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.