ATO benchmarks to help small business “swim between the flags”

The Australian Taxation Office (ATO) has released updated benchmark data to help small businesses across the country compare their performance with their competitors and “swim between the flags”. Assistant Commissioner Peter Holt said that businesses should use the benchmarks to gauge the strength of their business and keep an eye on their competition.

“We want small businesses to stay afloat, so our benchmarks are a great way to ensure your business is viable, competitive and not at risk of venturing into rough water. The benchmarks also help the ATO identify small businesses that may be doing the wrong thing and not properly reporting some or all of their income. Think of the benchmarks like the red and yellow flags on the beach. If you stay between the flags, you’ll be less likely to attract our attention.” Holt said.

Updated benchmark data for more than 100 industries is now available for the following categories:

  • accommodation and food
  • building and construction trade services
  • education, training, recreation and support services
  • health care and personal services
  • manufacturing
  • automotive electrical services
  • machinery and equipment repair and maintenance
  • architectural services
  • veterinary services
  • retail trade
  • transport, postal and warehousing.

The quickest and easiest way to work out how you compare is by using the business performance check tool in the ATO app, which does the calculations for you. The ATO app is available to download for free from the Google Play or Apple app stores.

“If your costs are within the benchmark range, you should be satisfied that you’re keeping up with your competition,” Holt said. “If you use a registered tax professional, it’s also a good idea to have a chat with them about where your business sits in comparison with our benchmarks. They might have some advice about steps you can take to improve your performance. We also encourage tax professionals to use the benchmarks to initiate conversations with their small business clients.”

He added, “Our benchmarks accommodate for these variations between businesses due to factors such as location and businesses types.”

Benchmark data is drawn from over 1.5 million small businesses around the country, which ensures businesses can confidently calculate the benchmark ranges for their industry.

“Businesses operating outside the benchmarks may trigger a red flag for businesses we suspect could be engaging in the black economy,” Holt said. “A frequent red flag is a business reporting minimal profit while the business owner seems to be maintaining a lifestyle far exceeding their personal income.”

The ATO has received significant funding to tackle the black economy and is increasing enforcement activity. The benchmarks are one of the tools the ATO is using to crack down on the black economy along with data matching and referrals from the community.

“The black economy is estimated to be costing the community as much as $50 billion, which is approximately three percent of Gross Domestic Product (GDP). This is money that the community is missing out on for vital public services, like life savers on the beach,” Holt said.

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