Businesses looking to access contracts through a government Indigenous support program must now be majority First Nations owned or controlled, or specifically registered as a First Nations operation.
The new measures which came into effect from Wednesday were introduced to stop non-Indigenous companies from 'black cladding' - or presenting as Indigenous when they are not - in order to win contracts through the Federal government's Indigenous Procurement Policy (IPP).
Businesses wanting to access Commonwealth contracts under the IPP will now either need to be 51 per cent or more First Nations owned and controlled, or registered with the Office of the Registrar of Indigenous Corporations.
A target for government agencies to buy from First Nations businesses also increased 3.25 per cent from Wednesday, and will continue to increase by 0.25 per cent each year until it reaches 4 per cent by 2030.
Previously, businesses only needed to be 50 per cent Indigenous controlled in order to access the scheme.
The changes aim to help ensure economic benefits are flowing to First Nations people as intended and support economic self-determination for First Nations business owners.
From Wednesday, a transition period will support businesses to take the necessary steps to ensure they align with the new requirements.
Since being introduced in 2015, the IPP has helped direct more than 91,000 contracts worth over $14.2 billion awarded to more than 4,900 First Nations businesses.
However, concerns have been raised about non-Indigenous businesses potentially taking unfair advantage to win otherwise inaccessible Indigenous deals.
Indigenous Australians Minister, Senator Malarndirri McCarthy said the approach aimed to ensure First Nations business owners were empowered to run their businesses and exercise their rights as majority owners.
"Strengthening the Indigenous Procurement Policy is about ensuring First Nations people are not just participating, but genuinely leading and benefiting from the success of IPP contracts," Senator McCarthy said.
"By moving to a 51 per cent ownership and control requirement, we are backing First Nations entrepreneurs to exercise full authority over their businesses.
"This approach balances certainty with opportunity, ensuring the IPP continues to deliver real economic empowerment and lasting outcomes for First Nations businesses."