Category: ATO

Is your business on an ATO radar? Use ATO benchmarking to find out …

What do you do to keep your finger on the pulse of your business?  A quick check of the bank balance perhaps?  A walk around the factory floor?  Every business owner has their own way(s) of determining how well their business is performing. Successful business owners have a firm grip on how their business is performing and how it should be performing.

As a business owner, it’s always good to get your hands on business benchmarking information for comparison purposes.  Finding good benchmark data is easier said than done though! Compiled from tax returns and Business Activity Statements, the ATO has some basic benchmark data available for small business, and it’s worth taking a look.

The ATO benchmarking data is handy for a couple of reasons.  As well as providing you with an idea of how your business performs against others in your industry and turnover range, it seems that you will also find out if your business is on an ATO radar.  According to the ATO, businesses operating outside their key benchmark range “may be contacted” by the ATO. Useful to know? – yes!

I recently found the ATO small business benchmarks  to be a useful guide for a client of mine (as below). I discovered that the business is performing and reporting inside the benchmark ratio zones.  So just based on this, the business would not fall on an ATO target list. Additionally, labour levels form part of our regular business monitoring, so it’s also interesting to note that my client’s labour levels are less than the industry average (21% v 27%).  And it’s always good to know that motor vehicle expenses are on the lower side of “normal”!

ATO Benchmark Ratio Name

ATO Industry Benchmark Ratio

Client Business Ratio

Rating
Labour/ Turnover

21% – 32%

21%

GOOD

Average Labour

27%

21%

GOOD

Total Exps/ Turnover

84% – 93%

87%

GOOD

Average Total Exps

89%

87%

GOOD

Non Capital Purchases (BAS)/ Total Sales

51% – 65%

65%

GOOD

Motor Vehicle Exps / Turnover

4%-25%

12%

GOOD

I recommend that you develop ways of having a strong, reliable “finger on the pulse” of your business.  Why not compare your business’ results against the ATO benchmark ratios and see how your business measures up?  I’m more than happy to quickly run the numbers for your business, just ask!  A small donation to my fundraising page as a token of appreciation would be greatly appreciated.