Small business benchmarks are financial ratios developed from information provided to the ATO by businesses on their tax returns and activity statements. You can use the benchmarks to help you compare your performance against similar businesses in your industry.
The ATO has just updated every Small Business Benchmark; check them out at the ATO website
Benchmarks are published for businesses with different turnover ranges across more than 100 industries. They are generally published as a range, to recognise the variations that occur between businesses due to factors such as location and the businesses circumstances.
When you are running a business it can sometimes be difficult to establish whether your costs are more than they ought to be. Many business owners feel like the cost of goods, overheads and expenses eat into the profitability of their business.
The ATO has created benchmarks for so many businesses and they are adding new businesses all the time. The purpose is to help you, the Small Business owners to understand whether the amount you are spending on a certain aspect of your costs is similar to that of other businesses in your industry. Using ATO Benchmarks to improve your business
Businesses reporting outside the benchmarks may attract the attention of the ATO. There may be reasons for this difference, such as higher costs or lower selling prices than others in the industry, but it may also be an indication that a business is not recording and paying tax on all its transactions, especially cash transactions.
If you find you are outside the benchmarks for your industry, check that you have correctly recorded and reported income and deductions for your business. To do this you should review your record-keeping practices to ensure they meet the legal requirements.
The ATO uses benchmarks and other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income. If a business does not have evidence to support their return the ATO may also use the benchmarks to determine income that has not been reported. For each industry we highlight the benchmark that we use to predict income or turnover.
Check if your industry is included in the ATO’s Small business benchmarks
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