{"id":4482,"date":"2026-07-23T13:47:12","date_gmt":"2026-07-23T13:47:12","guid":{"rendered":"https:\/\/webgenix.com.au\/rickmon\/?p=4482"},"modified":"2026-07-24T03:11:02","modified_gmt":"2026-07-24T03:11:02","slug":"ato-small-business-benchmarks-guide","status":"publish","type":"post","link":"https:\/\/webgenix.com.au\/rickmon\/ato-small-business-benchmarks-guide\/","title":{"rendered":"ATO Small Business Benchmarks: What Every Business Owner Should Know"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Many small business owners believe the Australian Taxation Office only reviews a business when someone reports it or when there is an obvious mistake in a tax return.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That is not always the case.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The ATO uses data and industry benchmarks to compare your business with other businesses operating in the same industry. These benchmarks can help the ATO identify businesses that may require a closer look.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The ATO currently publishes small business benchmarks for around 100 industries. These benchmarks are based on information reported in business tax returns and activity statements. They are used as both a business performance tool and a tax-compliance risk indicator.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This means your business may be compared with similar businesses before an ATO officer has even spoken to you.<\/span><\/p>\n<h2><b>What are ATO small business benchmarks?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">ATO small business benchmarks are financial ranges showing how businesses in a particular industry normally report their income and expenses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Depending on your industry, the ATO may compare ratios such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">cost of sales compared with annual turnover, excluding labour<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">total expenses compared with annual turnover<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">labour expenses compared with annual turnover<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">rent expenses compared with annual turnover<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">motor vehicle expenses compared with annual turnover<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">non-capital purchases compared with total sales<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">GST-free sales compared with total sales.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The ATO calculates a benchmark ratio by dividing the relevant expense or amount by turnover and multiplying the result by 100.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example:<\/span><\/p>\n<p><b>Cost of sales \u00f7 Annual turnover \u00d7 100<\/b><\/p>\n<p><span style=\"font-weight: 400;\">If your cost of sales is $180,000 and your annual turnover is $500,000, your cost-of-sales ratio would be:<\/span><\/p>\n<p><b>$180,000 \u00f7 $500,000 \u00d7 100 = 36%<\/b><\/p>\n<p><span style=\"font-weight: 400;\">That percentage can then be compared with the ATO benchmark for your industry and turnover range.<\/span><\/p>\n<h2><b>A takeaway food business example<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Takeaway food businesses are a good example of how ATO benchmarking works.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The current ATO benchmark separates takeaway food businesses into different annual turnover ranges. Across those turnover categories, the published cost-of-sales benchmark is approximately 34% to 43%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The exact acceptable range depends on the business\u2019s annual turnover. For example, the current turnover categories include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">$65,000 to $200,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">$200,001 to $600,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">more than $600,000.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The cost-of-sales ranges vary between these categories.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Imagine a takeaway business with annual turnover of $500,000 and cost of sales of $250,000.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Its cost-of-sales ratio would be:<\/span><\/p>\n<p><b>$250,000 \u00f7 $500,000 \u00d7 100 = 50%<\/b><\/p>\n<p><span style=\"font-weight: 400;\">A ratio of 50% would be above the published benchmark for that turnover category.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This does not automatically mean the business has done anything wrong. There may be genuine reasons for the difference, such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">unusually high ingredient prices<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">food wastage<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">incorrect stock records<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">changes in the type of food being sold<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">large discounts or promotions<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">incorrect classification of wages as cost of sales<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">missing or understated sales<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">personal purchases incorrectly recorded as business expenses.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">However, when the figures are significantly outside the industry range and the business does not have proper records or a reasonable explanation, the ATO may consider the business to be higher risk.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The ATO confirms that benchmarks are used together with other risk indicators to identify businesses that may not be reporting all their income correctly.<\/span><\/p>\n<h2><b>The ATO also compares GST-free sales<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Expense ratios are not the only figures the ATO reviews.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For industries that make a mixture of taxable and GST-free sales, the ATO may compare the amount reported as GST-free sales with the total sales reported on the business activity statement.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is particularly important for businesses such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">takeaway food businesses<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">caf\u00e9s and restaurants<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">grocery and convenience stores<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">bakeries<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">health-related businesses<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">other businesses selling a mixture of taxable and GST-free products.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Incorrect GST coding can significantly change the percentage of GST-free sales reported on your BAS.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, a business may accidentally code taxable takeaway food as GST-free. Another business may record bank transfers, owner contributions or loan proceeds as GST-free sales when they are not sales at all.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These mistakes can create an unusual GST-free sales ratio and may make the business appear different from similar businesses in the same industry. The ATO specifically includes GST-free sales to total sales as an activity statement benchmark.<\/span><\/p>\n<h2><b>Being outside the benchmark does not automatically mean an audit<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">A benchmark is not a tax law, and every business is different.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your business may have a genuine commercial reason for being outside the normal range. You may operate from an expensive location, use premium ingredients, have unusually high delivery costs or employ more staff to provide a better level of service.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The problem arises when:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the figures are incorrect<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">sales have not been fully reported<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">expenses have been entered into the wrong categories<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">private expenses have been claimed through the business<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">wages are incorrectly included in cost of sales<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">GST codes have been applied incorrectly<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">the business cannot support its figures with proper records.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The ATO states that being outside a benchmark does not necessarily mean a business has done something wrong. However, unusual ratios may indicate errors, underreported income or areas requiring further examination.<\/span><\/p>\n<h2><b>Small accounting mistakes can create unnecessary risk<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">In many cases, the business has not intentionally done anything wrong.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The issue may simply be poor bookkeeping or an incorrect tax return presentation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, entering wages into cost of sales instead of salary and wages can increase the cost-of-sales percentage. Using the wrong business industry code can result in your business being compared with the wrong industry. Incorrectly reporting multiple business activities can also distort the benchmark calculation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even when the business has reported the correct overall profit, incorrect classifications may create an unnecessary ATO risk indicator.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is why it is important to review your benchmark position before lodging your annual tax return\u2014not after receiving an ATO letter.<\/span><\/p>\n<h2><b>How Rick &amp; Mon Business Consultants can help<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Ricky Dheri and the team at <\/span><b>Rick &amp; Mon Business Consultants<\/b><span style=\"font-weight: 400;\"> understand how ATO small business benchmarks work and how accounting classifications affect your reported ratios.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We have helped hundreds of small businesses review their financial records, correct bookkeeping errors and reduce unnecessary stress caused by avoidable reporting mistakes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Our team can assist you with:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">reviewing your business against the correct ATO industry benchmark<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">checking cost of sales, wages and other expense classifications<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">reviewing GST-free and taxable sales coding<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">reconciling BAS sales with annual tax return income<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">identifying unusual expense ratios before lodgement<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">maintaining proper supporting records<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">preparing explanations where genuine commercial circumstances place the business outside the benchmark<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">responding to ATO enquiries and reviews.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Our objective is not to artificially change your figures to fit a benchmark. Your tax return must always reflect the true financial position of your business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Our role is to make sure your records are accurate, your expenses are classified correctly and your business does not attract unnecessary attention because of preventable accounting mistakes.<\/span><\/p>\n<h2><b>Review your figures before the ATO does<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Do not wait until an ATO review or audit letter arrives.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A benchmark review can help identify accounting errors, GST coding problems, missing income and unusual expenses before your tax return is lodged.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If your business operates in takeaway food, hospitality, retail, construction, transport, professional services or another benchmarked industry, speak with the team at <\/span><b>Rick &amp; Mon Business Consultants<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We support small businesses across Melbourne and Australia with tax compliance, bookkeeping, BAS preparation, financial reporting and practical business advice.<\/span><\/p>\n<p><b>Contact Rick &amp; Mon Business Consultants today to arrange a review of your business figures and ATO benchmark position.<\/b><\/p>\n<p><i><span style=\"font-weight: 400;\">This article provides general information only and should not be treated as personal taxation advice. ATO benchmark ranges may be updated, and the appropriate range depends on your industry, turnover and individual business circumstances.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many small business owners believe the Australian Taxation Office only reviews a business when someone reports it or when there is an obvious mistake in a tax return. That is not always the case. The ATO uses data and industry benchmarks to compare your business with other businesses operating in the same industry. These benchmarks [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4486,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4482","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs"],"_links":{"self":[{"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/posts\/4482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/comments?post=4482"}],"version-history":[{"count":1,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/posts\/4482\/revisions"}],"predecessor-version":[{"id":4483,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/posts\/4482\/revisions\/4483"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/media\/4486"}],"wp:attachment":[{"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/media?parent=4482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/categories?post=4482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/webgenix.com.au\/rickmon\/wp-json\/wp\/v2\/tags?post=4482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}