Understanding Performance Benchmarks for Your Business

Performance benchmarks are financial guidelines that help you compare your business to others in your industry. They provide insight into how your business is tracking and whether any adjustments are needed to improve efficiency or profitability. Currently, benchmarks are available for over 100 industries.

What Do Performance Benchmarks Include?

There are two main types of benchmarks:

• Tax return benchmark ranges – Based on data from businesses’ tax returns.

• Activity statement benchmark ranges – Previously calculated using complete financial year activity statement data (these stopped being produced from 1 July 2017 when Simpler BAS was introduced).

Tax Return Benchmark Ranges

These benchmarks help you understand how different expenses relate to your turnover, including:

• Cost of sales to turnover (excluding labour)

• Total expenses to turnover

• Labour to turnover

• Rent to turnover

• Motor vehicle expenses to turnover

Activity Statement Benchmark Ranges (Before 1 July 2017)

For reference, these used to include:

• Non-capital purchases to total sales

• GST-free sales to total sales

What Is the Key Benchmark Range?

The key benchmark range is a useful tool for assessing your business’s performance against others in your industry. The ATO also uses it to ensure businesses are meeting tax obligations when records are missing or incomplete. Because it provides an accurate estimate of business turnover, it’s a valuable measure to keep an eye on.

Finding Your Industry’s Benchmark

You can search for your industry’s key benchmark range alphabetically under Benchmarks A-Z. If your industry isn’t listed, you may find relevant data in the industry benchmarks section of taxation statistics.

Understanding these benchmarks can help you make informed financial decisions and keep your business on track. If you’re unsure how your business compares, reach out to a bookkeeping professional for guidance.

Compare Your Business to ATO Benchmark Figures Here:

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How the ATO Uses Business Performance Benchmarks

Benchmarks are one of the tools the ATO uses to identify businesses that may not be meeting their tax obligations.

The ATO compares information reported in business tax returns with the key performance benchmark for their industry. This is determined based on:

• Business industry codes

• The description of the main business activity on the tax return

• The business's trading name

When reviewing a business’s tax records, the ATO considers a range of factors and does not rely solely on benchmarks when deciding whether to investigate a business.