Small to medium businesses are being warned to check the Australian Taxation Office (ATO) business benchmarks when completing their tax or business activity statements.
Whilst the benchmarks are there for a guide, those operating outside of the figures should have all records to validate their claims.
The increase in technology and data matching allows the ATO’s benchmarks to become more sophisticated and able to track claims correctly.
For example, if you are operating a bakery there’s an expectation of the percentage of labour cost (based on turnover). Let’s say 30%. If you are either significantly above or significantly below the 30% mark, the ATO may look further into what you are doing with your income to discover why your business is trading outside of the expected parameters. This may raise questions such as ‘are cash deposits being made?’ and ‘are all employees paid on the books?’
The benchmarks provide the ATO with an ability to quickly identify who is trading outside of the norms in their industry and determine where to direct additional scrutiny.
Generally, you should fall within the key benchmark range for your particular annual turnover, but it’s okay to be outside the benchmarks. They are there for a useful comparison but not every business falls within the average parameters for their particular industry and location.
Falling outside the key benchmarks for your industry may indicate your business has room for improvement. The team at AFS can help you improve your business and assist you in reaching the expected benchmarks set for a business within your industry. We offer personalised business services that can help you improve efficiencies, increase your cash flow and help you set and achieve your goals.
If you are interested in looking at your lodgements in comparison to the ATO’s expected benchmarks for your industry, please give us a call on 03 5443 0344.