ATO’s use of small business benchmarks (May 2024 Tax Update)

Relevant For:

Small business owners, financial managers, and advisors interested in understanding and utilising ATO benchmarks for compliance and performance assessment.

Key Points:

  • ATO has updated small business benchmarks for the 2021-2022 income year to aid comparison and identify tax avoidance.
  • Benchmarks span nine categories including accommodation, construction, healthcare, and more, with specific subcategories.
  • Five key ratios calculated: total expense, cost of sales, labour, rent, and motor vehicle expenses as percentages of turnover.
  • Businesses can use ATO’s Business Performance Check tool or manual calculations to compare their ratios against benchmarks.
  • Businesses within benchmark ranges are usually compliant; those outside should identify and assess discrepancies.

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