INSIGHT · FINANCE & TAX RECORDS

An ATO benchmark is a range with four coordinates.
Your books have to share all four.

The Australian Taxation Office's 2023-24 small business benchmarks, on industry pages last updated 16 March 2026, make total expenses to turnover the key benchmark for carpentry, electrical, plumbing, bricklaying and tiling services. Each range belongs to one industry, one financial year and one turnover band: the key range for plumbing services with turnover of more than $600,000 is 75% to 86%. The ATO's labour ratio counts contractor payments and leaves out payments to associated persons, so a comparison only means something if the books use the same definitions.

Analysed 28 September 2026 · ATO 2023-24 benchmark pages for carpentry, electrical, plumbing, bricklaying and tiling services, last updated 16 March 2026 · ATO ratio calculation and methodology pages last updated 16 March 2026 · all pages read 28 September 2026.

Key takeaways

• One key ratio, bands set by trade: The turnover bands differ by trade: carpentry's high band starts above $400,000, bricklaying's above $350,000, electrical's above $500,000, and plumbing's and tiling's above $600,000.
• Labour includes contractors: The ATO calculates labour as total salary and wages expenses plus contractor, subcontractor and commission expenses, minus payments to associated persons. Its plain-language definition: "salary and wage payments, including contractor payments (excluding GST amounts)", not including labour provided by a business owner or business partner.
• Not every ratio exists for every trade: For 2023-24, carpentry and bricklaying have no published cost of sales benchmark, and tiling has no published labour benchmark. The ATO's methodology only publishes a ratio when the industry population passes its statistical tests and enough businesses report the expense.
• The ranges move between releases: Comparing the ATO's 2022-23 and 2023-24 key-ratio files on data.gov.au, the medium-band range for electrical services moved from 62% to 77% to 59% to 75%. A range that is stored without its financial year can't be checked again later.
• We would store a benchmark as a record, not a number: We would store industry, financial year, turnover band and ratio definition with every benchmark, and map job-costing categories to those definitions before comparing anything. That is a system-design recommendation, not tax advice.

Five trades, one key ratio,
turnover bands set trade by trade.

Each industry page states that its performance benchmarks "use information reported on tax returns for the 2023-24 financial year and are updated each year", and that total expenses to turnover "is the key benchmark range for this industry".

Key benchmark: 'Total expenses' divided by 'Annual turnover', 2023-24 financial year, as read on 28 September 2026 from ATO industry pages last updated 16 March 2026. A $300,000 carpentry business and a $300,000 electrical business sit in the medium band of their own industries, but those bands start and stop at different turnovers.

The other ratios are published
for some trades and not others.

Under "Other benchmarks", each page adds secondary ratios with the caveat: "Not all expenses are reported by every business. Only use this information as a guide if it applies to your business." The ATO's methodology states that a secondary ratio is published only when the industry population is "normally distributed and homogenous" and "25% or more of the population in the industry is reporting the benchmarked expense". The pages do not say why a particular ratio is missing for a particular trade, and we do not guess.

Same bands as the key benchmark for each trade. Each of the five pages also publishes a motor vehicle expenses to turnover ratio, not shown here.

What the ATO counts as labour,
and what it leaves out.

The ratios are not built from a business's own chart of accounts. The ATO's page on how it calculates benchmark ratios states that they "are calculated from information reported at specific labels on tax returns", and that all tax return ratios "are expressed as a percentage of turnover (excluding GST)".

For trades, the labour definition is the one that matters most. Subcontractors are labour, not cost of sales. Wages paid to the owner or a partner count in neither labour nor total expenses.

• Turnover: Generally the amount at the Other sales of goods and services label. If that amount is "blank, zero, or less than 50% of the amount at the total business income label", the ATO uses total business income instead.
• Total expenses: "Total expenses amount is calculated as total expenses minus the payments to associated persons." The ATO's plain-language definition of associated parties covers relatives, partners in a partnership, directors of companies and closely connected companies or trusts.
• Cost of sales: "The cost of sales amount excludes salary and wages." Where the tax return code shows total salary and wages were included in cost of sales, the ATO deducts them.
• Labour: "Total salary and wages expenses + Contractor subcontractor and commissions expenses - Payments to associated persons." If the activity statement's W1 amount (total salary, wages and other payments) is greater than the salary and wages on the tax return, the ATO uses the activity statement amount.

The ATO's own plumbing example
turns on one bookkeeping category.

On its page about being outside the range, the ATO works through a plumbing services business with an annual turnover of $704,500. The owner, Robert, enters his tax return figures into the Business performance check tool in the ATO app and gets a total expenses to turnover result of 120%, "above the benchmark range of 75% to 86% for businesses in his industry with turnover of more than $600,000". The figures include salary, wages and superannuation of $260,000, of which $240,000 was his own.

The ATO's example is illustrative and involves no finding about any real business. We make no statement about how any particular amount should be reported.

• What changed: In the ATO's words, Robert "accidentally included the wages and superannuation he paid to himself in the calculation. These should have been reported separately on his tax return." After excluding that amount, his result is 85.97%, which the ATO describes as within the key benchmark range for his industry. The example ends with Robert lodging "an amended tax return to correctly report the wages and superannuation he paid to himself".
• The same category issue can go the other way: For businesses below a range, the same page lists as one possible explanation that "your expenses are recorded under the wrong label - for example, cost of goods sold under another expense label", and that some expenses "may not have been recorded - for example, salary, wages or cash wages".

A benchmark moves between releases,
and sometimes its bands move too.

The ATO publishes each year's key ratios as a spreadsheet on data.gov.au. Comparing the 2022-23 and 2023-24 files shows that, for the same industry and the same turnover band, the published range is not fixed.

The spreadsheets publish ratios as decimals (for example 0.62); we show them as percentages. Of the 100 industries in both files, only architectural services changed its turnover bands between the two years, by our comparison.

• How a range is built: The methodology states that "the range is represented by 30% of the population around the average", that "all benchmark ratios are published as whole numbers", and that turnover ranges "are different for each of the benchmarked industries".
• Who is in the population: The ATO excludes businesses with turnovers of less than $30,000 and more than $15,000,000, businesses that reported multiple activities, and businesses operating for less than one year before the start of the financial year. For 2023-24, the starting population "was identified after 31 October 2025".
• Which industry a business is in: Businesses are allocated by business industry code and by keywords in the main business activity and trading name labels. The pages also draw lines: carpentry benchmarks "don't apply to cabinet makers", and bricklaying benchmarks "don't apply to block layers, pavers or builders".

How the ATO says
it uses the key benchmark.

The ATO's own pages are direct about the purpose.

• Identifying businesses: "We use benchmarks and other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some of their income. We compare information reported in business tax returns with the key performance benchmark for their industry." (How we use business performance benchmarks, last updated 17 March 2025.)
• Not in isolation: "When we choose to investigate a business's tax records, we use a wide range of factors. We never use the benchmarks in isolation when deciding to review a business or when looking at the business's records."
• Where records are missing: Of the key benchmark range: "We use this range to protect honest businesses. We may also use it to determine how much tax a business should have paid when there are insufficient or no records available." (Types of small business benchmarks, last updated 17 March 2025.)
• What a result outside the range may indicate: The ATO's small business newsroom article of 27 March 2026 on the 2023-24 benchmarks states that if expenses fall outside the industry range, "it may indicate errors in your tax return", such as underreported income or overclaimed expenses.

Your job costing decides
whether the comparison means anything.

A trade business rarely thinks in tax return labels. It thinks in jobs. A quote splits into materials, the business's own crew, subcontracted work, plant and travel. A job costing report adds them up against progress claims. The benchmark asks a different question, using different categories, over a financial year. The comparison is only meaningful if someone has mapped one set of categories onto the other.

• Subcontracted work is labour: Under the ATO's definition, subcontractor payments sit in labour, not cost of sales. A job-cost view that files a supply-and-install subcontract under materials will give a different labour percentage from one computed to the ATO's definition. Which tax return label is right for a particular invoice is a question for the business and its registered tax agent. Our point is only that the percentage depends on the category.
• The owner's labour is outside both ratios: Payments to associated persons come out of labour and out of total expenses. In a small trade business the owner is often the main tradesperson. If job costing charges the owner's time to jobs as crew labour, the business's internal labour figure and the ATO's labour figure diverge by design.
• The band depends on turnover as the ATO measures it: Turnover here excludes GST and comes from the tax return. Contract values and progress claims may be tracked including GST and by job rather than by financial year. A business near a band limit, such as $150,000 for plumbing or $400,000 for carpentry, can land in a different range depending on which turnover figure is used.
• Builders are not in the list: We did not find a house construction or residential building industry in the ATO's Benchmarks A-Z list as read. For a builder, these trade benchmarks describe its subcontractors' industries, not its own.

What we would put in a system

Agents can help here, but only in a narrow way. A finance agent can read the ledger and job-cost categories, draft the mapping to the ATO's ratio definitions, pull the benchmark for the stated industry, year and band, calculate the ratios, and flag likely mismatches, such as an owner's wages sitting inside labour. The bookkeeper or registered tax agent then confirms the result. No agent decides which industry code applies, how a transaction should be reported, or whether a tax return is correct. Those decisions belong to the business, its tax agent and the ATO.

• Quoting: The cost categories set at quote time are the categories job costing, and later the benchmark comparison, inherit.
• Reporting: Holds the benchmark record with its year, band and definition, next to the business's own ratios.
• Finance and cashflow agent: Drafts the ledger-to-ratio mapping and the comparison. A person confirms before it is relied on.
• Construction companies: For builders whose subcontractors are the trades these benchmarks describe.
• A payment time is a record: entity, six-month period, measure: What large construction businesses report about paying small suppliers, and for which six months.

Questions worth asking
of your own records

For a trade business owner: which ATO industry, financial year and turnover band is your comparison against?

Each of the three changes the range. A range quoted without them is a number with no identity.

For a bookkeeper: where do supply-and-install subcontracts land in the ledger, and does that match the ATO's labour definition?

The ATO counts contractor, subcontractor and commission expenses as labour. If the ledger puts some of them in materials or cost of sales, a ratio calculated from the ledger will not match the one the ATO calculates from the tax return labels.

For an owner-operator: is your own pay recorded separately from employee wages?

Payments to associated persons come out of both labour and total expenses. In the ATO's own worked example, a plumbing business owner included his own wages and superannuation by mistake, giving 120% against a corrected 85.97%, and then lodged an amended tax return.

For a builder: which of your subcontractors' industries do these benchmarks describe?

We did not find a house construction industry in the ATO's A-Z list as read. The benchmarks describe the trades a builder engages, and bricklaying's page states that it does not apply to builders.

For a business near a band limit: which turnover figure put you in that band?

The ATO uses turnover excluding GST, generally from the Other sales of goods and services label. A GST-inclusive contract total, or a figure summed by job rather than by financial year, can put the same business in a different band.

What this analysis
does and does not show.

Bring us one year of job costing.

Tell us how your quotes split materials, crew, subcontractors and your own time, and how those categories reach the ledger. We will show you where they line up with the ATO's ratio definitions and where they do not. Classifying any amount is still for you and your tax agent.

This article is general information about benchmarks published by the Australian Taxation Office. It is not tax, accounting or financial advice. It does not determine whether any tax return is correct, which industry code applies, or whether any business is compliant. Figures and quotations are as read on 28 September 2026 from the sources listed and relate to the 2023-24 benchmarks unless stated.

Send us your job categories · Systems for trades

Sources

Suggested citation: Australian Taxation Office, Small business benchmarks 2023-24 industry pages and methodology pages, as read 28 September 2026. Derived, not quoted: the 2022-23 against 2023-24 comparison and the count of industries whose turnover bands changed, both our comparison of the ATO's data.gov.au spreadsheets, with decimals shown as percentages. Where the ATO prints an en dash or a minus sign (in years, turnover bands, industry names, formulas and quotations), we show a hyphen.

• ATO - Carpentry services: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - industry benchmark page
• ATO - Electrical services: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - industry benchmark page
• ATO - Plumbing services: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - industry benchmark page
• ATO - Bricklaying services: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - industry benchmark page
• ATO - Tiling services - floor and wall: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - industry benchmark page
• ATO - How we calculate benchmark ratios: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - ratio definitions
• ATO - Benchmarking methodology: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - methodology
• ATO - How to compare your business performance manually: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - guidance and definitions
• ATO - What it means to be outside the benchmark range: Last updated 16 March 2026 · read 28 September 2026 · Tax regulator - guidance with worked examples
• ATO - How we use business performance benchmarks: Last updated 17 March 2025 · read 28 September 2026 · Tax regulator - statement of use
• ATO - Types of small business benchmarks: Last updated 17 March 2025 · read 28 September 2026 · Tax regulator - guidance
• ATO - Benchmarks A-Z: Last updated 14 March 2024 (as displayed) · read 28 September 2026 · Tax regulator - industry index
• ATO - Small business benchmarks: No date displayed · read 28 September 2026 · Tax regulator - section overview
• ATO - Where does your business stand with our benchmarks?: Published 27 March 2026 · read 28 September 2026 · Tax regulator - small business newsroom
• ATO - ATO releases new small business benchmarks for 100 industries: Published 17 March 2025 · read 28 September 2026 · Tax regulator - media release (previous year's release)
• data.gov.au - Small Business Benchmarks (2023-24 and 2022-23 key ratios files): Dataset metadata modified 15 March 2026 (UTC) · read 28 September 2026 · ATO open data - spreadsheets