Certified Practicing Accountant
Regi. Tax agent & Regi. ASIC Agent
jason@taxcodeaccounting.com.au
 
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What is Small Business Benchmarking?

 

These are recently introduced by ATO. These gives opportunity to small businesses in more than 100 industries to compare their performance against standard ratios developed by Australian Taxation Office.

 

These benchmarking are used to identity businesses that may be avoiding their tax obligations by not reporting some or all of their income. ATO is expecting that your business should perform withing the benchmarking. Businesses reporting outside the benchmarks may attract ATO's attention. While we say "attention", we get a sense of "Audit" or "Further Investigation" about financial records.

 

This does not mean that all the businesses are hiding or conciling income. This need to be consider as an opportunity to look in to your business performance and how the performance is worked out. It gives you an opportunity to review your record-keeping practice.

 

You should note that post introduction of new software in February 2010, capability of ATO has increased substentially and they can look into your merchant transactions in co-ordination with the merchant bankers.

 

There are three types of benchmarking:

 

1. Performance Benchmarks

- Cost of goods sold to turnover

- Cost of material to turnover

- Labour to turnover

- Rent to turnover

- Motor vehicle expenses to turnover

 

2. Cash sales Benchmarks

- These were introduced in 2009, however withdrawan from November 2010.

 

3. Input Benchmarks

- This is specifically for tradespeople, and income is compared with labour and materials they use.

 

* Souce Australian Taxation Office.

 

To know more about Small Business Benchmarking,

 

Contact us, we will be happy to help you to be on track and offer you better compliance

Or

Please refer ATO link: www.ato.gov.au and search for Small Business Benchmarking.