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The small business benchmarks were introduced by the Tax Office to provide a tool for assessing the performance of a business as well as a checking the reasonableness of various costs incurred in the business relative to its turnover.
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The benchmarks provide a means of assessing what is happening in a particular industry [Click here for a list of benchmarks published by the Tax Office].
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Generally, the benchmarks act as a tool that can help businesses:
• Compare their performance against other businesses in the same industry;
• Check that they are meeting their tax obligations;
• Work out whether they need to adjust their record keeping practices; and
• Assess whether they are likely to be selected for an audit or review.
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The Tax Office has announced that it will be using the benchmarks to identify businesses that may be avoiding their tax obligations.
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Small businesses that are found to be falling outside the benchmarks for a particular industry will be more likely to attract an audit by the Tax Office.
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For more information on small business benchmarks, visit the ATO website at http://www.ato.gov.au.
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