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  • How benchmark ratios are calculated

    Benchmark ratios are calculated from information reported at specific labels on business tax returns and activity statements.

    Depending on the entity type, we use the labels from the company, partnership, trust, or individual tax returns.

    Each ratio has a set of rules for how we treat labels reported as blank or zero.

    Not all of the benchmark ratios apply to every business. Look at the performance benchmarks specific to your business to determine which ones you need to calculate.

    All label examples given below are from 2011 tax returns and activity statements.

    Find out about:

    Tax return – benchmark ratio calculations

    All tax return benchmark ratios are expressed as a percentage of turnover (excluding GST).

    The basic formula to calculate the tax return benchmark ratio is:

    (amount at the relevant labels ÷ turnover) × 100 = benchmark ratio %

    There are five tax return benchmark ratios:

    Turnover

    We use turnover to calculate the tax return benchmark ratios. Turnover is the revenue businesses receive from providing goods or services. This amount excludes GST.

    For turnover, we generally use the amount reported at the Other sales of goods and services label on the tax return.

    The Other sales of goods and services labels vary according to the type of tax return:

    Company

    label 6C

    Partnership or trust

    label 5G + 5H

    Individual

    label P8 I + P8 J

    If the amount reported in the Other sales of goods and services labels are either blank, zero, or less than 50% of the amount reported at the total business income label, then we use the Total business income amount instead.

    The Total business income labels used vary according to the type of tax return:

    Company

    label 6S

    Partnership or trust

    label 5 – Total business income primary production plus non-primary production

    Individual

    label P8 – Total business income primary production plus non-primary production

    If the amount reported in the Total business income label is zero, blank or incomplete, then we calculate the total business income as the sum of the following labels for the relevant entity type.

    Companies – Labels summed to calculate the total business income

    Item

    Label

    Other sales of goods and services

    label 6C

    Gross payments subject to foreign resident withholding

    label 6B

    Gross payments where ABN not quoted

    label 6A

    Gross distribution from partnerships

    label 6D

    Gross distribution from trusts

    label 6E

    Forestry managed investment scheme income

    label 6X

    Gross interest

    label 6F

    Gross rent and other leasing and hiring income

    label 6G

    Total dividends

    label 6H

    Fringe benefits employee contributions

    label 6I

    Assessable Government industry payments

    label 6Q

    Unrealised gains on revaluation of assets to fair value

    label 6J

    Other gross income

    label 6R

    Partnerships and trusts – Labels summed to calculate the total business income

    Item

    Label

    Other business income

    label 5G 5H

    Gross payments where ABN not quoted

    label 5C + 5D

    Gross payments subject to foreign resident withholding

    label 5A + 5B

    Assessable Government industry payments

    label 5E + 5F

    Individuals – Labels summed to calculate the total business income

    Item

    Label

    Gross payments where Australian business number not quoted

    label P8C + P8D

    Gross payments subject to foreign resident withholding

    label P8A + P8B

    Gross payments – voluntary agreements

    label P8E + P8F

    Gross payments – labour hire or other specified payments

    label P8N + P8O

    Assessable governments industry payments

    label P8G + P8H

    Other business income

    label P8I + P8J

    Total expenses/turnover

    For this ratio we divide the total expenses amount by the turnover amount.

    The total expenses amount is calculated as total expenses minus the payments to associated persons.

    For total expenses, we use the amount reported at the relevant labels for the type of tax return.

    Company

    label 6Q

    Partnership or trust

    label 5O

    Individual

    label P8S + P8 T

    For the payments to associated persons, we use the amount reported at the relevant label for the type of tax return.

    Company

    label 8Q

    Partnership or trust

    label 45 M

    Individual

    label P14 H

    If the amount reported at the Total expenses label is zero, blank or incomplete, then we calculate the total expenses amount as the sum of the following labels for the relevant entity type.

    Companies – Labels summed to calculate the total expenses

    Item

    Label

    Foreign resident withholding expense

    label 6B

    Cost of sales

    label 6A

    Contractor, sub-contractor and commission expenses

    label 6C

    Superannuation expenses

    label 6D

    Bad debts

    label 6E

    Lease expenses within Australia

    label 6F

    Lease expenses overseas

    label 6I

    Rent expenses

    label 6H

    Interest expenses within Australia

    label 6V

    Interest expenses overseas

    label 6J

    Royalty expenses within Australia

    label 6W

    Royalty expenses overseas

    label 6U

    Depreciation expenses

    label 6X

    Motor vehicle expenses

    label 6Y

    Repairs and maintenance

    label 6Z

    Unrealised losses on revaluation of assets to fair value

    label 6G

    All other expenses

    label 6S

    Partnerships and trusts – Labels summed to calculate the total expenses

    Item

    Label

    Foreign resident withholding expenses

    label 5P

    Contractor, subcontractor and commission expenses

    label 5C

    Superannuation expenses

    label 5D

    Cost of sales

    label 5E

    Bad debts

    label 5F

    Lease expense

    label 5G

    Rent expenses

    label 5H

    Total interest expenses

    label 5I

    Total royalty expenses

    label 5J

    Depreciation expenses

    label 5K

    Motor vehicle expenses

    label 5L

    Repairs and maintenance

    label 5M

    All other expenses

    label 5N

    Individuals – Labels summed to calculate the total expenses

    Item

    Label

    Cost of sales

    label P8 K + L  M expenses

    Foreign resident withholding expenses

    label P8 U

    Contractor, subcontractor and commission expenses

    label P8 F

    Superannuation expenses

    label P8 G

    Bad debts

    label P8 I

    Lease expenses

    label P8 J

    Rent expenses

    label P8 K

    Interest expenses within Australia

    label P8 Q

    Interest expenses overseas

    label P8 R

    Depreciation expenses

    label P8 M

    Motor vehicle expenses

    label P8 N

    Repairs and maintenance

    label P8 O

    All other expenses

    label P8 P

    Cost of sales/turnover

    For this ratio, we divide the cost of sales amount by the turnover amount.

    The cost of sales amount excludes salary and wages.

    When the Total salary and wages expenses code equals C – meaning that the total salary and wages expenses are included in the cost of sales figure – we deduct the Total salary and wages expenses from the Cost of sales.

    Otherwise, we use the Total cost of sales amount reported on tax return.

    For costs of sales we use the amount reported at the relevant label for the type of tax return.

    Company

    label 6A

    Partnership or trust

    label 5E

    Individual

    label P8 K + L  M expenses

    To identify if total salary and wages are included in cost of sales we use the code at the relevant label for the type of tax return.

    Company

    label 8D code

    Partnership or trust

    label 44 L code

    Individual

    label P13 G code

    For total salary and wages expenses we use the amount reported at the relevant label for the type of tax return.

    Company

    label 8D

    Partnership or trust

    label 44 L

    Individual

    label P13 G

    Labour/turnover

    For this ratio, we divide the labour amount by the turnover amount.

    The labour amount is calculated as follows:

    Total salary and wages expenses + Contractor subcontractor and commissions expenses − Payments to associated persons

    If the amount reported at Label W1 (total salary, wages and other payments) on the activity statement is greater than the Total salary and wages expenses reported on the tax return, then we use the activity statement amount in the calculation.

    For total salary and wages expenses we use the amount reported at the relevant label for the type of tax return.

    Company

    label 8D

    Partnership and Trust

    label 44 L

    Individual

    label P13 G

    For contractor, subcontractor and commissions expenses we use the amount reported at the relevant label for the type of tax return.

    Company

    label 6C

    Partnership or trust

    label 5C

    Individual

    label P8 F

    For payments to associated persons labels we use the amount reported at the relevant label for the type of tax return.

    Company

    label 8Q

    Partnership or trust

    label 45 M

    Individual

    label P14 H

    Rent expenses/turnover

    Not all businesses have rent expenses.

    For this ratio, we divide the rent expenses amount by the turnover amount.

    For rent expenses we use the amount reported at the relevant label for the type of tax return.

    Company

    label 6H

    Partnership or trust

    label 5H

    Individual

    label P8 K

    Motor vehicle expenses/turnover

    Not all businesses have motor vehicle expenses.

    For this ratio, we divide the motor vehicle expenses amount by the turnover amount.

    For motor vehicle expenses labels we use the amount reported at the relevant label for the type of tax return.

    Company

    label 6Y

    Partnership or trust

    label 5L

    Individual

    label P8 N

    Activity statement – benchmark ratio calculations

    The introduction of Simpler BAS on 1 July 2017 reduced GST reporting for small businesses with a GST turnover of less than $10 million. Therefore, activity statement benchmark ratios will not be available for 2017–18 or later years.

    The information in this section is only relevant for 2016–17 and earlier financial years.

    All activity statement benchmark ratios are expressed as a percentage of total sales (including GST).

    The ratios are developed using a data for a complete financial year. To compare your performance against the benchmarks, you should use your activity statements for the complete financial year.

    The formula to calculate the activity statement benchmark ratios is:

    (amount at the relevant labels ÷ total sales) × 100 = benchmark ratio %

    There are two activity statement benchmark ratios:

    See also:

    Total sales

    We use the total sales amount, including GST, in calculating the activity statement benchmark ratios. This is label G1 Total sales.

    Before using the data in our calculation we check the status of the GST-inclusive indicator 'Does the amount shown at label G1 include GST? (indicate with X)'.

    If the ‘GST Included’ indicator is marked as ‘Yes’ we use the amount shown at label G1 Total sales in our calculation.

    Id the indicator is marked 'No' we use the sum of label G1 Total sales and label 1A GST on sales.

    Working out whether GST has been included

    If the GST-inclusive indicator is blank we use the formulae below to determine if it should be set to ‘Yes’ or ‘No’.

    ((G1 Total sales + G7 Sales adjustments) − (G2 Export sales + G3 GST-free sales + G4 Input taxed sales)) ÷ 11

    If this result is equal to label 1A GST on sales then the GST-inclusive indicator is set to ‘Yes’.

    If it isn't, we do a similar calculation but divide by 10.

    (G1 + G7) − (G2 + G3 + G4) ÷ 10

    If this result is equal to label 1A GST on sales then the GST-inclusive indicator is set to ‘No’.

    We also do these calculations if businesses have been inconsistent in their reporting of the GST-inclusive indicator throughout the financial year.

    Non-capital purchases/total sales

    To calculate this ratio, we divide the label G11 Non-capital purchases amount by the Total sales amount.

    GST-free sales/total sales

    To calculate this ratio, we divide the label G3 GST-free sales amount by the Total sales amount.

    Where label G3 GST-free sales is zero, we calculate the figure by multiplying the label 1A GST on sales by 11 and then subtracting this amount from the G1 Total sales amount.

    See also:

      Last modified: 20 Nov 2020QC 37143