| name | audit-risk-benchmarking |
| description | Compare entity financial ratios against ATO small business benchmarks to assess audit probability |
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
