Benchmarking – Tax

The ATO has had business profit margin information for years.  Businesses are categorised into small medium and large, $125k, $400k and $2 million turnover repectively.  The ATO has cost percentages for materials, labour and rentals for many businesses. The ATO also knows what gross profit and net profit margins businessess should achieve.

The problem now is……the ATO is contacting businesses that do not achieve the required profit margin to se why. If the explanation is not satisfactory then a business is placed in the audit pool. Worse is to come as the ATO has also signalled it’s intention to “‘default assess”" a business owner on the benchmark net profit rate on any turnover…EVEN IF THE BUSINESS DID NOT ACHIEVE THE BENCHMARK  PROFIT.

It is a mathematical exercise. The ATO views any variance between the benchmark rate and your actual business profitability as an indicator that you may not be including all of your sales or exagerating expenses.

So now it is essential for you as a business owner to be aware of the required benchmark profit rate and ensure that you have your business performing at better than the benchmark rate.

You need to find out what your benchmark rate is and make the necessary changes to the way you operate your business.  There are a range of options and strategies that we would love to discuss with you.

That is where we come in………give us a call on 9832 0900 for a complimentary no obligatio consultation to discuss the ways in which we can show you how this can be done.