ATO benchmarks for blocklayers

The ATO's blocklaying services industry covers businesses that lay blocks and get sites ready for buildings and other structures to go up. Bricklayers, pavers and builders fall outside this group, and the ATO says these ranges do not apply to them. For blocklayers the ATO's key benchmark range is total expenses to turnover, the measure it regards as predicting turnover most accurately in this trade.

Each business is placed by the activity it reports as its main one. The ATO drops businesses outside a minimum and maximum turnover, those reporting several activities and newcomers that had traded for under a year when the year opened, then removes outlying results.

Turnover is the income from blocklaying work and any materials supplied with it, excluding GST. Total expenses takes in the business's costs minus payments to associated persons, like a spouse or relative labouring on the job.

The ATO publishes no cost of sales ratio for blocklayers. It only puts a ratio out when enough businesses in an industry report that expense, and many businesses that mainly sell a service have little cost of sales. That ratio also leaves out salary and wages, so wages paid to a laying crew would not count in it.

That leaves the one figure to carry everything: wages and payments to labourers and subcontract layers, blocks, cement, sand, core-fill grout and reinforcing steel on supply-and-lay jobs, scaffold and mixer hire, the ute's fuel and running costs, and insurance. On labour-only contracts the builder buys the blocks, so those materials never pass through the blocklayer's books. A motor vehicle ratio is the only other one the ATO lists for this industry.

A published range is the band of blocklayers grouped either side of the mean blocklaying result at that turnover level. It sets no minimum or maximum, and the ATO publishes it in whole numbers. Blocklaying has its own turnover ranges, drawn from how this industry's results spread.

The share climbs steeply with each larger turnover range. In 2023-24 the bands do not overlap at all, while in 2022-23 the lowest band and the middle band met at the same whole number. The bands also tighten as turnover rises, leaving the lowest range clearly the widest.

Between the years, the 2023-24 bands for the lowest and middle ranges slid down at both ends. In the highest range the floor slipped a little and the ceiling stayed where it was.

Above the band, expenses are heavy against turnover. In blocklaying that can mean labourers kept on through wet weeks or slow patches when little gets laid, blocks and steel bought at higher prices than other blocklayers pay, broken blocks and leftover pallets that never reach a wall, or supply-and-lay quotes carrying a thin margin. Cash from a small retaining wall job that pays a labourer before it is recorded as income, or a homeowner job never invoiced, also lifts the share.

Below the band can point to costs never recorded, such as cash paid to a casual labourer or materials paid for out of the owner's own pocket, or to a well-run crew wasting little. Bookkeeping checks that clear a recording cause:

• Supplier dockets for blocks, steel and cement matched to the bills in the books
• Progress payments from builders traced to invoices raised and to bank deposits
• Cash paid to labourers written down with the name, date and job
• Blocks and steel left in the yard counted at the close of the year

Take total expenses for a whole financial year off the profit and loss report, leave out payments to associated persons, divide by turnover excluding GST, and compare the answer against the blocklayer's own turnover range. A business that traded for only part of the year, is new to the trade this year, or also does bricklaying or paving as a separate activity is unlike the businesses the ATO measured, so its ratio will not line up the same way, and an unusual expense like a major truck repair lifts that year's share. Because labour-only and supply-and-lay contracts put very different amounts through the books, a year with an unusual contract mix can read differently too.