The ATO has updated its small business benchmarks with information from key financial ratios drawn from information provided by businesses through activity statements and tax returns. The most recent complete data (for the 2014–15 financial year) allows businesses and their tax agents to use the benchmarks to compare business performance against similar business entities.
Benchmarks are updated on an annual basis, which the ATO says will ensure the benchmarks reflect an accurate performance of businesses over time. You can find the small business benchmarks by business type here (businesses listed A-Z), or by industry here.
The benchmarks can be useful to check if your clients’ business performance is within the average range for their industry. There could be valid reasons for performance being outside the average range, but it could also mean these client businesses have room for improvement and need your expertise.
The ATO says its benchmark methodology has been verified as statistically valid by an independent organisation and is consistent with international approaches.
Its small business benchmarks:
- are based on the biggest data set available – calculated from tax returns and activity statements from more than 1.4 million small businesses
- account for businesses with different turnover ranges (up to $15 million) across more than 100 industries
- are published as a range to recognise the variations that occur between businesses due to factors such as location and businesses circumstances.
The ATO releases updated benchmark ratios each year based on:
- your business client’s business industry code, derived from the Australian and New Zealand Standard Industrial Classification (ANZSIC)
- the main business activity on your client’s tax returns
- the trading name of your client’s businesses.
The ATO says that the quickest way to see how a business compares to its competitors is by using the business performance check in the ATO app, which does all the calculations.
You can find the business performance check tool by:
- downloading the ATO app from Google Play, the Windows Phone Store or the Apple App Store
- go to “Business”
- select “Business performance check”
- have your client’s information ready and enter the figures into the tool
- compare the business performance.
The ATO says the personal information entered isn’t recorded and will only be used for completing the tool’s calculations.