How does this Affect You?
The ATO has advised that their small business benchmarks have been updated with data from the 2010/2011 financial year. Their benchmarks are updated annually using the latest available income tax data.
Small business benchmarks are financial ratios developed by the ATO to help compare the performance of similar businesses in an industry. The ATO based these benchmarks from information provided by businesses in their tax returns and activity statements.
The benchmarks can be used to compare a business’s performance against similar businesses in their industry, and also provide guidance on what figures the ATO expects a business in a particular industry to normally report.
The ATO has developed and published benchmarks for businesses with different turnover ranges (of up to $15 million) across more than 100 industries. Business reporting outside these benchmarks may attract the ATO’s attention. There may be reasons for the difference, such as higher costs or lower selling prices than others in the industry, but it also may be an indication that a business is not recording and paying tax on all its transactions, especially cash transactions.
Do you need help with small business benchmarks? The tax accountants at The Quinn Group can help you liaise with the ATO regarding the benchmark for your industry if it’s unrealistic. Contact us on 02 9223 9166 or submit an online enquiry.