Insights · Tax · 31 October 2026

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ATO small business benchmarks: are you outside the range?

The ATO publishes benchmarks for hundreds of industries showing typical ratios of costs to turnover. Businesses outside the range can attract ATO attention, but the benchmarks are also a useful health check.

The ratios

Each ratio is the cost divided by turnover (excluding GST) × 100. Common ones: cost of sales, total expenses, labour, rent and motor vehicle expenses. The ATO groups businesses by industry and turnover range.

How to check

1. Find your industry and turnover range on the ATO's Compare your business page.
2. Calculate your ratios from your profit and loss.
3. See where you sit in the range.

If you are outside the range

• Look for real reasons: start-up year, unusual large job, change in business model, location.
• Check for errors: wrong coding, private costs in the business, missing sales.
• Document the reasons. Being outside the range is not proof of a problem, but you should be able to explain it.

Use it to improve

A labour or cost of sales ratio above your peers often means a pricing or productivity issue: see markup vs margin and KPIs for small business. Our business health check covers this.

Quick answers

How are ATO benchmark ratios calculated?

The relevant cost divided by turnover excluding GST, multiplied by 100, compared with businesses in the same industry and turnover range.

What if my business is outside the benchmark?

Check for errors and document genuine reasons. Being outside the range is not proof of a problem.

Sources

• ATO: Compare your business now
• ATO: How we calculate benchmark ratios

General information only. This article does not take into account your circumstances and is not tax, legal or financial advice. Rates and rules change; check the sources above and get advice for your business before acting.