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Increasing Compliance Activity – ATO Small Business Benchmark

There are many ways to improve your business’ performance. While a trip to the accountant is a great way to get professional help in the optimizing of business procedures, home calculations using tools such as the ATO’s small business benchmark data is also a great way to get valuable insight into how your business compares to others in the industry.

What are ATO Small Business Benchmarks?

The Small Business Benchmarks program is an ATO initiative involving the gathering and publishing of expense benchmarks per industry and business size. This data is compiled from tax returns of over 1.9 million business returns that are lodged each year. These benchmarks consist of costs, presented as a percentage compared to turnover. Listed expenses include:

  • Total expenses
  • Cost of sales
  • Cost of labour
  • Rent expenses
  • Motor vehicle expenses

These benchmarks are used by the government to identify business trends in the Australian economy, making it an incredibly useful tool to analyse your performance. ATO also identified businesses that fall outside of the benchmarks and may use that knowledge to initiate reviews or audits.

How can these benchmarks help me?

The ATO promotes these benchmarks to help small businesses compare their turnover with other businesses in the same industry. By doing some basic calculations, you can see how your business is performing in comparison to others in your field, and take action where you will find room for improvement.

To check your own benchmarks against the set of ATO data, you first need to compile your information in an orderly manner. This will include:

  • Gross business income
  • Salaries and wages
  • Vehicles
  • Interest
  • Costs of purchases and sales

You can then compare your business performance with the ATO benchmarks manually or via the ATO app.

Falling above or below the benchmark

If your ratios fall above the benchmark, it may be indicative of a low volume of sales or larger output of waste in comparison to others in the industry. If your ratio falls below the average, it may indicate that your business is more efficient than others in the industry. It is important to remember that these figures are all very general in nature and will not be applicable to the circumstances of each business in Australia. It’s always a good idea to seek advice and guidance from a professional in the field.

Improving business performance

If you are concerned about the performance of your business or would like a professional to review your business model and practices, speak to an accountant and get onto the path to success today. At BTMH, we can help you with creating business forecasts, plans, compliance and grants.

Consulting an expert

Navigating the world of business can be tricky, requiring experience and a certain degree of expertise. At BTMH, we can take your mind off taxes, so you can focus on what matters to you. Want to improve your business performance, cashflow or compliance? Book an appointment with us today.


Thomas Murmylo

Thomas is the Principal Tax Agent at BTMH. Unlike most in the accounting industry, Thomas takes a different approach when it comes to the management of his clients’ taxation and accounting needs. Thomas has helped local and international businesses to grow and prosper for more than 30 years.