ATO updates benchmark data to help businesses stay afloat

The Australian Taxation Office (ATO) has released updated benchmark data to help small businesses across the country compare their performance with their competitors and ‘swim between the flags’.

Assistant commissioner Peter Holt said that businesses should use the benchmarks to gauge the strength of their business and keep an eye on their competition.

"We want small businesses to stay afloat, so our benchmarks are a great way to ensure your business is viable, competitive and not at risk of venturing into rough water," Mr Holt said.

The benchmarks also help the ATO identify small businesses that may be doing the wrong thing and not properly reporting some or all of their income.

"Think of the benchmarks like the red and yellow flags on the beach. If you stay between the flags, you’ll be less likely to attract our attention," Mr Holt said.

According to ATO, the quickest and easiest way to work out how you compare with other businesses is by using the performance check tool in the ATO app. The ATO app is available to download for free from the Google Play or Apple App stores.

"If your costs are within the benchmark range, you should be satisfied that you’re keeping up with your competition," Mr Holt said.

He advised that small businesses that are using a registered tax professional should have a chat with them about where their business sits in comparison with the ATO's benchmarks.

"They might have some advice about steps you can take to improve your performance. We also encourage tax professionals to use the benchmarks to initiate conversations with their small business clients," Mr Holt added.

"Clearly, a coffee shop in Caloundra will have vastly different operating costs to a panel beater in Perth. Our benchmarks accommodate for these variations between businesses due to factors such as location and businesses types."

Benchmark data is drawn from over 1.5 million small businesses around the country, which ensures businesses can confidently calculate the benchmark ranges for their industry.

Businesses operating outside the benchmarks may trigger a red flag and be suspected of engaging in the black economy.

"A frequent red flag is a business reporting minimal profit while the business owner seems to be maintaining a lifestyle far exceeding their personal income," Mr Holt clarified.

The ATO has received significant funding to tackle the black economy and is increasing enforcement activity. The benchmarks are one of the tools the ATO is using to crack down on the black economy along with data matching and referrals from the community.

The black economy is estimated to be costing the community as much as $50 billion, which is about 3 per cent of gross domestic product.