Selling to Government: What the New “Australian Business” Definition Means for Tenderers

Back in November 2025, the Commonwealth Procurement Rules (CPRs) introduced a formal definition of what qualifies as an “Australian business” in Commonwealth procurement. For suppliers, this is not just a technical definition. In many procurements it directly affects whether your business can participate in the opportunity at all.

Understanding how the definition works, and ensuring your organisation can demonstrate compliance with it, is becoming an important part of tender strategy and eligibility.

Why This Change Matters for Suppliers

Under CPR paragraph 5.4, for certain procurements valued:

• above $10,000, and

• below the relevant procurement threshold ($125,000 for goods and services).

Commonwealth entities must invite only Australian businesses to submit proposals. This means that if your organisation cannot demonstrate that it meets the definition, you may be excluded from participating in the procurement. For suppliers targeting Commonwealth work, this creates a new practical requirement:

You must be able to clearly evidence that your business qualifies as an Australian business.

The Three Requirements to Qualify as an Australian Business

To meet the CPR definition, a business must satisfy all three criteria.

1. Australian Ownership

A business must have:

• 50% or more Australian ownership; or

• be principally traded on an Australian equities market.

Ownership can be held by a single Australian owner or multiple owners whose combined ownership exceeds 50%. Importantly, this requirement applies not only to the entity submitting the tender, but also to any parent business.

2. Australian Tax Residency

The business must also be an Australian resident for tax purposes. This applies to both the business submitting the tender and any parent entity.

For example:

• Sole traders are assessed based on the individual’s tax residency.

• Partnerships must have 50% or more partners who are Australian tax residents.

• Trusts must have 50% or more trustees who are Australian tax residents.

3. Principal Place of Business in Australia

The business must also have its principal place of business in Australia. This refers to the main place in the world where the business is run from, which must be located at a street address in Australia. In practice, this means a business that is incorporated locally but operated from overseas may not qualify.

How the Definition Applies to Different Structures

The CPR guidance clarifies how the definition works across different business structures.

Partnerships - At least 50% of each class of partnership interest must be Australian owned.

Trusts - At least 50% of trustees must be Australian.

Incorporated Associations or Companies Limited by Guarantee - 50% or more of members must be Australian.

Who Counts as “Australian”?

For the purposes of ownership, an individual counts as Australian if they are:

• an Australian citizen,

• a permanent visa holder, or

• a Special Category Visa (subclass 444) holder.

These visa categories align with the Migration Act 1958 (Cth).

New Zealand Businesses

Under the CPR framework, New Zealand businesses are treated the same as Australian businesses for relevant procurements. The detailed definition of a New Zealand business is contained in New Zealand’s Government Procurement Rules.

What This Means for Tender Strategy

For businesses selling to government, the definition introduces several practical considerations.

1. Eligibility may now depend on corporate structure

Ownership arrangements, parent companies, and trust structures may affect whether a business qualifies.

2. Tender declarations will require supporting evidence

Suppliers may need to provide declarations or supporting information confirming they meet the definition. Procurement teams are expected to undertake reasonable due diligence when verifying these declarations.

3. False declarations carry real risk

Providing false or misleading information in a procurement process may breach the Commonwealth Supplier Code of Conduct and may also constitute an offence under the Criminal Code Act 1995 (Cth).

A Practical Step for Suppliers

If your organisation is actively selling to the Commonwealth, it is worth reviewing:

• ownership structure

• parent company relationships

• tax residency status

• operational headquarters

These factors can now directly affect your eligibility to participate in certain government procurements.

Final Thought

Government procurement is increasingly structured around clear eligibility and compliance frameworks. The introduction of the formal Australian business definition reflects a broader policy objective to strengthen participation of Australian businesses in Commonwealth procurement. For suppliers, understanding how these rules apply is not just about compliance.