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    In recent years, the ATO has worked with community groups, industry representatives and tax practitioners on a range of activities. These activities are aimed at maintaining the integrity of the tax system, encouraging and improving record keeping practices among businesses, and reducing compliance costs for businesses. Providing industry benchmarks in the form of financial ratios and activity statement ratios is one such activity.

    In providing benchmarks, the ATO aims to have a more direct impact on taxpayer behaviour before tax returns are prepared and lodged.

    The benchmarks help tax advisers identify averages for groups of activities and, therefore, businesses that vary significantly from those averages. Tax advisers can use this information to determine the reasons for any variation and identify action that should be taken to correct problems and improve business practices - in particular, those related to record keeping.

    The business community and business owners generally use benchmarks to compare the performance of their business with industry averages. The business community may also use these ratios when evaluating job tenders. The gross profit and net profit ratios of a business compared to the industry average may be one factor taken into account in deciding whether a particular tender is successful.

      Last modified: 18 Oct 2011QC 23907