Guide 4 of 5 · Ombudsman
The Ombudsman definition: fewer than 100 employees, or $5 million
Under section 5 of the Australian Small Business and Family Enterprise Ombudsman Act 2015, a business is small at a particular time in a financial year if it has fewer than 100 employees at that time, or its revenue for the previous financial year was $5,000,000 or less. Either test is enough on its own, part-time employees count as a fraction of a full-time equivalent, and the definition marks out who the Ombudsman advocates for and assists.
General information, not legal advice. The official place to check is the Australian Small Business and Family Enterprise Ombudsman.
Employees as full-time equivalents, or revenue · the line: fewer than 100, or $5 million or less
Section 5, in the Act’s words
“(1) A business is a small business at a particular time in a financial year (the current year) if:
- it has fewer than 100 employees at that time; or
- either:
- its revenue for the previous financial year is $5,000,000 or less; or …
(2) For the purposes of this section, business includes an enterprise, activity, project, undertaking or arrangement.
(3) In counting employees for the purposes of the definition of small business in subsection (1), take part‑time employees into account as an appropriate fraction of a full‑time equivalent.
(4) Revenue is to be calculated for the purposes of this section in accordance with accounting standards in force at the relevant time.”
Paragraph (b)(ii), left out above, covers a business not carried on at any time in the previous financial year. Australian Small Business and Family Enterprise Ombudsman Act 2015, s 5, compilation of 14 October 2024, from the Federal Register of Legislation
Either test is enough
The word that matters in subsection (1) is “or”. A business with fewer than 100 employees is small whatever its revenue, and a business with revenue of $5,000,000 or less is small however many people it employs.
| Employees | Revenue, previous financial year | Small under section 5? |
|---|---|---|
| Fewer than 100 | $5,000,000 or less | Yes |
| Fewer than 100 | More than $5,000,000 | Yes |
| 100 or more | $5,000,000 or less | Yes |
| 100 or more | More than $5,000,000 | No |
A business that was not carried on at any time in the previous financial year is measured on its revenue for the current year instead.
How the counting works
- Part-timers as fractions. Part-time employees count as an appropriate fraction of a full-time equivalent. That is the opposite of the Fair Work Act’s head count, where each employee counts as one.
- Revenue by the accounting standards. Revenue is calculated under the accounting standards in force at the relevant time.
- A broad idea of business. “Business” includes an enterprise, activity, project, undertaking or arrangement.
- Family enterprises. Section 6 is one sentence: “A small business operated as a family enterprise is a family enterprise for the purposes of this Act.” A family business is inside the definition when it is small under section 5.
What the Ombudsman does for a small business
Section 13 gives the Ombudsman two main functions: to advocate for small businesses and family enterprises on relevant legislation, policies and practices, and to give assistance in relation to relevant actions when asked.
What can be brought
Any person may ask the Ombudsman for assistance in relation to a relevant action, orally or in writing. Section 65 lists the actions that count, among them:
- “action by an agency of the Commonwealth that affects, or may affect, a small business or family enterprise”;
- “action by a constitutional corporation that affects, or may affect, a small business or family enterprise”;
- action in relation to insurance, banking, telecommunications, or copyright, patents, designs or trade marks, “where that action is by, affects or may affect a small business or family enterprise”.
The Ombudsman’s own page puts it more simply: it responds to small businesses and family enterprises in dispute with other businesses or Commonwealth Government agencies.
Where the Act draws limits
- Not authorised. Section 67 excludes, among other things, action taken by a Minister, by an agency of a State or Territory, and orders or decisions of courts and tribunals.
- May decline. Under section 68, the Ombudsman may decide not to assist if it reasonably believes the person knew of the action “more than 12 months before the request was made”, among other grounds.
- Must transfer. Under section 69, where the Ombudsman reasonably believes another Commonwealth, State or Territory agency could deal with the request more conveniently or effectively, and that agency has the legal power to, the Ombudsman must not assist and, after consulting that agency, must transfer the request to it.
Disputes and mediation
In a dispute, the Ombudsman may recommend that the parties take part in an alternative dispute resolution process, which is conducted by someone the parties choose, never by the Ombudsman. If a party refuses or withdraws, the Ombudsman may publicise that fact. Among the conditions of its Legal Support Service, a business must be small under the Act’s definition, must not be legally represented, and must have its matter actively managed by one of the Ombudsman’s case managers. Access depends on selection and on available funding.
The Ombudsman’s page on state-based Small Business Commissioners lists services in New South Wales, Victoria, Western Australia, South Australia and Queensland, and says it partners with them on small business disputes.
Where this line sits among the others
This line and the company reporting test both count to 100 employees, and both let a business past 100 stay small: here on revenue of $5,000,000 or less, there as long as a company’s revenue and gross assets both stay under their own lines. The tax test looks only at aggregated turnover.