See the return the way the ATO sees it.
Taxpartna measures every client file against the ATO’s published small business benchmarks for their industry and turnover band, so you know where a return sits before it’s lodged, not after a review letter arrives.
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Key ratios vs ATO benchmark range
Source: ATO small business benchmarksMotor vehicle costs sit well outside the published range for ANZSIC 3011 at this turnover. No FBT return was lodged and no logbook workpaper was provided. Consider whether a private use adjustment, Division 7A treatment or an FBT liability applies, and document the commercial explanation on file before lodgement.
Prior year comparison
The ratio has more than doubled on the prior year and now sits above the benchmark cap. Worth raising with the client now.
Matched to the right benchmark, automatically.
Identify the industry
Reads the ANZSIC code from the return and confirms it against the described business activity in the financials.
Select the turnover band
Places the entity in the correct ATO turnover bracket so ratios are compared against genuine peers.
Calculate the ratios
Builds each benchmark ratio from the financial statements, then reconciles the inputs back to the return.
Flag and explain
Marks each ratio within range, near the boundary or outside it, with the working shown for your review.
The conversation is easier before lodgement.
Know the risk position early
The ATO uses these benchmarks to select cases. Seeing the same picture before lodgement removes the surprise.
Document the explanation
Where a variance is commercially sound, record the reason on file while the client can still recall the detail.
Add value to the meeting
Benchmark context turns a compliance job into a discussion about how the business compares with its peers.
AI benchmarking analysis for Australian tax and accounting firms.
What are the ATO small business benchmarks?
The ATO publishes small business benchmarks derived from the tax returns and activity statements of hundreds of thousands of Australian businesses. Each benchmark expresses a key expense as a ratio of turnover for a given industry and turnover band, such as cost of sales to turnover, labour to turnover, and motor vehicle expenses to turnover. The ATO uses these ranges as one of its data matching and risk profiling tools when deciding which small business tax returns to examine, so a company return that falls outside the published range for its ANZSIC code is more likely to attract review activity.
Automated benchmarking as part of tax return review
Checking a client file against industry benchmarks has traditionally been a manual exercise, which means it is often skipped under deadline pressure. Taxpartna performs benchmarking analysis automatically as part of every company and trust tax return review. The platform reads the financial statements and income tax return, identifies the industry code and turnover bracket, calculates each benchmark ratio from the underlying figures, and reports where the entity sits against the published range. Because the calculation is built from the same source documents used for the rest of the review, every ratio can be traced back to the page it came from.
Identifying tax risk before lodgement
The value of benchmark analysis is in the timing. Once a return is lodged, an unusual expense ratio becomes a matter to defend rather than a matter to consider. Reviewing benchmark position during the sign off process gives the registered tax agent an opportunity to confirm the figures are correctly classified, ask the client for the commercial explanation while the year is still fresh, and record that explanation in the file. Where the variance is genuine, the file note supports the position. Where it reflects a classification error or an unadjusted private use component, it can be corrected before lodgement.
Benchmarking as a client advisory conversation
Benchmark data also has a use beyond compliance. Showing a client how their gross margin, labour cost or overhead ratio compares with similar businesses in their industry turns an annual compliance meeting into a business performance discussion. For accounting firms looking to move up the value chain without adding chargeable hours, benchmarking output produced automatically during the tax review is a practical starting point.
Benchmarking sits alongside Taxpartna’s cross-checks and compliance checks, and complements our AI tax benchmarking software resource.
- Cost of sales to turnover
- Total expenses to turnover
- Labour and wages to turnover
- Motor vehicle expenses to turnover
- Rent to turnover
- Net profit to turnover
- Gross profit margin
- Superannuation to wages
Does being outside a benchmark mean an audit?
No. It indicates the return sits outside the typical range for that industry, which is one factor the ATO may consider. Many variances have sound commercial explanations.
Which entity types are covered?
Benchmarking runs on company and trust reviews today. Individual and SMSF reviews are on the roadmap.
Is it an extra step in the workflow?
No. Benchmarking analysis is produced as part of the standard review and appears in the exported report.
See where your next return sits.
Benchmarking analysis runs with every review, at no extra step in your workflow.