MENU

ATO’s Use Of Small Business Benchmarks

Recently, the ATO updated its small business benchmarks to encompass the 2021–2022 income year. While the ATO promotes these benchmarks as an aid for small businesses to enable them to compare expenses and turnover with other similar small businesses in the same industry, it is important to note that these benchmarks are also used by the ATO to identify businesses that may be avoiding their tax obligations.

According to the ATO, it uses small business benchmarks along with other risk indicators to select businesses for further compliance activities.

The benchmarks themselves are divided into nine broad business categories: accommodation and food; building and construction trade services; education, training, recreation, and support services; health care and personal services; manufacturing; professional, scientific and technical services; retail trade; transport, postal and warehousing; and other services. These categories split into additional subcategories; for example, bakeries, chicken shops, coffee shops, kebab shops and pubs all have their own separate subcategory under accommodation and food.

There are five tax return benchmark ratios calculated by the ATO, each expressed as a percentage of turnover (excluding GST). These consist of total expense/turnover, cost of sales/turnover, labour/turnover, rent expenses/turnover, and motor vehicle expenses/turnover. To calculate the turnover, the ATO generally uses the amount reported at the “Other sales of goods and services” label on the tax return or, if that figure is not present, the figure from the “total business income” label.

Small businesses can use the Business Performance Check tool on the ATO app to work out their own personal ratios and then compare them to the benchmarks, or manually calculate the various ratios and compare to the benchmarks. For businesses with ratios inside the benchmark ranges for their industry, the ATO notes that nothing else needs to be done. However, businesses with ratios outside of benchmarks are encouraged to look to see if there are any factors that can be improved.

Expansion Of Paid Parental Leave

Parents will soon be able to access up to 26 weeks of paid parental leave (PPL) under an expansion of the scheme.

The Paid Parental Leave Amendment (More Support for Working Families) Bill 2023 (the Bill), which was passed by the Senate, will increase PPL by adding 2 weeks each year from 1 July 2024, until the overall length of the scheme is increased to 26 weeks by July 2026.

The Bill also introduces concurrent leave, meaning that from July 2026 both parents can take 4 weeks of reserved leave at the same time, thereby increasing flexibility for families to share caring responsibilities. The reserved leave period will increase by one week each year from 1 July 2025 to reach 4 weeks by 1 July 2026. Currently, the PPL scheme provides 20 weeks of payment for a child, with 100 flexible PPL days and 2 weeks reserved for each parent.

In addition to the expansion of scheme, the federal government also announced its intention to pay superannuation on PPL from 1 July 2025.

Important Tax Dates

15 May 2024

  • Lodge 2023 tax returns for all entities that did not have to lodge earlier (including all remaining consolidated groups) and are not eligible for the 5 June concession.
  • Due date for companies and super funds to pay if required.

21 May 2024

  • Lodge and pay April 2024 monthly business activity statement.

26 May 2024

  • Lodge and pay eligible quarter 3, 2023–24 activity statements if you or your client have elected to receive and lodge electronically.

28 May 2024

  • Lodge and pay quarter 3, 2023–24 Superannuation guarantee charge statement if the employer did not pay enough contributions on time.

2024 FBT Year – Ends 31 March 2024

This is a timely reminder to capture Odometer Readings at 31 March 2024 for any motor vehicles that are under the Operating Cost method for Fringe Benefits Tax (FBT).

In relation to the Operating Cost method, the ATO have updated their guidance to clarify that the Operating Cost method can be used to calculate the car fringe benefit even without a logbook, or if the logbook is invalid.

In this situation the business use percentage will default to nil however this may still result in a lower FBT liability than the statutory formula method.

We will be sending out FBT Questionnaires to clients shortly and we will provide more FBT updates in our next newsletter.

The Bike Of Life

Having a balanced life is not about being perfect in all areas. It is about ensuring that any emphasis that may be put into one or more areas of your life is not causing an in-balance and issues in other areas.

The Bike Of Life is a great little self-assessment to ascertain where your energy is going and where more attention can be directed.

To further assist you, please click Begin Life Balance Diagnostic button below and answer 25 questions (it should only take you 5 minutes) to identify from 6 factors the top 3 areas that are working well and top 3 areas you need to work on to improve your personal Life Balance. You will also have the ability to see how you compare to the global benchmark (average scores of all completed diagnostics) on each of the 6 factors.

Register Your Interest: Harris Black Business Leaders Forum

2024 will be a year of exciting opportunities for most business leaders. Not only is it an opportunity to ‘reset’ strategies, but also to look at how to boost business value, grab emerging opportunities and scale up by doing more with less. This is often easier said than done especially in the unpredictable and at times very challenging current market.

Discover emerging trends all leaders need to understand for higher performance.  Challenge your plans with experienced peers.

Register your interest by clicking the button below.

Workshop Details:

Date: 31 May 2024
Time: 7:45am
Venue: Harris Black Office – Level 16 333 Ann Street Brisbane QLD 4000

How can we help you?

Today’s financial environment demands a regular review of strategy and a focus on execution.