888 Business Innovation Stream: 2-out-of-3 Test and Turnover Rules (2026)
How the subclass 888 Business Innovation stream measures net assets, employees and turnover under the 2-out-of-3 test.
The Business Innovation stream of the Subclass 888 (Business Innovation and Investment (Permanent)) visa does not require you to clear every financial benchmark. Under clause 888.225 of the Migration Regulations 1994, as reflected in the Department of Home Affairs' Procedures Advice Manual (PAM3) guidance for Subclass 888, an applicant generally must meet at least two of three tests — AUD 300,000 in net business assets, at least two full-time local employees, and AUD 900,000 in combined net personal and business assets — and must also meet the separate turnover requirement in subclause 888.225(5). Threshold amounts and clause wording should always be confirmed against the current official text, which is the authoritative version.
In practice, most applications turn on measurement rather than on the headline numbers: which assets can be counted, whose hours count, and how turnover is derived from BAS figures.
What does the 2-out-of-3 test actually require?
Clause 888.225(1) sets the structure: if the nominating State or Territory government agency has not determined that there are exceptional circumstances, the requirements in at least two of subclauses (2) to (4) must be met, and the requirement in subclause (5) must also be met. The three optional tests are:
- Net business assets of at least AUD 300,000 (subclause 888.225(2));
- Employment of at least two full-time employees (subclause 888.225(3));
- Net personal and business assets totalling at least AUD 900,000 (subclause 888.225(4)).
The turnover requirement sits on top of the two you choose; it is not one of the three options. This test also operates alongside other stream criteria — continuous ownership of a main business for the 24 months before application (clause 888.222), an ABN and BAS history (clauses 888.223 and 888.224), residence in Australia for a cumulative period of at least one year in the two years before application, counted only while the applicant held a qualifying Subclass 188 visa (clause 888.221), a genuine commitment to continue business activity (clause 888.213), and a satisfactory record of compliance with Australian tax, superannuation and workplace laws (clause 888.214).
How are net business assets counted toward the AUD 300,000?
Only net assets held in the main business are counted for this test. Personal assets sit outside it, which is why the same asset base can look very different under subclause (2) and subclause (4).
Net business assets are measured with snapshots taken at the start and at the end of the 12-month assessment period, supported by documents such as a balance sheet and a statement of assets and liabilities (SALP). Because the figure is a point-in-time measure, an asset bought and sold inside the window will not rescue the closing snapshot.
Assets must also be lawfully acquired (subclause 888.225(2)(c)). Where the source of funds is not clear from bank statements, financial statements or valuation reports, decision-makers can request further information before accepting the figure.
Who counts as one of the two full-time employees?
The employment test is expressed as continuous employment of at least two full-time employees during the 12 months before application. Two exclusions do most of the work here: the employees must be Australian citizens, Australian permanent residents or New Zealand citizens, and they cannot be the applicant or members of the applicant's family.
"Continuous" is the part that is usually tested. A pair of employees engaged for only part of the 12-month window, or a role split between two part-time staff, does not automatically produce two full-time positions for the whole period.
How is the AUD 900,000 combined figure built?
Subclause 888.225(4) pools net personal assets and net business assets into one total. This is the broader measure, and it is where assets outside the main business become relevant — personal assets may include assets of other businesses.
The same snapshot discipline applies: documentation at both the start and the end of the 12-month period, and the same requirement that assets be lawfully acquired. An applicant who narrowly fails the AUD 300,000 business-only test may still reach AUD 900,000 once personal assets are added, which is a common reason to plan around this pair rather than the other two.
How is turnover calculated for the Business Innovation stream?
Two calculation rules matter under subclause 888.225(5). First, the 12-month period used for turnover does not have to be a financial year — it is any 12-month period within the required timeframe. Second, where BAS sales figures include GST, 10% is deducted to arrive at turnover. An applicant who reads a BAS total as turnover will overstate the figure.
Turnover also drives the ownership percentage required under clause 888.222: at least 51% where the business has an annual turnover below AUD 400,000, at least 30% where annual turnover is at least AUD 400,000, and at least 10% for a publicly listed company.
How do the three measurements line up?
| Test | What is counted | Threshold | Measurement basis |
|---|---|---|---|
| Net business assets | Net assets of the main business only | AUD 300,000 | Snapshots at start and end of the 12-month period; balance sheet and SALP; assets lawfully acquired |
| Employees | Full-time Australian citizens, permanent residents or New Zealand citizens, excluding the applicant and family | 2 employees | Continuous employment across the 12 months before application |
| Net personal and business assets | Net personal assets combined with net business assets; personal assets may include other businesses | AUD 900,000 | Snapshots at start and end of the 12-month period; assets lawfully acquired |
| Turnover (separate) | Sales for any 12-month period, GST excluded | Set by subclause 888.225(5) | BAS sales less 10% where GST is included; period need not be a financial year |
What sits underneath all three tests?
The financial tests are assessed on a business the applicant has owned continuously for the 24 months before application. That ownership interest must meet the percentage applicable to the business's turnover band or listing status, and the anti-circular purchase rule applies: acquiring a main business from another Subclass 888 or associated visa applicant is generally excluded unless the parties held it together for at least one year and the applicant's interest was not less than 30%. A statutory declaration from the seller is one way the point is commonly documented.
The business must also hold an ABN and have lodged BAS covering at least two years. Where a BAS copy does not show a "Processed" status, decision-makers are expected to take a flexible approach and accept an ATO-issued copy of the lodged statement. Tax, superannuation and workplace-law compliance are assessed in their own right under clause 888.214, so a business that meets the numbers but carries unresolved compliance issues still faces risk.
Which two should you plan around?
Start from the pair you can document at both ends of the window rather than the pair that looks closest on paper. Employee records and payroll are usually the cleanest evidence of the three; asset snapshots depend on valuation timing, and personal-asset inclusions depend on how clearly ownership is documented.
If only one of the three can be met, the route is the exceptional circumstances determination under clause 888.226 — and that determination is made by the nominating State or Territory government agency, not by the applicant. Clause 888.225(1) applies only where the nominating agency has not made such a determination; where it has, the two-out-of-three plus turnover route is not the test being applied. Because the determination is made by the nominating State or Territory government agency, an applicant cannot substitute their own assessment of exceptional circumstances.
This article describes the general rules only and is not advice on your own circumstances; the current official texts and any professional advice you obtain should govern how you apply them.
Frequently Asked Questions
Can I pass the 2-out-of-3 test by meeting only one of the three?
No, not on the ordinary route. Clause 888.225(1) requires at least two of subclauses (2) to (4) to be met where the nominating State or Territory agency has not determined that exceptional circumstances exist. The alternative is an exceptional circumstances determination under clause 888.226, which is made by the nominating agency.
Do family members count toward the two full-time employees?
No. The employees must be Australian citizens, Australian permanent residents or New Zealand citizens, and the applicant and members of the applicant's family are expressly excluded. Contractors and part-time arrangements also need to be tested against the full-time and continuous requirements over the 12 months before application.
Is turnover measured over the financial year?
Not necessarily. The 12-month period used under subclause 888.225(5) does not have to align with a financial year. Where BAS sales figures include GST, 10% is deducted to work out turnover, so the BAS total is not the turnover figure.
What documents show assets at the right point in time?
Decision-makers look for snapshots at both the start and the end of the 12-month period, typically a balance sheet and a statement of assets and liabilities (SALP). Net business assets cover the main business only, while net personal assets may include assets of other businesses.
How does buying a business from another 888 applicant affect the test?
The business must have been owned continuously for the 24 months before application, and the anti-circular purchase rule restricts acquisitions from another Subclass 888 or associated visa applicant. Such a purchase is generally excluded unless the parties held the business together for at least one year and the applicant's interest was not less than 30%.
What if my BAS does not show a "Processed" status?
PAM3 guidance directs decision-makers to take a flexible approach here. An ATO-issued copy of the lodged statement can be used where the original record does not display the status, and the ABN must be held in the name of the main business.