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06/03/2025

Definition of an Australian business

The Australian Government has developed a definition of an Australian business for use within the context of Commonwealth procurement framework.

An Australian business, in the context of the Commonwealth procurement framework:

  1. is a business, including any parent business, that:
    1. has 50% or more Australian ownership, or is principally traded on an Australian equities market; and
    2. is an Australian resident for tax purposes; and
  2. is a business that has its principal place of business in Australia.

Purpose

The definition of an Australian business will be used to collect information on the participation of Australian businesses in Commonwealth procurement, providing a more comprehensive picture on the number of Australian businesses that interact with the Commonwealth procurement framework. The data captured will also enable and inform targeted engagement with businesses and industry sectors, to help lift their capability to compete for Australian government contracts.

The Department of Finance will periodically update this guidance.

Identifying an Australian Business

The Commonwealth Procurement Rules will be updated to include the definition of an Australian business. Once updated, where a business meets the criteria in the definition, they may choose to self-declare their status as an Australian business for these purposes. A director, partner, trustee or appropriate officer, with the relevant authority and understanding of the business structure and operations, will need to make the declaration on behalf of the business.

Declaration of an Australian business will be a phased approach. In the first instance it will apply to select Whole of Australian Government Panels, including the Management Advisory Services Panel and the People Panel. It will then be extended to suppliers on all panels, and finally, all suppliers on AusTender will be able to identify themselves as an Australian business in the system.

Suppliers on the panels identified for the first phase, will be contacted by their relevant panel manager when it is possible to identify as an Australian business against that panel.

What does Australian ownership mean?

For businesses not listed on a securities exchange, the ‘50% or more’ requirement may be met by an individual or be a cumulative representation of ownership by multiple individuals.

The definition will apply to the entity or entities that own the business, regardless of the ownership structure. For the purpose of the definition, the owning entity or entities must also have 50% or more Australian ownership or be principally traded on an Australian equities market.

For partnerships, 50% or more of each class of partnership interest must be Australian owned (that is, partner(s) are Australian, as per below), with the partnership interest reflected in the partnership agreement.

For trusts, where at least 50% of the owner(s) of securities or assets held in trust are Australian, the trust will be taken to be Australian.

In terms of a natural person, an ‘Australian’, for the purpose of the definition, is a person who is one of the following:

  • an Australian citizen
  • the holder of a permanent visa, or
  • the holder of a special category visa (subclass 444) 

    with the holder, permanent visa, special category visa (subclass 444) and visa having the same meaning as in the Migration Act 1958 as in force from time to time.

For more information on visa requirements, visit the Department of Home Affairs website.

How do I know if I am an ‘Australian resident for tax purposes’?

The Australian Taxation Office (ATO) website includes information on how to correctly assess the residency status of your business entity. The website clearly sets out the different residency criteria for a sole trader and for companies, corporate limited partnerships, and trusts.

For a sole trader, your tax residency will be based on your individual Australian income tax residency.

For partnerships, for the purposes of the Australian business definition, 50% or more of the partners in each class of partnership interest must be a tax resident of Australia.

For trusts, for the purposes of the Australian business definition, 50% or more of the owners of the securities or assets held in trust must be a tax resident of Australia.

For more information on tax residency, visit the ATO website. 

What is a ‘principal place of business’?

For the purposes of the Australian business definition, the ‘principal place of business’ in the main place in the world where you run your business. To be able to identify as an Australian business, this location (that is, the main place the business is run from), must be a street address in Australia.

For more information about ‘principal place of business’, visit, business.gov.au. 

Can procuring entities use the definition to preference Australian businesses?

No. Australia’s international government procurement commitments, which are given effect through the Commonwealth Procurement Rules, contain non-discrimination commitments. All suppliers are to be treated equally based on their commercial, legal, technical, and financial abilities and must not be discriminated against due to their size, location, ownership or degree of foreign affiliation.

Does the Australian business definition interact with the existing SME definition?

Not at this stage. The definitions are standalone, and do not interact with one another. Once the Commonwealth Procurement Rules have been updated, the Australian business definition will apply to the Australian element of the SME definition. The update will ensure there is sufficient time for SMEs to determine their eligibility.

What data will be publicly available regarding the number of Australian businesses?

Finance is currently developing the ‘Supplier Portal’ to enable businesses engaged through panels (and later all businesses registered on AusTender) to manage their business information. This will include enabling businesses to identify their key business characteristics, such as being an Australian business, with this information to be available to the public. The Supplier Portal is expected to commence implementation in mid-2025. For more information on the timing of these projects, see the Govpanels/Supplier Portal update page on AusTender. Suppliers registered on AusTender will be notified when the Supplier Portal is available to all suppliers.

Where contracts are reported against these suppliers, this information will be publicly available on AusTender.

Further Questions

If you have any further questions regarding the application of the Australian Business Definition, please email Sellingtogov@finance.gov.au
 



 

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