and preferable approach. This involved apportioning the Applicant's Overseas Representation and Promotional Literature and Advertising expenses by comparing its eligible export revenue in the US/Canada market with Tzcorp's revenue, resulting in a 10% apportionment. For the Rest of World market, the Applicant's Marketing Visits expenses were apportioned by comparing its total eligible export revenue with Tzcorp's, resulting in a 29% apportionment. The Tribunal affirmed the Review Decision dated 3 October 2018.