The Australian Taxation Office has spent considerable time and money over the past few years to formulate Industry Benchmarks to identify businesses avoiding their taxation obligations. However, it’s not all doom and gloom – we can use the Benchmarks as a very handy tool to assess your own performance against industry standards.
Developed performance benchmarks are based on information collected from small businesses in an ever growing range of industries, and provide ratios for such key performance indicators as cost of materials compared to total sales (eg. A painter on average should get so many square metres per litre, apply a certain number of litres of paint per day, at a range of $xx – $yy per square metre).
Falling outside the benchmarks is not necessarily a big problem, and often can be explained by such issues as mechanical breakdown or sickness/injury for key personnel. It could be a result of inadequate record keeping, but in particular the ATO is looking for more sinister behaviour such as failing to report cash transactions.
Copies of the relevant benchmarks can be found at www.ato.gov.au/business – click on Tax Topics A-Z, Business Benchmarks.
If you are concerned whether you fall within Benchmark targets, we can have a chat about that when your Tax Papers are completed.