11 July 2016

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The ATO has released its latest benchmarks for small business based on the data from 2014 income tax returns and business activity statements. Assistant commissioner Matthew Bambrick said the benchmarks, based on information from 1.3 million small businesses, was that they gave “a lot of small businesses peace of mind”. “If a small business is inside the benchmark range for their industry and the ATO hasn't received any extra information that may cause concern, they can be confident that they probably won't hear from us," Mr Bambrick said. "The business performance check tool on the ATO app also makes it quick and easy for small businesses to compare their own operations with industry benchmarks." Mr Bambrick said the benchmarks were also a helpful guide for small businesses to see how they stack up against others in their industry. “We know a lot of small businesses, advisors and industry associations use the benchmarks to gauge competitiveness, whether or not costs might be too high or profit margins too low,” he said. "Sometimes when a small business finds themselves outside the benchmarks for their

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Benchmarks can help build small business industry it may be because they have more waste than their competitors or they're spending more on materials in comparison. Using the benchmarks as a guide, not only can they identify where they are slipping behind but also how they can improve and build their business. "For example, one business told us how their accountant used the tailored benchmarks to work out that their expense to turnover ratio was higher than other businesses with a similar turnover. Using this information the business adjusted some of their inputs and how they were pricing their products. These changes resulted in an overall improvement in their performance." Mr Bambrick said for some small businesses outside the benchmark range it could also simply

be a case of being incorrectly registered or the business intent changing since starting up. "These types of small administrative errors can be easily fixed by checking the previous year's tax return to see which business industry code was used and then updating it in the next return and on the Australian Business Register," Mr Bambrick said. While the benchmarks are a helpful guide for small business, Mr Bambrick said it was one of several tools the ATO uses to ensure a “level playing field”. "We use tools like benchmarks and data matching to protect honest businesses from competitors who are trying to get ahead by avoiding their tax obligations."

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Frankston Times

11 July 2016

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