A guide published by Dotto
Small business: the law’s different definitions, side by side
Australian law has more than one meaning for “small business”, and they do not agree. For tax it is aggregated turnover under $10 million; under the Fair Work Act, fewer than 15 employees; under the Ombudsman’s Act, fewer than 100 employees or revenue of $5 million or less; for company reporting, a proprietary company that does not meet two of three size tests; and for payment times reporting, any supplier missing from the Regulator’s tool, which lists mainly businesses with revenue of A$10 million or more.
General information about how each law draws its line, not legal, tax or accounting advice. The official places to check are the ATO, the Fair Work Ombudsman, ASIC, the Australian Small Business and Family Enterprise Ombudsman and the Payment Times Reporting Regulator.
Five rules, five lines
Each law measures something different: money in, people employed, or both. The shaded end of each rule is the small side of its line.
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Less than $10 million aggregated turnover, for an income year in which the business is carried on. Income Tax Assessment Act 1997, section 328-110.
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Workplace Small business employer
Fewer than 15 employees at a particular time, counted by head. Fair Work Act 2009, section 23.
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Companies Small proprietary company
Not two of three: $50 million revenue, $25 million gross assets, 100 employees. Corporations Regulations 2001, regulation 1.0.02B.
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Ombudsman Small business
Fewer than 100 employees, part-timers as a fraction, or $5 million or less revenue for the previous financial year. Australian Small Business and Family Enterprise Ombudsman Act 2015, section 5.
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Payment times Small business supplier
Not listed in the Regulator’s tool, which lists entities with revenue of A$10 million or more in a single financial year, alone or as part of a corporate group, as well as government entities and businesses that opt out. Payment Times Reporting Regulator, Information sheet 6.
The rules are drawn side by side, not to one scale: a dollar and an employee are different units.
When each one is measured
A figure is only half a definition. The other half is the moment it is taken.
| Definition | The moment it is measured |
|---|---|
| Small business entity | For an income year in which the business is carried on: last year’s aggregated turnover, this year’s likely turnover worked out on the first day of the year (or the day a new business starts), or this year’s actual turnover at year end (a business that qualifies only this last way cannot choose some GST, PAYG instalment, excise and customs concessions). A partner in a partnership is not, as a partner, a small business entity. |
| Small business employer | At a particular time. For a dismissal, the count includes the employee being dismissed and anyone dismissed with them. |
| Small proprietary company | For a financial year: revenue for the year, and gross assets and employees at its end, counting the entities the company controls. |
| Small business (Ombudsman) | At a particular time in a financial year: employees at that time, or revenue for the previous financial year. |
| Small business supplier | By the Regulator’s Small Business Identification Tool, updated every January and as needed for corrections. |
One business, five answers
An illustration, written for this guide
A proprietary company runs one business with 20 full-time employees, $6 million in aggregated turnover and revenue, $3 million in gross assets, and no related entities. Read against each line:
- Tax: under $10 million, so it meets the turnover line for a small business entity.
- Fair Work: 20 is not fewer than 15, so if it is a national system employer it falls outside the small business employer definition.
- Company reporting: it meets none of the three large tests, so it is a small proprietary company.
- Ombudsman: fewer than 100 employees is enough on its own, so its revenue above $5 million does not matter. It is small.
- Payment times: its revenue is under A$10 million and it is in no group, so on the Regulator’s description of the tool it would be classified as a small business supplier, unless it had opted out.
Small four times out of five: the one “no” is the line that counts people one by one.
The five guides
- The tax definition: a small business entity
Section 328-110, the three ways to be under $10 million, and what the ATO ties to the line.
- The Fair Work definition: a small business employer
Section 23, who is counted, and the dismissal, redundancy and casual rules that change at 15.
- The company reporting definition: a small proprietary company
Regulation 1.0.02B, the two-of-three test, and the financial reports that follow from it.
- The Ombudsman definition: fewer than 100, or $5 million
Section 5, how part-timers are counted, family enterprises, and what the Ombudsman can take on.
- The payment times definition: a small business supplier
The A$10 million line, how the tool decides, and how a supplier’s label is corrected.
How these pages are written
Each guide quotes the law where it is published under an open licence and puts official guidance into plain words. Figures carry the date or year their source gives them for. The sources for each page are listed at its foot, and every page was checked against them on 8 October 2026.