Audit Risk Benchmarking Skill

Compares a taxpayer's financial ratios (expense/income, labour costs, rent, motor vehicle) against ATO-published small business benchmarks for their ANZSIC industry code. Generates a risk profile without recommending behaviour change.

When to Use

• Assessing ATO audit probability before lodgement

• Identifying expense ratios that deviate from industry norms

• Preparing documentation for items outside benchmark ranges

• Pre-engagement risk assessment for new clients

• Annual compliance health check

Key Principle

ATO benchmarks are DESCRIPTIVE, not NORMATIVE. Being outside a benchmark is NOT illegal. This skill assesses probability, never recommends adjusting legitimate figures to match benchmarks.

Benchmark Ratios

Ratio Calculation Source

Cost of sales Cost of sales / Total income ATO Small Business Benchmarks

Total expenses Total expenses / Total income ATO Small Business Benchmarks

Labour costs Wages + super / Total income ATO Small Business Benchmarks

Rent Rent expense / Total income ATO Small Business Benchmarks

Motor vehicle Motor vehicle / Total income ATO Small Business Benchmarks

Engine Reference

• Engine: lib/analysis/audit-risk-engine.ts

• Function: assessAuditRisk(tenantId, financialYear, options)

• Output type: AuditRiskAssessment — includes risk factors, benchmark comparisons, and recommendations

• Database: audit_risk_benchmarks table stores cached benchmark data per industry code and FY

Data Sources

• ATO Small Business Benchmarks: ato.gov.au/Business/Small-business-benchmarks

• ATO Compliance Focus Areas: Published annually

• Industry codes: ANZSIC 2006 classification

Legislation

• TAA 1953, s 263-264 — ATO access and information powers

• TAA 1953, s 8C — Record keeping obligations