The ATO should improve community understanding and confidence in the ATO’s industry performance benchmarks by publishing material that seeks to provide assurance that the methodology to develop the benchmarks is robust and communicating it more broadly. Such material should include:
- all current benchmarking inputs and methodology (except for specific aspects giving rise to genuine manipulation concerns);
- assurance from an independent party with statistical expertise about the robustness of the benchmarking methodology;
- assurance that the types of businesses included in ATO benchmarked industries are sufficiently similar to each other to compare financial performance; and
- appropriate comparisons and explanations of ratios between
- country and metro businesses within each benchmark; and
- states and territories on an aggregated basis.
We agreed with this recommendation and implementation was completed on 21 March 2014.
We prepared a more comprehensive guide to the calculation of the small business benchmarks, the Small business benchmarks methodology and ratio calculations. An independent actuarial firm, Cumpston Sargeant Ltd was then engaged to review the methodology we use and the published guide. The firm found the methodology to be robust and that the guide 'provides a clear description of the process…'. The Cumpston Sarjeant Ltd Review of Statistical Methodology used in producing Small Business Benchmarks is published on our website.
The Administrative Appeals Tribunal (AAT) has also been asked to consider if the benchmarks are a reasonable basis for default assessments. In each case to date (September 2014) the AAT has found that the benchmarks are a reasonable basis for a default assessment.