The A.T.O. uses small business benchmarks to identify businesses that may not be reporting some or all of their income.
Input benchmarks (income to labour and materials used) apply to tradespeople who undertake domestic projects and are responsible for purchasing their own materials.
Performance benchmarks provide financial ratios for your industry that compare your business performance to others in your industry. They are updated with new financial-year data on an annual basis to ensure they reflect the performance of businesses over time.
The ATO review the following performance ratios:cost of sales to turnover, total expenses to turnover, rent to turnover, labour to turnover, motor vehicle expenses to turnover, non-capital purchases to total sales, GST-free sales to total sales.
It is very important to review your business benchmarks regularly.