EXPORT MARKET DEVELOPMENT GRANTS ACT 1997
Export Market Development Grants (Change in Ownership of Business) Guidelines 2006
Explanatory Statement
Guidelines to be complied with by Austrade in determining, for the purposes of subparagraph 94(1)(b)(ii) of the Export Market Development Grants Act 1997, whether a business or a part of a business that was carried on by a person is similar to a business being carried on by another person to such an extent that the new business should be treated as a continuation of the old business.
The Export Market Development Grants Act 1997 (EMDG Act) provides for grants to specified Australian businesses which have incurred specified expenses promoting the export of their Australian goods, services, intellectual property rights and know-how. The grant is a partial reimbursement of the expenses incurred.
Section 94 of the EMDG Act allows Austrade to ensure that a business does not become eligible for more than the limit of seven grants simply because the business changes ownership. The section provides that if the business of the new owner is sufficiently similar to the business of the previous owner, then Austrade may attach the grants history of the previous owner (including grants already paid) to the new owner.
Among other amendments, the Export Market Development Grants Amendment Act 2006 simplified section 94 but did not change its policy intent or scope. Paragraph 101(1)(d) of the EMDG Act requires Austrade to comply with ministerial guidelines when making section 94 decisions.
These ministerial guidelines set out the factors that Austrade must have regard to when determining whether one business is similar to another.
Austrade’s decisions under section 94 of the EMDG Act are subject to review in the Administrative Appeals Tribunal.
This determination is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.
Overview
The Export Market Development Grants Act 1997 (EMDG Act) was enacted to provide financial assistance to Australian businesses that incur expenses promoting the export of Australian goods, services, intellectual property rights and know-how. The Act enables these businesses to receive grants as a partial reimbursement of their expenses. The EMDG Act was introduced to support Australian businesses in expanding their export activities, thereby contributing to the broader economic growth of the nation. The Act was enacted by the Parliament of Australia.
The Export Market Development Grants (Change in Ownership of Business) Guidelines 2006 were established to address a specific issue under the EMDG Act, ensuring that businesses do not become eligible for more than the allowable limit of seven grants simply by changing ownership. These guidelines, which are subject to ministerial oversight and review by the Administrative Appeals Tribunal, outline the criteria that Austrade must consider when determining whether a new business, following a change in ownership, is sufficiently similar to the previous business to warrant the transfer of the grants history, including those already paid. The policy objective is to maintain the integrity of the grant scheme while facilitating continuity in export market development activities.
Scope and Application
The Export Market Development Grants Act 1997 (EMDG Act) applies to Australian businesses that have incurred specific expenses in promoting the export of Australian goods, services, intellectual property rights, and know-how. The Act provides grants as a partial reimbursement of these expenses and is administered by Austrade, the agency responsible for international trade and investment promotion. Section 94 of the EMDG Act is particularly relevant as it ensures that businesses do not receive more than the allowable limit of seven grants by virtue of a change in ownership. The Act stipulates that if a new business is deemed sufficiently similar to a previous one, the grants history of the previous business may be transferred to the new owner. This provision is subject to guidelines set by the Minister under section 101(1)(d) of the EMDG Act, which detail the factors Austrade must consider when assessing the similarity of businesses. Decisions made under section 94 are subject to review by the Administrative Appeals Tribunal, and these guidelines are considered a disallowable instrument under section 46A of the Acts Interpretation Act 1901.
Key Provisions
The Export Market Development Grants Act 1997 (EMDG Act) provides grants to Australian businesses that have incurred expenses promoting the export of their goods, services, intellectual property, and know-how. These grants serve as partial reimbursements of the expenses incurred (Section 94). The Act aims to ensure that businesses do not exploit the grant system by repeatedly changing ownership to gain multiple grants. If the business of the new owner is deemed sufficiently similar to the previous owner's business, Austrade may transfer the previous owner's grant history to the new owner, thereby preventing multiple claims (Section 94(1)(b)(ii)). The 2006 amendments clarified section 94 without altering its fundamental purpose or scope.
Under the EMDG Act, the Australian Trade and Investment Commission (Austrade) is tasked with determining whether a new business is similar to a previous one, such that the new business should be treated as a continuation of the old one. This determination is made by considering factors outlined in ministerial guidelines issued under paragraph 101(1)(d) of the Act. These guidelines ensure consistency and transparency in the decision-making process. They include criteria such as the nature of the business activities, the markets served, the products or services offered, and the ownership structure.
The obligations placed on Austrade include a thorough analysis of the business activities and market strategies of both the new and previous businesses. Austrade must ensure that the new business does not merely represent a continuation of the old business under a new guise. The decision-making process must be evidence-based and consider all relevant factors as stipulated in the guidelines. Furthermore, Austrade must maintain accurate records of its determinations and be prepared to provide these records for review if necessary.
Breach of the guidelines or incorrect determinations by Austrade can lead to civil consequences. For instance, a business incorrectly deemed to be a continuation of a previous business may face penalties or be required to repay any improperly received grants. Additionally, incorrect determinations can result in the Administrative Appeals Tribunal reviewing Austrade's decisions. While the EMDG Act does not specify criminal penalties for breaches, the potential for financial penalties and reputational damage is significant.