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  • How we calculate benchmark ratios

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    Benchmark ratios are calculated from information reported at specific labels on tax returns and activity statements of businesses that operate in similar industries.

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

    Each ratio has a set of rules for instances where a label is blank or zero. For example, the labels used to calculate turnover.

    Not all benchmark ratios apply to every business. You should refer to the performance benchmark specific to your business.

    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 5 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.

    Other sales of goods and services label by tax return type

    Tax return type

    Label

    Company

    6C

    Partnership or trust

    5G + 5H

    Individual

    P8 I + P8 J

    If the amount reported in these labels is blank, zero, or less than 50% of the amount at the total business income label, we use the total business income amount instead.

    Total business income labels by tax return type

    Tax return type

    Label

    Company

    6S

    Partnership or trust

    5 – total business income primary production plus non-primary production

    Individual

    P8 – total business income primary production plus non-primary production

    If the amount in the Total business income label is zero, blank or incomplete, 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

    6C

    Gross payments subject to foreign resident withholding (excluding capital gains)

    6B

    Gross payments where ABN not quoted

    6A

    Gross distribution from partnerships

    6D

    Gross distribution from trusts

    6E

    Forestry managed investment scheme income

    6X

    Gross interest

    6F

    Gross rent and other leasing and hiring income

    6G

    Total dividends

    6H

    Fringe benefits employee contributions

    6I

    Assessable Government industry payments

    6Q

    Unrealised gains on revaluation of assets to fair value

    6J

    Other gross income

    6R

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

    Item

    Label

    Other business income

    5G + 5H

    Gross payments where ABN not quoted

    5C + 5D

    Gross payments subject to foreign resident withholding (excluding capital gains)

    5B

    Assessable Government industry payments

    5E + 5F

    Individuals – labels summed to calculate the total business income

    Item

    Label

    Gross payments where Australian business number not quoted

    P8C + P8D

    Gross payments subject to foreign resident withholding (excluding capital gains)

    P8B

    Gross payments – voluntary agreements

    P8E + P8F

    Gross payments – labour hire or other specified payments

    P8N + P8O

    Assessable governments industry payments

    P8G + P8H

    Other business income

    P8I + P8J

    Total expenses/turnover

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

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

    Total expenses labels by tax return type

    Tax return type

    Label

    Company

    6Q

    Partnership or trust

    5O

    Individual

    P8S + P8T

    Payments to associated persons labels by tax return type

    Tax return type

    Label

    Company

    8Q

    Partnership or trust

    45 M

    Individual

    P16 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 expenses (excluding capital gains)

    6B

    Cost of sales

    6A

    Contractor, sub-contractor and commission expenses

    6C

    Superannuation expenses

    6D

    Bad debts

    6E

    Lease expenses within Australia

    6F

    Lease expenses overseas

    6I

    Rent expenses

    6H

    Interest expenses within Australia

    6V

    Interest expenses overseas

    6J

    Royalty expenses within Australia

    6W

    Royalty expenses overseas

    6U

    Depreciation expenses

    6X

    Motor vehicle expenses

    6Y

    Repairs and maintenance

    6Z

    Unrealised losses on revaluation of assets to fair value

    6G

    All other expenses

    6S

    Partnerships and trusts – labels summed to calculate the total expenses

    Item

    Label

    Foreign resident withholding expenses (excluding capital gains)

    5P

    Contractor, subcontractor and commission expenses

    5C

    Superannuation expenses

    5D

    Cost of sales

    5E

    Bad debts

    5F

    Lease expense

    5G

    Rent expenses

    5H

    Total interest expenses

    5I

    Total royalty expenses

    5J

    Depreciation expenses

    5K

    Motor vehicle expenses

    5L

    Repairs and maintenance

    5M

    All other expenses

    5N

    Individuals – labels summed to calculate the total expenses

    Item

    Label

    Cost of sales

    P8 K + L  M expenses

    Foreign resident withholding expenses (excluding capital gains)

    P8 U

    Contractor, subcontractor and commission expenses

    P8 F

    Superannuation expenses

    P8 G

    Bad debts

    P8 I

    Lease expenses

    P8 J

    Rent expenses

    P8 K

    Interest expenses within Australia

    P8 Q

    Interest expenses overseas

    P8 R

    Depreciation expenses

    P8 M

    Motor vehicle expenses

    P8 N

    Repairs and maintenance

    P8 O

    All other expenses

    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.

    Cost of sales labels by tax return type

    Tax return type

    Label

    Company

    6A

    Partnership or trust

    5E

    Individual

    P8 K + L – M expenses

    To identify if total salary and wages are included in cost of sales, we use the codes below based on the tax return type.

    Total salary and wages label codes by tax return type

    Tax return type

    Label codes

    Company

    8D code

    Partnership or trust

    44 L code

    Individual

    P15 G code

    For total salary and wages expenses, we use the amount reported at the labels below based on the tax return type.

    Total salary and wages expenses by tax return type

    Tax return type

    Label

    Company

    8D

    Partnership or trust

    44 L

    Individual

    P15 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.

    Total salary and wages labels by tax return type

    Tax return type

    Label

    Company

    8D

    Partnership and Trust

    44 L

    Individual

    P15 G

    Contractor, subcontractor and commission expenses labels by tax return type

    Tax return type

    Label

    Company

    6C

    Partnership or trust

    5C

    Individual

    P8 F

    Payments to associated persons labels by tax return type

    Tax return type

    Label

    Company

    8Q

    Partnership or trust

    45 M

    Individual

    P16 H

    Rent expenses/turnover

    Not all businesses have rent expenses.

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

    Rent expenses by tax return type

    Tax return type

    Label

    Company

    6H

    Partnership or trust

    5H

    Individual

    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.

    Motor vehicle expenses by tax return type

    Tax return type

    Label

    Company

    6Y

    Partnership or trust

    5L

    Individual

    P8 N

    Activity statement – benchmark ratio calculations

    From 1 July 2017, Simpler BAS 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) from a complete year’s activity statement data.

    The activity statement benchmark ratios are developed using a complete financial year's activity statement data. 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 2 activity statement benchmark ratios:

    Total sales

    We use the total sales amount, including GST, to calculate 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.

    If 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 formula 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.

      Last modified: 21 Apr 2023QC 37143