For example, the total expenses for an Australian coffee shop are typically between 88 and 93 per cent of revenue when the business is turning over $600,000 or more, according to the numbers.
Labor costs are up to 33 per cent of turnover, while rent is typically 12 per cent.
Businesses that file their returns with profit margins and expense details radically different from these figures could raise the interest of the tax office.
The move comes as the tax office again pledges to “expand our data holdings” by drawing on publicly available information to catch out those that may be fudging their returns.
Evidence of “unexplained wealth”, whether that’s purchasing assets or motor vehicles or funds in a business owner’s bank account will raise the interest of the tax office, he says.
While it would be an “exceptional situation” for the tax office to look at social media, Holt does not rule out that this may also be a source for the ATO.
“It’s publicly available information, at times we might have to look it,” he says.
There are more than 4,000 site visits planned between now and the end of the financial year, with Holt warning these visits can provide an opportunity for a further investigation or audit.
So far this year site visits have identified cases of businesses omitting income, as well as tip-offs about suspicious business activities.
“We get dob-ins from their competitors while we’re out there,” he says.
Health checks important
The up-to-date benchmark figures also give smaller operators an idea of whether their costs are in line with their competitors.
They reveal a number of sectors where average expenses are more than 90 per cent of turnover, including Australian restaurants, where the average of total expenses to turnover is 92 per cent.
Newsagents typically saw expenses worth 94 per cent of turnover in the 2016-17 financial year, while takeaway shops sit at 91 per cent.
Holt says it’s critical for business owners to perform annual health checks to see whether their costs are much higher or lower than their peers.
If they are out of line with the norm, it’s important to “make sure you understand why” in case the tax office comes knocking, says Holt.
Business owners must not ignore the ATO if it does get in touch in the next few months.
“Don’t put your head in the sand. The best thing you can do is engage — let them know the information you have or haven’t got,” Holt says.
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Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.