Updated date: 22 September 2026
ATO small business benchmarks let business owners compare selected income and expense ratios with businesses in the same industry. They can be useful for understanding how your figures compare, but they are also used by the Australian Taxation Office as one of several tools in its compliance work.
That makes the benchmarks worth understanding. A result outside an ATO benchmark range does not automatically mean your figures are wrong, and it does not automatically trigger an audit. However, it is a reason to check the numbers, understand the commercial explanation and make sure your records support what has been reported.
For a growing business, the most useful approach is to treat benchmarks as a comparison point, not a target that your accounts must be changed to match.
Quick Summary
- The ATO publishes performance benchmarks for 100 small business industries.
- The benchmarks are calculated from information reported in business tax returns from more than two million small businesses.
- Current ATO industry pages state that the latest performance benchmark data is from the 2022–23 financial year.
- Benchmark ratios can include cost of sales, total expenses, labour, rent and motor vehicle expenses as a percentage of turnover, depending on the industry.
- Each industry has a key benchmark range that the ATO considers the most accurate for predicting business turnover.
- Being outside a benchmark range does not automatically mean a business has done anything wrong or will be audited.
- The ATO says it never uses benchmarks in isolation when deciding to review a business or its records.
- Where records are insufficient or unavailable, the ATO may use the key benchmark range when determining how much tax a business should have paid.
- Business owners can use the ATO Business performance check tool to compare their figures with similar businesses.
- If your business sits outside a benchmark range, check the accuracy of your records and understand the reason for the variance before changing anything.
What Are ATO Small Business Benchmarks?
ATO small business benchmarks are financial ranges developed for selected industries. They show how certain business expenses compare with turnover for businesses in that industry.
The ATO currently publishes performance benchmarks for 100 industries. Its benchmark data is calculated from tax returns lodged by more than two million small businesses, making it a broad comparison set for Australian small business activity.
The benchmarks are not a prescribed profit margin or a rule that every business must fit. They are statistical ranges that can help you compare selected ratios with businesses that report similar activities.
What Data Do the ATO Benchmarks Use?
The current performance benchmarks are based on information reported in business tax returns. Current ATO industry benchmark pages identify 2022–23 as the most recent performance benchmark data.
The ATO previously published activity statement benchmark ranges using complete financial-year activity statement data. Those activity statement ranges have not been produced since 1 July 2017 following the introduction of Simpler BAS.
This distinction matters. Current performance benchmarks are primarily tax-return benchmarks, rather than a live reading of what businesses in your industry are doing this month or this quarter.
Which Ratios Can Be Included?
The ratios shown depend on the industry and the information available. Tax return benchmark ranges can include:
- cost of sales to turnover, excluding labour
- total expenses to turnover
- labour to turnover
- rent to turnover
- motor vehicle expenses to turnover
Not every ratio applies to every business. For example, a service business may have very little cost of sales, while a retailer or hospitality business may rely heavily on stock and direct input costs.
What Is the Key Benchmark Range?
Each benchmarked industry has a key benchmark range. The ATO describes this as the most accurate benchmark for predicting business turnover for that industry.
For some industries, cost of sales to turnover is the key benchmark. For others, total expenses to turnover may be more appropriate. The relevant ATO industry page tells you which range is the key benchmark and usually separates the data into annual turnover bands.
You should therefore compare your business with the correct industry, turnover range and ratio. Comparing a business with the wrong category can produce a misleading result.
How Do You Calculate an ATO Benchmark Ratio?
Most benchmark ratios compare a particular expense with annual turnover. The basic calculation is:
Expense amount ÷ annual turnover × 100 = expense-to-turnover percentage
For example, if a business has annual turnover of $600,000 and cost of sales of $240,000, its cost-of-sales-to-turnover ratio is 40%. You can then compare that percentage with the published range for the relevant industry and turnover band.
The purpose is comparison. It is not an instruction to change a correctly recorded expense or income figure simply to move the result inside the benchmark range.
Does Being Outside an ATO Benchmark Mean Your Business Has a Problem?
Not necessarily.
A business can sit outside a benchmark range for legitimate commercial reasons. Its location, pricing model, staffing structure, supplier costs, business mix, stage of growth or unusual trading conditions may all affect its ratios.
The first question should therefore be whether the underlying financial data is accurate. If it is, the next question is whether there is a reasonable business explanation for the difference.
Reliable comparisons depend on reliable accounts. Cotchy’s financial data integrity guide explains why inaccurate or inconsistent underlying data can distort every report built from it.
Do ATO Benchmarks Trigger an Audit?
A benchmark variance can be relevant to ATO risk assessment, but it should not be described as an automatic audit trigger.
The ATO says benchmarks are one of the tools it uses to identify businesses that may not be reporting all their income. It compares information in business tax returns with the key performance benchmark for the relevant industry.
Importantly, the ATO also says it never uses benchmarks in isolation when deciding whether to review a business or when examining its records. Other information and risk indicators can also be considered.
For a broader explanation of the information the ATO can consider, see Cotchy’s ATO Audit Targets 2026 guide.
What Happens If Your Business Is Outside the Benchmark Range?
Start by checking the figures rather than trying to make them fit the benchmark.
Review whether all business income has been recorded, whether expenses have been coded correctly, whether private-use amounts have been treated appropriately and whether stock or cost-of-sales figures are complete where relevant.
If the records are correct, document the commercial reasons for a material variance. A business with unusually high rent, a different service mix or a temporary change in margins may have a perfectly legitimate explanation.
Good business record keeping is important because the records behind the reported figures are what allow a business to substantiate its actual position.
Can the ATO Use Benchmarks to Estimate Business Income?
Yes, in some circumstances.
The ATO states that it may use the key benchmark range to determine how much tax a business should have paid when there are insufficient or no records available. This is one reason poor record keeping can become much more serious than simply making bookkeeping harder.
If the business can produce complete and reliable records, those records provide the evidence for the income and expenses actually reported.
How Can Business Owners Use Benchmarks for Performance?
Benchmarks can also be useful outside tax compliance. They can prompt useful questions about how a business operates compared with similar businesses.
For example, a higher cost-of-sales ratio may lead you to examine supplier pricing, waste, discounts or product mix. A higher rent ratio may reflect an expensive location. A labour ratio outside the industry range may reflect a service model that relies more heavily on staff.
However, an ATO benchmark is not the same as a tailored management KPI. It is a broad industry comparison based on tax-return data. Your own budgets, historical trends, margins, cash flow and operational KPIs may be more useful for day-to-day management.
How to Use the ATO Business Performance Check
The ATO Business performance check is available through the ATO app. It allows a business owner to enter figures and compare selected performance ratios with similar businesses using the small business benchmarks.
The tool can be useful as a quick comparison, particularly if you want to see how your ratios sit against the published range. It should still be read in the context of your actual business model and financial records.
What If Your Industry Is Not Listed?
The ATO publishes performance benchmarks for 100 industries, so not every business activity has a dedicated benchmark.
If your exact industry is not represented, avoid forcing the business into an unrelated category simply to obtain a comparison. A neighbouring industry may have a very different cost structure.
The ATO points businesses without a represented industry towards its broader taxation statistics. For management purposes, your accountant may also use other relevant industry data, historical business results or internal KPIs where appropriate.
Why Accurate Bookkeeping Matters Before You Compare
A benchmark comparison is only as useful as the figures entered into it.
If bank accounts have not been reconciled, sales are missing, expenses are miscoded or stock figures are unreliable, the resulting benchmark ratio may tell you more about the quality of the records than the performance of the business.
Monthly reconciliation helps keep the underlying numbers current and makes unusual movements easier to investigate while the transactions are still recent.
If your books are behind, Cotchy’s catch-up bookkeeping service can help bring historical bookkeeping up to date before the figures are relied on for reporting or comparison.
Should You Change Your Numbers to Match an ATO Benchmark?
No.
A benchmark is a comparison tool, not a target for adjusting correctly recorded figures. Income and expenses should reflect what actually occurred and be supported by appropriate records.
If a legitimate business sits outside the range, the right response is to understand and document why. Changing accurate figures merely to resemble an industry benchmark would undermine the integrity of the accounts and tax reporting.
How Often Should You Review ATO Benchmarks?
For tax-compliance purposes, check the current ATO benchmark data when preparing or reviewing annual figures, particularly if your industry has a published benchmark and your ratios have moved materially.
For management purposes, you can monitor your own ratios more frequently. Monthly or quarterly internal reporting can show whether costs, margins and labour are moving over time, without waiting for the ATO to publish a new industry data set.
Always check the date of the ATO data before treating a benchmark as current. As at 22 September 2026, current ATO industry pages identify 2022–23 as the most recent performance benchmark data.
ATO Small Business Benchmark Checklist
- Confirm that the ATO publishes a benchmark for your actual industry.
- Use the correct annual turnover band.
- Identify the key benchmark range for that industry.
- Check which expense ratios actually apply to your business.
- Make sure the bookkeeping and tax-return figures are accurate before comparing them.
- Investigate material variances rather than assuming they are errors.
- Document legitimate commercial reasons for unusual ratios.
- Do not alter accurate records simply to fit a benchmark.
- Keep supporting records for reported income and deductions.
- Use your own management KPIs alongside ATO benchmarks when assessing business performance.
Frequently Asked Questions
What are ATO small business benchmarks?
They are financial ranges for selected industries, calculated from information reported in small business tax returns. They allow businesses and the ATO to compare selected expense-to-turnover ratios with similar businesses.
How many industries have ATO small business benchmarks?
The ATO currently publishes performance benchmarks for 100 small business industries.
What is the latest ATO small business benchmark data?
As at 22 September 2026, current ATO industry pages state that the latest performance benchmark data is from the 2022–23 financial year.
Does being outside an ATO benchmark trigger an audit?
Not automatically. The ATO says it uses benchmarks with other risk indicators and never uses benchmarks in isolation when deciding whether to review a business or its records.
What is the key benchmark range?
It is the ratio the ATO considers most accurate for predicting turnover in a particular industry. The relevant ratio varies by industry.
Can a profitable business be outside the benchmark range?
Yes. Business models, location, supplier costs, staffing, pricing and other commercial factors can produce legitimate differences from an industry range.
Can the ATO use benchmarks if my records are missing?
The ATO says it may use the key benchmark range to determine how much tax a business should have paid when there are insufficient or no records available.
Should I change my accounts to match the benchmark?
No. Accounts and tax reporting should reflect the actual transactions and be supported by records. A benchmark is a comparison, not a target for changing accurate figures.
Where can I check my business against ATO benchmarks?
You can use the industry benchmark pages on the ATO website or the Business performance check available through the ATO app.
Are ATO benchmarks the same as business KPIs?
No. ATO benchmarks are broad industry comparisons. Business KPIs are usually tailored to your own operations, goals, margins and historical performance.
Use Benchmarks as a Signal, Not a Target
ATO small business benchmarks can be useful for understanding how selected business ratios compare with similar businesses. They can also highlight figures that deserve a closer look.
The important part is what happens next. Check that the records are accurate, understand the reason for any material variance and keep evidence that supports the figures actually reported.
Cotchy brings accounting, bookkeeping and taxation together so business owners can work from reconciled numbers through to tax reporting without acting as the go-between for separate providers.
Sources
Australian Taxation Office – Small business benchmarks
Australian Taxation Office – Small business benchmarks methodology and ratio calculations
Australian Taxation Office – ATO app
