Industry norms-an example of how the ATO puts them to use 24.11.2005
As part of its ongoing audit programs, the Tax Office has advised that they use a range of industry norms and ratios that they collect from all activity statements for particular industries. This gives them their `normal' boundaries for different industry groups.  
 
For example, they calculate:  
 
• average expenses as a percentage of total sales'; and 
• wages as a percentage of total sales'; and identify businesses that are operating outside these norms or ratios. 
How they try and target cash avoiders  
 
They also use industry information to determine if the level of income being reported is reasonable.  
 
For example, industry information indicates that an average of 110 cups of coffee can be made from a kilogram of coffee beans.  
 
This can be used with other information obtained from a cafe to calculate income from coffee sales compared to total income declared. Similar approaches may be used in other industries.  
 
They say they realise that not all businesses outside the industry norm are doing the wrong thing and (they say) they take the individual circumstances of each business into account.

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