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