Understand ATO Benchmarks to Boost Your Business Strategy

If you’re a small business owner, understanding and applying ATO business benchmarks can be a powerful way to assess performance, reduce risk, and plan for growth. These benchmarks, compiled annually by the Australian Taxation Office, let you compare your financial performance to businesses in your industry—helping you stay compliant while uncovering opportunities to improve.

What Are ATO Business Benchmarks?

ATO benchmarks are based on financial data from over two million Australian small businesses across more than 100 industries. They focus on key financial ratios such as:

• Cost of sales to turnover

• Total expenses to turnover

• Labour to turnover

• Rent to turnover

• Motor vehicle expenses to turnover

• GST-free sales to total sales

• Non-capital purchases to total sales

These metrics are industry-specific. For instance, a café with a 44% cost of sales might seem fine—until you learn that the industry average is 37%. Benchmarks allow you to dig into your numbers and uncover inefficiencies that may be holding you back.

Why ATO Benchmarks Matter

Staying within benchmark ranges isn’t just good practice—it can reduce your risk of ATO scrutiny. Benchmarks help the ATO identify businesses that may be underreporting income or overclaiming deductions. While falling outside the range doesn’t guarantee an audit, it increases your likelihood of review, especially in cash-heavy sectors like hospitality or construction.

According to the ATO, Australia loses $11.2 billion in tax revenue annually due to non-compliance—$8.9 billion of that from underreported income and inflated deductions. Staying within benchmark ranges shows you’re operating above board.

How Benchmarks Help Your Business Grow

ATO benchmarks aren’t just for compliance—they’re a valuable tool for business development. Here’s how they can support your strategy:

• Identify inefficiencies: High costs compared to peers may signal overspending

• Discover growth opportunities: Low expenses may mean you’re ready to scale

• Enhance tax compliance: Stay ahead of ATO expectations

• Strengthen planning: Use real industry data to guide your goals

• Reduce audit risk: Benchmarks can keep your records consistent and defendable

Tools to Use

You can use the ATO Business Performance Check App to quickly calculate key ratios and compare them to the benchmark data. For more comprehensive insights, third-party benchmarking services offer detailed analysis, including metrics like employee output or stock turnover.

Industries Covered

Benchmarks are available for nine broad industries:

• Accommodation & Food Services

• Building & Construction Trade Services

• Health & Personal Services

• Retail Trade

• Professional, Scientific & Technical Services

• Manufacturing

• Education & Support Services

• Other Services

• Transport & Warehousing

Each has subcategories—for example, bakeries, kebab shops, or plumbing services—making comparisons more meaningful.

How We Can Help

As your adviser or broker, we can help interpret benchmark data specific to your SME and:

• Connect benchmarks with your insurance strategy and risk profile

• Work with your accountant to align financial health and compliance

• Identify risk management improvements through benchmarking insights

Ready to Benchmark Better?

Understanding ATO business benchmarks helps you stay compliant, grow smart, and reduce financial risk. Reach out today to learn how we can use benchmarking to support your business success.

If you’d like to know more about ATO’s small business benchmarks CLICK HERE, or contact us today.