ATO benchmarks for chiropractors

The ATO's group takes in chiropractors and osteopaths, who treat muscle, bone and joint complaints, along with other problems in how the body works, through hands-on techniques applied to the spine, other joints and the body's soft tissue. Physiotherapy practices are not part of it. As with every benchmarked industry, the group is drawn from businesses that serve consumers directly, here patients paying for treatment. For these clinics the ATO names total expenses to turnover as the key range, the ratio it sees as the most accurate pointer to turnover in this industry.

Practices are grouped by main activity, and the ATO removes those outside its turnover cut-offs, those reporting multiple activities, those newer than a year at the start of the financial year, and statistical outliers.

Turnover is consultation fees and any other sales, excluding GST. Total expenses counts the practice's costs, leaving out payments to associated persons, for example a spouse paid to run the front desk. The ATO's cost of sales measure leaves salary and wages out, but the ATO publishes no cost of sales range for these practices, so the tables show total expenses only.

The ATO prints a ratio only where a large enough share of the industry reports that expense, and service businesses like clinics are unlikely to carry much cost of sales. Goods bought to resell, such as pillows or supports where a clinic sells them, would be cost of sales.

Those resale goods sit within total expenses too, alongside the clinic's other costs: wages for reception and any employed practitioners, payments to practitioners engaged as contractors, rent, fit-out repairs, cleaning and laundry, card terminal fees, advertising, phone and booking costs, and car running costs for any treatment given at the client's home.

A range on this page is the middle band of practices around the mean ratio at that size, not a goal or a cap, rounded to whole numbers. The ATO sets turnover ranges for this industry on its own.

The expense share climbs as turnover moves up the ranges in both years; the bigger jump comes between the bottom and middle ranges. The lowest and middle bands do not overlap in either year, while the middle and top bands do. Widths stay fairly even: in 2023-24 each band is a little narrower than the one before it, while in 2022-23 the middle band stretched widest. Set against 2022-23, the lowest range in 2023-24 sits lower at both ends, its floor dropping further, the middle range sits lower at both ends by the same small step, and the top range repeats exactly.

Above the range, costs run high against fees. In a clinic the ATO's reasons can appear as rent or reception hours heavy for the number of consultations, quiet sessions staffed as if they were busy, treatment consumables bought at higher prices than other clinics pay, fees set below those of nearby practices, or fees paid in cash that did not reach the books. Cash from the front desk used to pay a small cost still counts as fee income.

Sitting below the range can reflect costs left unrecorded, such as cash wages for casual reception staff, fees set above other clinics, or a practice that fills its appointment book efficiently. Recording checks to clear first:

• Rent, contractor and supplier invoices for every month of the year are entered.
• Each day's appointments match the fees charged, including any cash fees.
• Cash taken at the front desk is banked or recorded before any is spent.

For a clinic, the sum uses a full financial year from the profit and loss: total expenses less any payments to associated persons, over turnover, read against the band for the clinic's turnover.

A new clinic, a partial year, or a year with an outsized single expense, such as a major fit-out repair, reads differently, since the ATO's figures exclude first-year businesses and outliers. A practice that also earns from another activity, such as running exercise classes, may fall outside the figures, because the ATO drops businesses that report several activities. The ATO covers chiropractic and osteopathic services together, so either kind of practice compares against the same bands, while a clinic offering physiotherapy as well may not match this group.