Microsoft 365 Guest Access & Compliance in Australia

Microsoft 365 guest access is often used for collaboration with external partners, service providers and customers. Microsoft 365 and Microsoft Teams guest access gives external users quick access to Teams, SharePoint or other applications. However, cathis requires caution, as guest access also carries considerable risks in terms of data protection and IT security.

In Australia the Protective Security Policy Framework (PSPF), the Information Security Manual (ISM) and the Privacy Act 1988 impose particularly strict data protection and compliance requirements.

Microsoft 365 guest management in particular shows that many companies are reaching their limits with native Microsoft 365 functions.

In this article I will show you

• what regulatory requirements apply to Microsoft 365 guest access in Australia,
• what risks often arise in practice,
• and how Australian companies can use External User Manager to manage their guest access securely, automatically and in compliance.

In addition, I will introduce you to our local partner OneDot61, who supports Australian companies in the implementation and integration of security solutions.

1. Regulatory Framework for Microsoft 365 Guest Access in Australia

Australian companies must ensure compliance with national data protection and security standards when using Microsoft 365.

Three frameworks are particularly relevant:

• The Protective Security Policy Framework (PSPF) requires strict control over who has access to sensitive data.
• The Information Security Manual (ISM) requires detailed technical measures such as multi-factor authentication, data residency in Australia and regular reviews of access permissions.
• The Privacy Act 1988 requires companies to document all accesses and their justification and to provide evidence in the event of an audit.

In Australia, these requirements make it necessary not only to enable guest access in Microsoft 3655, but also to manage it actively and transparently.

When external users access Teams, SharePoint or other M365 resources, this means:

• Clear assignment of permissions
• Comprehensible invitation and approval
• Proof of access duration and purpose
• Protection of data residency (Australia as storage location)
• Use of secure authentication procedures (e.g. MFA)

2. Challenges with native Microsoft 365 Guest Access

The standard functions of Microsoft 365 quickly reach their limits when implementing Australian compliance requirements:

• Manual invitations: By default, any Team owner can invite guests. IT has no central control over this.
• No central overview: There is no dashboard with a complete overview of all M365 guests.
• Lack of automation: Regularly checking and removing guest access is time-consuming and error-prone.
• Security risks due to orphaned guest accounts: Guest accounts that are no longer needed remain and pose a risk.
• Missing or insufficient evidence: Audit trails and reports (e.g. when a guest was invited, confirmed or deleted) are missing or have to be created manually.
• Data storage cannot be controlled: Control over storage location and data flow is only possible to a limited extent.

These points are not only problematic for the structure in the Microsoft 365 environment, but also compliance-relevant, especially with regard to PSPF and the Privacy Act.

3. Best Practices for Guest Access Management in Australia

To keep Microsoft 365 guest access secure and compliant, Australian organizations should follow these best practices:

• Define clear policies: Define who can invite guests, what approval processes are required and what data can be accessed.
• Use automated workflows: Use tools such as External User Manager to automate invitations, access reviews and offboarding processes and minimize manual errors.
• Perform regular access reviews: Review all guest access at least every 90 days to remove orphaned or unneeded accounts.
• Make multi-factor authentication (MFA) mandatory: MFA protects against unauthorized access, especially for external users.
• Transparent documentation and reporting: Ensure complete audit trails to be able to prove compliance requirements at any time.

With these best practices, you can reduce security risks while ensuring efficient collaboration with external partners.

Read more about how to use Microsoft 365 securely and compliantly here: Microsoft 365 Governance in Australia

4. Compliance Solutions with External User Manager from Solutions2Share

External User Manager offers a comprehensive solution to make guest access in Microsoft 365 secure, efficient and compliant for Australian companies:

Automated approval processes

• Domain and role-based control: Only authorized partners and guests are granted access.
• Approval workflows: Every guest goes through a multi-step approval process that meets PSPF and ISM requirements.

Lifecycle management and offboarding

• Automatic access review: Guest access is regularly reviewed at predefined intervals.
• Time-controlled access rights: Guest users can be automatically removed based on predefined lifecycles or inactivity.

Audit trails and reporting

• Complete documentation: All access, approvals and offboardings are automatically logged.
• Detailed reports: Fulfillment of the verification requirements of the Privacy Act 1988.

MFA and security

• Multi-factor authentication: External User Manager can enforce the MFA requirement for guests.
• Data residency: supports the requirement for sensitive data to be stored exclusively in Australian data centers.

5. Working with our Australian Partner OneDot61

We work with our local partner OneDot61 to provide Australian companies with the best possible support in implementing their compliance requirements. OneDot61 has extensive experience in cybersecurity and Microsoft 365 in Australia and is familiar with the specific regulatory framework.

Through this partnership you benefit from:

• Local expertise: OneDot61 knows the requirements of the Australian market and offers customized advice on PSPF, ISM and Privacy Act compliance.
• Fast implementation: Microsoft 365 security solutions can be implemented professionally and quickly.
• Direct support: You have your personal contact person directly on site.

The combination of local experience and Solutions2Share’s proven solution ensures that all Australian data protection and compliance requirements are met.

6. Comparison: Native Microsoft 365 vs. External User Manager

Function	Native M365 functions	External User Manager
Approval workflow for invitations	❌	✅
Central overview of all guests	❌	✅
Time-limited access rights	❌	✅
Automated offboarding	❌	✅
PSPF/ISM compliance	Restricted	✅
Audit trails and reporting	Restricted	✅
MFA enforcement for guests	Partial	✅
Data storage in Australia	Only with configuration	✅

See also: External User Manager vs Microsoft out-of-the-box features

7. FAQ: Microsoft 365 Guest Access and Compliance in Australia

The External User Manager is the ideal solution for Australian companies that want to manage Microsoft 365 guest access securely, efficiently and in compliance with the law.

In cooperation with our partner OneDot61, we support you in planning and implementation.

Let us show you how External User Manager can help you with compliance