At the Vodafone COSBA National Small Business Summit in Sydney yesterday I was fortunate to talk with a representative of the ATO about their engagement with Sm all Business and, in particular, their use of benchmarks as a trigger for further investigation.
The ATO has benchmarks for various types of businesses, including newsagency businesses. The benchmarks evolve as they see businesses evolve. In our channel this is a challenge given the disparity between newsagency businesses.
Whereas for decades our businesses were, overall, similar in percentage of product categories sold and operational overhead percentages, today, the similarities are not there. Today, a single benchmark for newsagency businesses does not make sense.
Check ut the current ATO newsagency business benchmark and see for yourself.
I am grateful for the time to discuss this in detail with someone from the ATO, to point out the differences in newsagency businesses that were not there three or four years ago and to share that the differences are growing apace.
This matters since the benchmarks are a trigger within the ATO for them taking a closer look at a business, which could be an audit. Audits can be expensive so anything we can do to avoid this unnecessary cost the better.
Of course, there are reasons businesses should be audited such as situations where owners take cash out of the business, act to hide tax obligation or otherwise misbehave. In these situations or in the event of suspicion about these situations, investigation is vital not only for the ATO but for the channel.
Hopefully, the discussion I had will add a useful voice to consideration for a review of the approach to benchmarking newsagent businesses and, maybe, separating the channel out to more useful business category subsets that serve the situation of the channel today compared to a few years ago.
I see the need in the channel benchmark studies I undertake and can plot the drifting from the almost singular model to what we have today of many quite different businesses operating under a single shingle.
I am grateful that the ATO representative at least listened to the explanation of why the single benchmark approach may not be useful today.
Mark,
Did the ATO person comment on the online developments with superannuation and payroll taxes. They will soon have better ways of targetting audits than blunt instrument of benchmarks
Colin, not the ATO but some others did. One Payroll and other tech advances help small business operators but they also provide the ATO an insight.
The thing is, not paying super, not forwarding PAYG withholding and the like hurts the whole economy and early intervention should happen when it is uncovered.
Mark,I agree. the single benchmark solution is as you state not on. It’s obvious that the SME Businesses are run by independent thought add area demographics of income, race, (race promotes different buying patterns) and age so benchmarking as an average could be another algorism in the same vein as A.I.
The paying of cash etc is another issue unfortunately the payer of the cash is only hiding the fact that the business is declining. It’s sad that they feel they are forced to do this to save money. It only postpones the ineveitable-closure or not getting their full price when selling.
There needs to be more education on how the alternative can help them. in case of the Franchises that have been founf guily it’s not anything but fraud Ignorance doesn’t come into the equation.