ATO benchmarks for carpet layers

The ATO's group is made up of businesses that fit new carpet and fix damaged carpet, with some also putting down other floor coverings such as cork tiles or linoleum. For carpet laying the ATO's key range is total expenses to turnover, which it treats as the closest guide to a carpet layer's turnover.

Carpet laying is one of several sub-groups the ATO separates out of a wider tiling and carpeting industry code, so tilers and timber floor sanders are benchmarked apart. Businesses join a group through their main activity; the ATO then leaves out those beyond its turnover limits at either end, those reporting other activities too, those in their first year, and outliers.

Turnover is income from laying and repair work, excluding GST. Total expenses is what the business spends apart from payments to associated persons, for instance a relative who helps on jobs. In the ATO's method cost of sales would exclude salary and wages, but no cost of sales range is published for carpet laying, so total expenses is the only figure in the tables on this page, while the ATO's own page adds labour and motor vehicle ranges as a guide only.

The ATO's general reason is that a ratio reaches publication only when enough of an industry reports the expense, and many service businesses carry little cost of sales.

Carpet bought by a flooring retailer or the customer stays out of the layer's books, while the running costs the layer does pay land in total expenses: materials it supplies such as seaming tape and door bars, van running costs including tolls and parking at the customer's premises, insurance, phone and quoting costs, tool repairs, and wages or subcontract payments for extra hands on larger jobs.

Each band covers the carpet layers grouped around the mean for that slice of turnover, so it is not a minimum or a maximum, and the ATO rounds its edges to whole numbers. The turnover ranges belong to this industry alone.

The expense share rises from the bottom turnover range to the top in both years, with the largest step into the top range. In 2023-24 the band widens at each step up; in 2022-23 it widened into the middle range and narrowed again at the top. Against 2022-23, the 2023-24 figures are lower at both edges in the lowest and middle ranges, while in the top range the floor is lower and the ceiling holds, so that band widened between the years.

Above the range, spending is high against the work billed. For a carpet layer that can show up as underlay and fixings bought in small lots at higher prices, a paid helper kept on through days without jobs, a low per-metre rate accepted from a retailer, offcuts and spoiled materials adding up, carpet or underlay used in the owner's own house yet recorded as business materials, or cash jobs for homeowners that were not invoiced.

A ratio under the band can follow from costs that never reached the books, such as fuel or materials paid for in cash or a helper paid cash wages, a higher price for the work, or a business that wastes little and books its days tightly. Recording checks to rule out first:

• Trade store and supplier receipts, small cash purchases included, are all entered.
• The job diary matches the invoices raised, including direct jobs for homeowners.
• Cash paid by homeowners is recorded as income before any of it is spent.
• A year-end tally of leftover underlay and fixings is taken.

From the latest complete financial year in the profit and loss, take total expenses minus any payments to associated persons, divide by turnover, and compare the result with the range for that turnover.

Part of a year, or the opening year of a new business, reads differently, as does a year carrying an unusual one-off cost such as a large insurance excess, because the ATO's figures leave out new businesses and outliers. A business that also sells flooring, sands timber floors or lays tiles may report more than one kind of work or belong in another group. One that supplies carpet as well as laying it carries purchases a labour-only layer does not, so they read differently.