The most common and most likely answer to this crossword clue is the 7 letter word JUMBUCK
I've seen this crossword clue in Independent
J
U
M
B
U
C
K
Buddy explains!

The straight part
We know that "sheep in Australia" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case sheep in australia = jumbuck.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does JUMBUCK mean?
JUMBUCK noun- A sheep.