Running a small business is no small feat. Between managing operations, handling customer relationships, and keeping up with industry trends, financial health can sometimes take a backseat. To help SMEs stay on track, the Australian Tax Office (ATO) has released updated financial benchmarks for over 100 industries, offering a clear picture of where your business stands compared to others in your sector.

What Are These Financial Benchmarks?

Think of the ATO’s financial benchmarks as a routine business health check—similar to a visit to your GP. These benchmarks provide key industry-specific financial data, such as average expenses and profitability margins, allowing small businesses to compare their financial performance to industry standards. Covering sectors like accommodation and food, construction, education, healthcare, retail, and many more, these insights serve as an essential tool for SMEs looking to stay competitive and financially healthy.

Why Should You Care?

ATO Assistant Commissioner Tony Goding explains that businesses operating within benchmark ranges are generally in better financial shape and less likely to attract tax audits. If your numbers fall outside these ranges, it may be time to reassess your business plan and financial strategies.

Staying within the benchmarks not only helps keep your business financially sound but also reduces the risk of scrutiny from the ATO. More importantly, it ensures that your business remains competitive by identifying strengths and potential areas for improvement.

Avoiding the Pitfalls of the Shadow Economy

The ATO has also emphasized its commitment to tackling tax non-compliance, particularly in the ‘shadow economy’—a sector where businesses under-report income or over-claim deductions. According to the ATO, nearly 60% of the small business tax gap, or approximately $11.2 billion annually, is linked to these practices.

While the benchmarks alone won’t trigger an audit, businesses consistently operating outside the expected financial ranges may come under closer scrutiny. The ATO uses a combination of data matching, community tip-offs, and benchmarking to identify irregularities and ensure fair competition for compliant businesses.

How to Access and Use These Benchmarks

Small business owners can access the ATO’s financial benchmarks through the ATO website or via the Business Performance Check tool in the ATO app. By using these resources, you can:

• Compare your expenses and income with industry standards.

• Identify potential areas for financial improvement.

• Reduce the risk of tax compliance issues.

• Make data-driven decisions to help your business grow.

Final Thoughts

For SMEs looking to scale and maintain strong financial health, these benchmarks offer an invaluable resource. By regularly reviewing your business performance against industry standards, you can proactively address financial challenges, improve efficiency, and ensure long-term success.

Ready to take the pulse of your business? Head to the ATO’s website and start benchmarking!