The ATO has updated its small business benchmarks using the latest data from the 2022 – 2023 financial year. These benchmarks, covering 100 industries, enable small businesses to compare their performance, such as turnover and expenses, with those of their industry peers.

Although the ATO doesn’t rely solely on these benchmarks, small businesses that deviate from them are more likely to draw the ATO’s closer scrutiny. The ATO utilises the information reported in business tax returns and the key performance benchmarks of the relevant industry to identify potential tax risks.

Apart from helping to determine the risk of attracting unwanted attention from the ATO, these benchmarks can also be employed to compare your business performance with that of other businesses in the same industry. They can assist you in identifying areas where cost – reduction or efficiency – improvement is possible.

The small business benchmarks can be accessed here. 

In addition to the small business benchmarks, the Australian Taxation Office (ATO) possesses a business viability assessment tool. This tool proves beneficial for business owners as it aids in determining if there are any evident financial risks.

The ATO deems a business to be viable when it is capable of generating enough profits. Such profits should be sufficient to fulfil the business’s obligations towards its creditors. Moreover, the business should also be able to provide a return to its owners. In cases where a business fails to generate profits, the ATO focuses on assessing whether the business has adequate cash reserves. These cash reserves should be enough to enable the business to sustain its operations. 

The business viability assessment tool can be found here. 

Please let us know if you would like us to review your business performance and compare it with your industry’s benchmark.