Liberty Wealth Group

Small business benchmarks

Small business benchmarks

AttentionSmall business benchmarks update:
Benchmarks have been updated with data from the 2010–11 financial year. Benchmarks are updated annually using the latest available income tax data.

Small business benchmarks are financial ratios developed from information provided to us 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.

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 the ATO highlights the benchmark that the ATO uses to predict income or turnover.

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.

Businesses reporting outside the benchmarks may attract our attention. 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.

Find out more

For more information about how to meet your legal record-keeping requirements, including what records you need to keep for your daily business transactions, refer to Record keeping for small business.

End of find out more

The following types of benchmarks are published for the small business sector:

  • performance benchmarks – these provide financial ratios for different industries
  • input benchmarks – these show an expected range of income for tradespeople based on the labour and materials they use.

Source: The Australian Tax Office

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Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

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