The ATO has updated its small business benchmarks which are a guide to help compare a business’s performance against similar businesses in the same industry. The updated benchmarks draw on information from 1.5 million small business tax returns which reveals their typical margins and costs of sale.
Between now and July the ATO has warned that it will be chasing black economy activities by checking up on small businesses and has urged them to use the new small business benchmarks to track their performance against competitors.
The tax office will use these updated figures as a risk indicator and is planning more than 4000 site visits, which may result in further investigation or audit. They have also indicated that they may analyse a business’s social media profile and other publicly available information.
Assistant commissioner for small business, Peter Holt, said: “businesses should use the benchmarks to gauge the strength of their business and keep an eye on their competition… If your costs are within the benchmark range, you should be satisfied that you’re keeping up with your competition…Businesses operating outside the benchmarks may trigger a red flag for businesses we suspect could be engaging in the black economy.”
The benchmarks are one of the tools the ATO is using to crack down on the black economy along with data matching and referrals from the community.
“The black economy is estimated to be costing the community as much as $50 billion, which is approximately three percent of Gross Domestic Product. This is money that the community is missing out on for vital public services.” Mr Holt said.
“It’s all about protecting honest businesses from competitors who are trying to get ahead by avoiding their tax obligations”.
More information can be found on the ATO website here.
Call in at your local TaxAssist Accountants for help.