• Is your performance on the mark?

    The pressure of the global economic downturn has tempted some small businesses to seek an unfair advantage by not recording and paying tax on all of their transactions, particularly cash transactions.

    To make it harder for dishonest operators to get away with not reporting cash income the Tax Office has developed performance benchmarks which make it clear what is expected from businesses in a range of industries.

    The Tax Office will look at ratios of:

    • cost of goods sold to turnover
    • labour to turnover
    • rent to turnover
    • GST-free sales to turnover, and
    • motor vehicle expenses to turnover.

    Tax Commissioner Michael D'Ascenzo said we will use these benchmarks to identify businesses who may not be paying their fair share.

    'We understand there will be times when there are good reasons for a business to have costs outside the norm or a real decline in income - and we will support people through these times.'

    'However, where we see on-going performance outside the benchmark range we will investigate and take appropriate action to restore a level playing field.

    'These performance benchmarks are published on our website, and I urge anyone who thinks they may be at risk to do the sums,' he said.

    Go to www.ato.gov.au/businessbenchmarks to compare your business performance to the financial norms of similar businesses with a similar financial turnover range.

    If after comparing your business performance against the benchmarks, you identify you may have made a mistake in your tax affairs the Tax Office recommends you make a voluntary disclosure which reduces any penalties that may apply.

    Fifty-eight benchmarks have been published covering businesses in:

    • manufacturing
    • construction
    • retail trade
    • accommodation and food services
    • transport, postal and warehousing
    • rental, hiring and real estate services, and
    • administrative and support services.

    How benchmarks can help

    Benchmarks provide an easy way to show how a business is performing within its own industry and whether it's on the right track to meeting its tax obligations.

    You can:

    • compare your business performance against others in your industry
    • assess your record-keeping
    • check that the information you're reporting to the Tax Office accurately reflects your business income and expenses, and
    • assess if you're likely to be selected for an audit.

    Two types of benchmarks have been developed for the small business (micro-market) sector.

    Input benchmarks
    Based on information from industry participants and trade associations.

    Performance benchmarks
    Based on information small businesses report on income tax returns and business activity statements.

    The Tax Office has released new performance benchmarks which along with existing input benchmarks provide a full range of small business benchmarks.

    For more information go to www.ato.gov.au/businessbenchmarks

      Last modified: 28 Jan 2010QC 28247