Quick answer
The ATO publishes small business benchmarks for 100 industries, showing typical ratios such as cost of sales, labour, rent and total expenses as a share of turnover. The latest set, released in March 2026, uses 2023–24 data. Lenders don't use them as a pass mark, but numbers well outside the typical range prompt questions. Checking your ratios first lets you explain differences before a lender asks.
Key points
- ATO benchmarks show typical cost ratios by industry and turnover band.
- The current benchmarks were released on 27 March 2026 and are based on 2023–24 data from over 2 million small businesses.
- The ATO's free online tool compares your figures with your industry in a few minutes.
- Being outside a range isn't a problem in itself — being unable to explain it is.
- Benchmarks exist for cafés, trades, retail, health and many other industries.
Every year, the ATO publishes a set of numbers that most small business owners never look at, but that say a surprising amount about how a business runs. The small business benchmarks show typical cost ratios for businesses in the same industry and of similar size. The ATO uses them to spot businesses that may be under-reporting income. Lenders and brokers sometimes use them too — not as a test, but as a quick sense-check.
Knowing where your business sits against its benchmark is one of the simplest ways to prepare for a loan application.
What do the benchmarks actually measure?
For each industry, the ATO publishes ranges for a handful of ratios, usually expressed as a share of annual turnover. Depending on the industry, they can include:
- Cost of sales — what you spend on stock, materials or ingredients.
- Labour — wages and related costs.
- Rent — premises costs.
- Motor vehicle expenses — for industries where vehicles matter.
- Total expenses — everything together.
The ranges are split into turnover bands, because a small business and a larger one in the same industry often have different cost structures. The current set was published on 27 March 2026 and is based on the 2023–24 financial year, drawn from the tax returns and activity statements of more than 2 million small businesses. If you prefer a spreadsheet, the same figures are on data.gov.au.
Take the ATO’s benchmark for coffee shops as an example. It covers businesses selling coffee, tea, other drinks and food, and excludes coffee carts and mobile vans. It publishes ranges for cost of sales, total expenses, labour, rent and motor vehicle expenses across three turnover bands — and it describes cost of sales to turnover as the key benchmark for the industry.
Which industries have benchmarks?
The A–Z list covers 100 industries. They include:
| Sector | Examples with ATO benchmarks |
|---|---|
| Food | Coffee shops, restaurants, bakeries, catering, butchers, takeaway |
| Health and personal | Dentists, physiotherapy, veterinary, pharmacy, child care, fitness centres, hairdressers, beauty |
| Trades | Electrical, plumbing, air conditioning, landscaping, carpentry, painting, roofing |
| Transport and auto | Road freight, courier services, automotive electrical, panel beating |
| Retail | Clothing, homewares, florists, hardware, gift stores |
| Other services | Cleaning, printing, alarm installation, laundry |
Not every industry has one — the list leans towards trades, retail, food and personal services, and many farm, production and professional businesses won’t find an exact match. If yours isn’t there, the ideas in this guide still apply — compare yourself with what you know of similar businesses.
How might a lender use a benchmark?
Most lenders don’t formally test applications against ATO benchmarks. But experienced credit assessors and brokers know roughly what a healthy business looks like in each industry, and the benchmarks are one public source of that knowledge.
Where a benchmark can come into play:
- Cost of sales far above the range might suggest pricing problems, waste or theft — or simply a premium product.
- Cost of sales far below the range might raise questions about whether all sales are being reported — or reflect a high-margin niche.
- Labour well above the range might point to overstaffing or rising award costs not passed on.
- Rent well above the range often signals a site that’s hard to make work, especially for hospitality and retail.
The point isn’t that being outside the range is bad. It’s that a lender will want to understand why. Owners who can explain their numbers before they’re asked tend to have smoother applications.
Once you know your numbers, see what your business could qualify for — no credit check to enquire, and a real person reviews it.
How to check your own business against the benchmark
- Find your industry on the ATO’s A–Z list.
- Pick your turnover band based on your last financial year.
- Calculate your ratios from your profit and loss: cost of sales divided by turnover, labour divided by turnover, and so on. Your accountant or bookkeeping software can do this quickly.
- Compare each ratio with the range.
- Write down the reasons for anything outside the range.
Short on time? The ATO’s Compare your business now tool does steps 2 to 4 for you: pick your industry, enter a few figures from your profit and loss, and it shows where you sit. Use the same figures that are on your lodged tax return, otherwise the comparison won’t match what the ATO — or a lender reading your financials — sees.
| Your situation | A reasonable explanation |
|---|---|
| Cost of sales above range | Premium ingredients or stock; recent supplier price rises; high wastage being fixed |
| Cost of sales below range | Specialist high-margin products; strong buying power; service-heavy mix |
| Labour above range | New staff ahead of growth; award increases; owner not drawing a wage elsewhere |
| Rent above range | High-traffic location; recent rent review; lease renewal due |
A worked example
Illustrative. A café owner applying for a $45k equipment loan checks the coffee shop benchmark. Her cost of sales sits above the typical range for her turnover band. Looking into it, she finds two reasons: she switched to a premium organic milk supplier, and she hadn’t raised prices in eighteen months.
She notes both in her enquiry and mentions that she’s increased prices this quarter. When the lender reviews her statements and sees the higher cost of sales, they already have the answer. The application moves straight on to the lease and takings — the things that matter most for a café loan.
Benchmarks and different industries
Different industries have different “key” ratios:
- Hospitality and food: cost of sales and rent. See the guides for cafés and restaurants.
- Trades: labour and materials, plus motor vehicle costs. The plumbing guide shows how lenders read service and builder work.
- Retail: cost of sales and stock turn. See the retail guide.
- Health: labour and rent, particularly for clinics with expensive fit-outs.
The industry finder lists what lenders typically focus on for 70+ industries.
What if the ATO has already flagged your numbers?
This is a question more owners are asking, because benchmarks are now a routine part of how the ATO picks businesses for a closer look. The ATO is open about it: businesses well outside their range are more likely to be reviewed, and its guide to being outside the benchmark range lists the usual causes — particular circumstances, incorrect figures on a return, or a business with room to improve.
A letter or review from the ATO doesn’t rule out finance. What lenders want is the full picture:
- Tell them early. A review that turns up later, in a credit check or a conversation with your accountant, looks far worse than one you mention in your first enquiry.
- Explain where it’s at. Has the ATO asked questions, or made adjustments? Were figures amended? Is there a debt, and is it on a payment plan?
- Show the fix. If the cause was coding — say, subcontractors booked as wages — show the corrected profit and loss. If it was genuine, such as a premium product or a costly site, show the evidence.
We look at businesses with ATO matters on a case-by-case basis. A clear, honest explanation usually matters more than the issue itself.
What benchmarks can’t tell a lender
Benchmarks are averages. They can’t show that your business is growing fast, that you just won a big contract, or that your rent is high because you’re next to a train station that brings a thousand customers a day. They also don’t show cash flow timing, debtor days or the strength of your lease.
That’s why a real conversation matters. The numbers start the discussion; your explanation finishes it. Our guide on industry classification explains why getting your industry right is the first step in that conversation.
What if your industry has no benchmark?
Plenty of industries aren’t on the ATO’s list, or only have a loose fit. That doesn’t put you at a disadvantage — it just means the comparison happens differently.
Lenders who finance those industries rely on their own experience: what a healthy cellar door margin looks like, how much of an agency’s income usually comes from property management, how much WIP a law firm typically carries. You can help by explaining your own key ratios in plain language. For example, a winery might note what share of sales is direct-to-consumer, and an agency might show management fees as a share of total income.
The principle is the same as with a published benchmark: know your numbers, know where they’re unusual, and have the reason ready.
Common mistakes when comparing yourself to a benchmark
- Using the wrong turnover band. Ratios differ between small and larger businesses in the same industry. Use the band that matches your last full year.
- Mixing personal and business costs. Private expenses run through the business distort every ratio. Clean records make the comparison meaningful.
- Comparing a part-year. A new business, or one that changed significantly mid-year, may not compare fairly. Say so.
- Forgetting owner wages. In some businesses, the owner takes profit rather than a wage, which can make labour look unusually low. Explain how you’re paid.
- Treating the range as a target. The benchmark describes typical businesses; it doesn’t tell you what’s right for yours. Premium products, prime locations and specialist services can all justify a different shape.
Should you talk to your accountant first?
It’s a good idea. Your accountant can calculate your ratios accurately, flag anything that looks odd and help you prepare a short explanation. They may also spot items that are coded inconsistently in your books — for example, subcontractor costs recorded as wages one year and cost of sales the next — which can make ratios jump around for no real reason.
Your ratios are ready — now put them to work
If you’ve just worked out your cost of sales, labour and rent ratios, you already have the story most lenders want to hear: how your business makes its money and why its numbers look the way they do. That’s the hard part done, and it’s exactly what we use to match you with a sensible option — whether that’s cash-flow funding sized on your turnover or a larger property-secured loan.
The enquiry takes about 60 seconds and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so your phone won’t light up with strangers. A real person who knows how your industry runs reads your enquiry and calls you. Please fill it in accurately — the real turnover, the real industry, and a line on any ratio that sits outside the norm — so we can get the match right first time.
Frequently asked questions
What are ATO small business benchmarks?
They're industry-specific ranges published by the ATO showing typical financial ratios — such as cost of sales, labour, rent and total expenses as a share of turnover — for businesses in the same industry and turnover band. The ATO uses them to help identify businesses that may be under-reporting income, and owners can use them as a health check.
Which year's data are the benchmarks based on?
The current set, published on 27 March 2026, is based on the 2023–24 financial year and covers 100 industries. The ATO updates the benchmarks each year, so check the date on the page before you compare.
Do lenders use ATO benchmarks?
Some lenders and brokers use them informally to sense-check a business's numbers. They're not approval criteria, but figures far outside the range can prompt questions.
What if my business is outside the benchmark range?
It's usually fine if there's a reason — a premium product with higher cost of sales, a location with high rent, a family business with low wages. The ATO itself says being outside the range can come down to particular circumstances, incorrect figures or room to improve. Explain it clearly.
Could being outside the benchmark lead to an ATO review, and would that affect a loan?
Businesses well outside their benchmark are more likely to get a closer look from the ATO. A review on its own doesn't stop you borrowing, but an unresolved one can raise questions. If you've been contacted, say so up front and explain where it's at.
Where do I find the benchmark for my industry?
The ATO publishes an A–Z list of industries with their benchmarks, plus a 'Compare your business now' tool. Find your industry, select your turnover band and compare the ratios with your own figures.