On 6 March 2025, the Australian government issued a formal definition of what an ‘Australian business’ is for Commonwealth procurement contracts.1
This definition establishes three criteria for a business to be considered ‘Australian’:
- Ownership
At least 50% of the entity’s ownership must be Australian, including any parent businesses, or its principal trading activity must take place on an Australian equities market.
- Tax residency
The entity must be an Australian tax resident.
- Principal place of business
The primary place of business must be in Australia.
According to the Australian government, this definition will allow for enhanced transparency in the procurement process, providing better insights into which businesses are winning government tenders.2
While businesses will be able to self-declare their ‘Australian business’ status, it’s important to note that this declaration does not automatically grant preferential treatment. This is due to existing non-discrimination rules.
However, the government intends to use this data to track Australian business participation in procurement and tailor support accordingly.
Support for SMEs and the ICT sector
Beyond defining ‘Australian business’, the government has also introduced measures aimed at supporting small and medium enterprises (SMEs) and promoting broader economic benefits, particularly within the information and communications technology (ICT) sector. These include:
- An increased SME exemption threshold
Raising the SME exemption threshold from $200,000 to $500,000, providing SMEs with access to a greater number of contracts.
- Higher SME procurement targets
Increasing the target for government procurement from SMEs to 25% for contracts up to $1 billion, and 40% for contracts below $20 million.
- SME inclusion mandate
Ensuring that at least one SME is included in every approach to market through the whole-of-government management advisory services and people panels.
An ‘important economic lever’
Awarding an average of $70 billion through 80,000 contracts each year, the Australian government says it aims to drive economic growth, support local businesses, and create opportunities for Australian workers.
Minister for Finance Senator Katy Gallagher said: “Australian businesses have been calling for these changes, and we have listened. Procurement is one of the most important economic levers government has – helping to grow our economy, support small and medium businesses, and benefit Australian workers and consumers.”
Minister for Industry and Science Ed Husic MP echoed this sentiment, highlighting the government’s commitment to genuine Australian businesses.
“When we say we want Australian companies to have a chance to provide goods and services to government, we want genuine, true-blue Australian businesses to do so. This new definition helps give confidence that this is the case – and helps make the job easier for government officials too,” Mr Husic said.
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