ATO's Benchmarks for Business

Benchmarking is simply another way to describe an acceptable margin or limit within which your business can or should operate. Although each business is different, benchmarking is a useful tool for seeing whether or not your business’ performance is “in the ball park”.

For example, your accountant may have advised you that, in order to make a profit, your labour costs (i.e. employees and contractors) must stay within a certain % of the value of each contract.

Benchmarks are not confined to dollar values but can be expressed in terms of time (eg the average number of days to complete a specific task) or volume of materials per given area of work.

The intention of benchmarks is to monitor how your business is travelling. If you find that your business is falling to meet your benchmarks, you can look at new business strategies to improve the overall performance of your business.

The ATO has recently released some benchmarks for the following businesses that operate within the building industry:

• Concreting
• Floor Sanding and Polishing
• Metal Roofing and Guttering
• Painting
• Roof Tiling

These benchmarks have been compiled by the ATO and are based on financial information contained in tax returns. They are available from the ATO website.

Click here  for the link. Businesses that operate in these segments of the industry can compare these benchmarks against their business’ financial data.

HIA is interested to know whether these benchmarks are realistic and would appreciate receiving feedback from you about these benchmarks, as they are likely to be used in the future for audit purposes. If they are not correct or need refining, HIA would like to be in a position to go back to the ATO with suggested changes so that all businesses operating within these areas can be "on a level playing field". If you wish to provide feedback about these benchmarks, please email e.greenwood@hia.com.au.