ATO's Updated Small Business Benchmarking Tool

ATO’s Small Business Benchmarks

The ATO has updated its small business benchmarks with the latest data taken from the 2022–23 financial year. These benchmarks cover 100 industries and allow small businesses to compare their performance, including turnover and expenses, against others in their industry.

Types of Benchmarks

Performance Benchmarks:

Tax return benchmark ranges from information provided by businesses on their tax returns.
Activity statement benchmark ranges from information provided by businesses using complete financial year activity statement data.

Tax return benchmark ranges:

Cost of sales to turnover (excluding labour).
Total expenses to turnover.
Labour to turnover.
Rent to turnover.
Motor vehicle expenses to turnover.

Activity statement benchmark ranges (before 1 July 2017):

Non-capital purchases to total sales
GST-free sales to total sales.

Information taken from the ATO’s website

While the ATO doesn’t use the benchmarks in isolation, small businesses who fall outside the ATO’s standards are more likely to trigger a closer examination from the ATO. The ATO uses information reported in business tax return with key performance benchmarks for the relevant industry to identify potential tax risks.

Aside from determining the risk of unwanted attention from the ATO, the benchmarks can also be used to compare your business performance against other businesses in the same industry. The benchmarks could help you spot areas where you might be able to reduce costs or improve efficiency.

ATO’s Business Viability Assessment Tool

The ATO also has a business viability assessment tool which can help business owners identify whether there are any obvious financial risks.

The ATO consider a business to be viable if it is generating sufficient profits to meet commitments to creditors and provide a return to the business owners.

If a business isn’t generating profits, the ATO looks at whether the business has sufficient cash reserves to sustain itself.

How to use the Business Viability Assessment Tool

Have the following documentation ready before completing the assessment:

Statement of financial performance (or profit and loss statements).
Statement of financial position (or balance sheet).
Aged creditor listing.
Aged debtor listings.
Total monthly repayment amount for all debt commitments. This includes your bank overdraft and any loan facilities (for example, term loans, bank bill facilities, hire purchase, lease agreements).

Now, you’re ready to fill in the assessment. You’ll then receive a report with an overview of your business’s viability.

Information taken from the ATO’s website

Want to review your business performance? Get in touch with your Aintree Group adviser today!

This is general advice only and has not been prepared with your individual situation or needs in mind. For personalised advice, we highly recommend that you seek professional guidance from a qualified adviser.