Business benchmarks are a guide to help you compare your business’s performance against similar businesses in the same industry. These ATO published benchmarks are financial ranges to help compare your business’s performance against others in your industry.
Performance benchmarks are financial ranges for your industry to help you work out how you compare to other businesses in your industry and if you need to make any improvements.
There are two types of performance benchmark ranges:
- income tax – from information provided by businesses on their tax returns
- activity statement – from information provided by businesses using complete financial year activity statement data.
Tax return benchmark ranges include:
- cost of sales to turnover (excluding labour)
- total expenses to turnover
- rent to turnover
- labour to turnover
- motor vehicle expenses to turnover.
Activity statement benchmark ranges include:
- non-capital purchases to total sales
- GST-free sales to total sales.
Use the business performance check
The easiest and quickest way to see how your business compares to competitors is by using the business performance check tool.
Just enter your details in the tool, and it will calculate and compare the data you entered using the benchmarks to quickly show how your business compares to your competitors.
Download the app and compare
You can find the business performance check tool by:
- downloading the ATO app from Google Play, the Windows Phone Store or the Apple App Store
- go to Business
- select Business performance check
- have your information ready and enter the figures into the tool
- compare your business performance.
The personal information you enter isn’t recorded and will only be used for completing the tool.
See also:
- See How to compare your business performance manually to find out how you can calculate your benchmark manually.
What it means to be outside the benchmark
Your benchmark might be above or below the range for your business turnover in your industry. There could be a number of reasons why this has happened, including:
- you are only starting up or winding down your business
- higher costs or lower selling prices than your competitors
- your geographic location as compared to your competitors.
When the ATO see a business significantly outside the key benchmark range for their industry, it doesn’t necessarily mean you have done anything wrong but it may lead to an ATO audit or review as they use benchmarks and other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some (or all) of their income.
Information reported in your tax returns or activity statements is compared with the key performance benchmark for your industry, based on:
- your business industry code
- the description of the main business activity on your tax return
- the trading name of your business.
The lesson out of all this is that an review of your business performance against ATO benchmarks should be performed periodically and ensure you are able to justify the reasons you may fall outside the benchmarks
If you require help in benchmarking your business, please let us know
