ATO’s small business benchmarks

The ATO’s small business benchmarks have recently been updated for the 2014 financial year. They cover over 100 industries and in particular the sort of cash industries the ATO love to audit.

The ATO use this as one of their main tools for identifying businesses to audit and actively select anyone well outside their norms. Please refer to the June 2012, 2013 and 2014 edition of Tips and Traps to see how the ATO has assessed substantial income tax and GST shortfalls as well as hefty interest charges and penalties.  They are eye watering amounts.

Their data is split into three groups based off turnover. They also have some regional and metropolitan ratios.

If the ATO has a small business benchmark for your business then we will discuss it with you in your annual general meeting. If you like to learn more though in the meantime you can go to:-

• The ATO’s you Tube clip at https://www.youtube.com/watch?v=KbS_l3Qm9b8
• The ATO’s introductory page at https://www.ato.gov.au/business/small-business-benchmarks/
• Our app which will take you to the these benchmarks. You can install our app by going to either iTunes or the Play Store and searching on Maggs Reid Stewart.

Before closing I must though express a personal view on benchmarks. They can be a great tool but must be used with care as:-

• You may not be comparing apples with apples. Even if the right industry has been selected there can be natural differences between say a newly established business and one establish some time ago.
• There is great danger in comparing oneself to a norm. It is not the average you should be comparing yourself to but the upper quartile.

I also wish to add that we are trialling some non-ATO industry benchmark software of which you will hear more later.

At MRS, we will spend today planning for your success tomorrow.

At MRS, we will spend today planning for your success.