Business Innovation Stream 888 in 2026: Anti-Circular Purchase Traps

Buying your main business from someone else who is already in the Subclass 888 queue is not automatically fatal, but it survives only through one narrow exception. Under clause 888.222(2) of Schedule 2 to the Migration Regulations 1994 (Cth), the main business must not have been acquired from another Subclass 888 or DF visa applicant unless the two of you held the business jointly for at least one year and your interest was not less than 30%. That rule, together with the ownership, tax and financial criteria built around it, is set out in the Migration Regulations 1994 as published on the Federal Register of Legislation, the Department of Home Affairs’ Subclass 888 visa listing page and its PAM3 procedural guidance; the figures and the commencement status that bind you are the ones in the current text of those pages at the time you lodge.

This article explains how that restriction is structured and what it does to a transaction. It is general information about the shape of the criteria, not an assessment of any particular deal, and a purchase of this kind touches migration, tax and corporate law at the same time — for a specific transaction, the official wording and a qualified professional’s view on your own facts are what should govern.

Can you buy a business from another 888 applicant at all?

Yes, but the exception is drafted as a joint-holding carve-out rather than a general permission, and most conventional acquisitions fail it.

An ordinary sale-and-purchase — you sign a contract, settle, and take 100% of the shares from a seller who happens to be a Subclass 888 or DF applicant — is caught squarely by clause 888.222(2). Nothing in the rule turns on whether the price was commercial, whether the business is genuinely trading, or whether the seller’s own application succeeded. The trigger is the identity of the seller.

The only escape is co-ownership: the same business held by both of you for at least a year, with your stake at 30% or above. If your structure cannot produce that history, the business you just bought simply does not work as your nominated main business.

Purchase structure	Does 888.222(2) disqualify it?	What you still have to prove
Outright purchase from another Subclass 888 or DF applicant, no prior co-ownership	Yes — the acquisition is prohibited for the purposes of the ownership test	Nothing rescues it for this business; a different main business is needed
Purchase from a co-owner after the two of you held the business jointly for at least 1 year, with your interest at 30% or more	No — the carve-out applies	Continuous ownership across the 24 months before application, at the share threshold that matches turnover
Purchase from a seller who is not a Subclass 888 or DF applicant	The rule is not triggered	Continuous 24-month ownership, ABN and BAS coverage, and that the funds were lawfully acquired

Why is the exception built around joint holding?

The most sensible reading is that the rule targets churn, not commerce. A business that has already carried one person through the 188-to-888 pathway can, in theory, be sold to the next applicant, who runs it for a period and then sells it on again — with each buyer presenting essentially the same asset base, the same turnover and the same staff. The prohibition cuts that cycle.

A genuine joint venture looks different from that cycle. If you and the seller were both exposed to the business for a year, at a meaningful stake, the arrangement has the characteristics of an operating partnership rather than a handover timed to an application. That is what the 12-month and 30% conditions appear to be testing.

Two drafting details matter here. The exception is written as a condition on the acquisition, not as a substitute for anything else — so satisfying the joint-holding test removes the disqualification, but the separate ownership, residence, tax and financial criteria still apply to you in full. And the percentage is a floor, not an average: the interest needs to sit at 30% or above across the joint-holding period, not merely reach it on the settlement date.

How does a mid-stream purchase collide with the 24-month ownership clock?

Clause 888.222 requires you to have owned an interest in the main business continuously for the 24 months before you apply, and the size of the interest you need depends on turnover: at least 51% where the business’s annual turnover is under AUD 400,000, at least 30% where turnover is AUD 400,000 or more, and at least 10% if the business is a publicly listed company.

That is where a badly timed purchase does its damage. If you acquire at month 14 of your intended window, the continuity of your interest in that business starts at month 14, and the earlier 14 months were spent owning something else. PAM3 records that the 24-month period can be satisfied by continuously owning different businesses, and that a short interruption can be a matter for officer judgment — so a replacement business is not inherently impossible. But it compresses your margin: you now need the new business to carry the ABN, the BAS history, the employment record and the financial metrics from the acquisition date, inside a window that has already lost 14 months.

The practical consequence for deal design is that the purchase date is a migration decision, not just a commercial one. A buyer who settles early in the 188 period keeps the full measurement window intact; a buyer who settles late is effectively betting that the officer accepts a chain of different businesses with a gap in it.

What if the seller is not a 888 or DF applicant?

Then clause 888.222(2) is not engaged, and the acquisition is assessed like any other change in the shareholding of your main business.

You still carry the burden of showing that the rule does not apply. PAM3’s guidance on ownership evidence refers to obtaining a statutory declaration from the previous seller confirming that they are not a Subclass 888 or DF applicant. In practice that declaration is worth obtaining at signing rather than after settlement, because by then the seller’s willingness to sign anything is a matter of goodwill rather than contract.

The rest of the ownership file is documentary: company registration records, shareholder agreements and board resolutions showing the percentage you held and when, ASIC or register extracts covering the whole period, and a shareholding timeline that matches the nominal main business rather than a parent, trust or holding entity sitting above it.

How does the acquisition flow through the three financial tests?

The financial criteria in clause 888.225 are drafted as two of subclauses (2) to (4) plus the turnover requirement in subclause (5), and that combined requirement applies unless the nominating State or Territory agency has determined that exceptional circumstances exist under clause 888.226, in which case the turnover requirement in subclause (5) is the requirement that must be met.

The three alternatives are:

Net business assets of at least AUD 300,000, counting only net assets held in the main business;
Employment of at least two full-time employees over the 12 months before application, each an Australian citizen, permanent resident or New Zealand citizen, and none of them the applicant or a family member;
Net personal and business assets of at least AUD 900,000, which may include business assets outside the main business.

An acquisition distorts all three, in different ways. The business-asset test is measured from snapshot documents — a balance sheet and a statement of assets and liabilities position (SALP) — taken at the beginning and the end of the 12-month measurement period. A purchase inside that window changes both sides of the comparison, and goodwill, plant and stock acquired on settlement have to be documented at the value claimed rather than assumed. The net-asset test is more forgiving of structure, because it can draw on assets held elsewhere. The employment test is the least forgiving: the two employees have to be employed in the 12 months before application, and a business bought three months out cannot manufacture that history.

Turnover has its own arithmetic. The 12-month period used for the measurement does not have to be a financial year, and where the BAS sales figure includes GST, the GST component (10%) is excluded in calculating turnover. For a business acquired partway through the relevant year, the sales recorded on the BAS will include a period when you had no economic interest in it — which makes the apportionment, and the underlying settlement documents, worth preparing rather than leaving to inference.

Where do circular deals actually get refused?

Refusal records reflect three recurring patterns, and they tend to arrive together.

The first is the ownership finding itself: the interest was below the required percentage, it was not held continuously for 24 months, or the business was acquired from another Subclass 888 or DF applicant without the joint-holding conditions being met. This is a criteria failure, and it is not curable by argument about the commercial sense of the deal.

The second is a knock-on failure of the financial criteria. A buyer who spends heavily on goodwill can arrive at the measurement date with a business-asset figure below the threshold, having converted an asset test they would have passed into one they cannot.

The third is evidential. Clause 888.225 requires business assets to have been lawfully acquired, and the guidance on natural justice notes that where the lawfulness of an asset source is in doubt, further information may be requested. A purchase funded through layered entities, related-party loans or an unclear remittance trail invites exactly that request, and the answer has to be a fund path rather than a description of one.

Two broader criteria sit behind these. Clause 888.211 requires that the applicant, their spouse or de facto partner, and certain associated persons not have a history of involvement in business or investment activities of a kind not generally acceptable in Australia, and clause 888.214 requires that those persons have a satisfactory record of compliance with Commonwealth, State and Territory law, including tax, superannuation and industrial relations, when operating a business and employing staff in Australia. A structure built to move a business between applicants is poorly placed if either provision is examined closely.

What should a pre-signing check cover?

Work through the following in order, before the contract becomes unconditional.

Ask the seller, in writing, whether they hold or have applied for a Subclass 888 or DF visa.
Ask for a statutory declaration from the seller confirming that status.
Obtain the shareholder register and company extracts for the full 24 months before your intended lodgement date.
Confirm your post-settlement interest clears the 51%, 30% or 10% threshold that matches the business’s turnover.
Map the 24-month ownership window on a calendar and mark every change in shareholding, including internal transfers.
Confirm the ABN is registered to the entity you intend to nominate as the main business.
Confirm that BAS lodged for that entity covers the full two-year period.
Recompute the three financial tests on the post-acquisition structure, not the pre-acquisition one.
Prepare the balance sheet and statement of assets and liabilities position for the start and end of the 12-month measurement period.
Assemble the contract, settlement statement and fund trail as the lawfully-acquired evidence for the money used.

Does the State or Territory nomination survive the deal?

The nomination is a separate criterion and it does not travel automatically with a change of business. Clause 888.212 requires that the nomination by the State or Territory government agency, or Austrade, has not been withdrawn, and the evidence of a still-current nomination — a valid Form 1414 is the example given in the guidance — forms part of the file. Where an applicant changes business or address, the nominating agency’s records are the ones that need to reflect it.

The same agency also holds the exceptional-circumstances lever under clause 888.226. If a purchase leaves you unable to meet two of the three financial tests, the question of whether the turnover requirement alone can carry the application is a determination for the nominating State or Territory agency, not something an applicant can self-assess. That makes the timing of the acquisition relevant to the nomination as well as to the 24-month clock.

Frequently Asked Questions

Can I buy the business from a co-owner who is also applying for a 888 visa?

Yes, if the two of you held the business jointly for at least one year and your interest was not less than 30%. The joint holding is what clause 888.222(2) requires; without it, an acquisition from another Subclass 888 or DF applicant does not satisfy the ownership criterion.

Does the 30% threshold apply throughout the joint-holding year?

The requirement is framed as an interest of not less than 30% held jointly with the other person for at least one year. Treating it as a floor you must maintain, rather than a figure to reach at settlement, is the safer reading, and your shareholding register should show it continuously.

Do I still need 24 months of ownership if the joint-holding exception applies?

Yes. The carve-out removes the prohibition on the acquisition; the separate requirement in clause 888.222 to have owned the interest continuously for the 24 months before application still has to be met. In practice, the joint-holding year needs to sit inside the same continuous window you rely on.

What if the seller has never held a 188 or 888 visa?

Clause 888.222(2) is directed at acquisitions from another Subclass 888 or DF visa applicant, so a seller outside those classes does not trigger it. You should still obtain evidence of the seller’s status — the guidance refers to a statutory declaration from the previous seller — because the ownership file has to show why the rule is not engaged.

Is GST counted in the turnover figure?

No. Where the sales figure on the BAS includes GST, the GST component of 10% is excluded when turnover is calculated. The 12-month period used for the measurement also does not have to be a financial year.

What happens to my State nomination if I change businesses?

Clause 888.212 requires the nomination to remain in force at the decision, and the applicant carries the evidentiary burden of showing it has not been withdrawn. A change of business or address needs to be reflected in the nominating agency’s records, and any exceptional-circumstances determination under clause 888.226 is made by that agency.

Can exceptional circumstances rescue a purchase that breaks the financial tests?

Clause 888.226 allows the nominating State or Territory agency to determine that exceptional circumstances exist, which changes what has to be met under clause 888.225. It is a determination made by that agency on the facts, not an option an applicant can elect, and it does not affect the ownership criteria in clause 888.222.

Are the thresholds in this article the current ones?

They are the figures set out in clause 888.222 and clause 888.225 of the Migration Regulations 1994, and they can be amended. Before lodging, read the current text of clause 888.222 and clause 888.225 in the Migration Regulations 1994 on the Federal Register of Legislation, together with the Department of Home Affairs’ Subclass 888 page, and confirm the figures against those.