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Question 1Unverified content area 1

What is the rate of the goods and services tax (GST) in Australia?

  1. 5 per cent
  2. 12.5 per cent
  3. 10 per cent Correct answer.
  4. 15 per cent

Explanation

Australia applies GST at a single flat rate of 10 per cent to most supplies of goods and services. The rate is set in the GST Act and has not changed since the tax commenced in 2000.

Question 2Unverified content area 1

The Australian income year for which most individuals lodge an annual tax return runs from:

  1. 1 July to 30 June Correct answer.
  2. 1 April to 31 March
  3. 1 January to 31 December
  4. 1 October to 30 September

Explanation

The Australian income year is the 12-month period ending on 30 June, so it runs from 1 July to 30 June. Returns for that year are generally due by 31 October unless lodged through a registered tax agent.

Question 3Unverified content area 1

How many digits are contained in an Australian Business Number (ABN)?

  1. 14 digits
  2. 9 digits
  3. 11 digits Correct answer.
  4. 8 digits

Explanation

An ABN is an 11-digit identifier issued through the Australian Business Register. The first two digits are check digits used to validate the number.

Question 4Unverified content area 1

The fringe benefits tax (FBT) year used to calculate an employer's FBT liability runs from:

  1. 1 January to 31 December
  2. 1 March to 28 February
  3. 1 April to 31 March Correct answer.
  4. 1 July to 30 June

Explanation

FBT is calculated on benefits provided during the FBT year, which runs from 1 April to 31 March. This differs from the income year used for income tax.

Question 5Unverified content area 1

A small business (other than a non-profit organisation) becomes required to register for GST once its GST turnover reaches:

  1. $150,000 per year
  2. $50,000 per year
  3. $250,000 per year
  4. $75,000 per year Correct answer.

Explanation

The GST registration threshold for businesses is $75,000 of GST turnover per year. Non-profit organisations have a higher threshold of $150,000.

Question 6Unverified content area 1

For a full year, the tax-free threshold available to an Australian resident individual is:

  1. $18,200 Correct answer.
  2. $45,000
  3. $6,000
  4. $21,000

Explanation

A resident individual may earn up to $18,200 of taxable income in a full year before income tax becomes payable. Claiming the threshold affects the rate at which PAYG tax is withheld from wages.

Question 7Unverified content area 1

Which statement best describes the duty of care and diligence owed by a company director under the Corporations Act 2001?

  1. To prioritise creditors above all other parties
  2. To act only when instructed by shareholders
  3. To act as a reasonable person would in that role Correct answer.
  4. To guarantee that the company never makes a loss

Explanation

Directors and officers must exercise their powers and duties with the degree of care and diligence that a reasonable person would exercise in that position. The standard is objective and is tested against the company's circumstances.

Question 8Unverified content area 1

Which body administers the Corporations Act 2001 and regulates Australian companies?

  1. APRA
  2. ASIC Correct answer.
  3. The ATO
  4. The ACCC

Explanation

ASIC is the Commonwealth regulator responsible for administering the Corporations Act, registering companies and regulating financial services. It also investigates and prosecutes corporate misconduct.

Question 9Unverified content area 1

Which regulator is responsible for enforcing the Australian Consumer Law nationally?

  1. The ACCC Correct answer.
  2. APRA
  3. The ATO
  4. ASIC

Explanation

The Australian Consumer Law sits in Schedule 2 of the Competition and Consumer Act 2010 and is enforced nationally by the ACCC, alongside state and territory fair trading agencies. ASIC and APRA have different regulatory mandates.

Question 10Unverified content area 1

An individual disposes of an eligible investment asset held for 18 months and makes a capital gain. The gain may be reduced by:

  1. A 25 per cent discount
  2. A 75 per cent discount
  3. A 50 per cent discount Correct answer.
  4. A complete exemption

Explanation

Individuals and trusts can apply a 50 per cent capital gains tax discount to a gain on an asset held for at least 12 months. The discounted amount is then included in assessable income.

Question 11Unverified content area 1

The superannuation guarantee requires an employer to:

  1. Match each employee's own contributions dollar for dollar
  2. Pay a set percentage of ordinary time earnings into a complying fund Correct answer.
  3. Contribute only for employees who ask in writing
  4. Contribute only after one year of continuous service

Explanation

Employers must make compulsory superannuation contributions calculated on each eligible employee's ordinary time earnings and pay them into a complying fund. The obligation is separate from and additional to salary.

Question 12Unverified content area 1

A GST-registered business reports and pays its GST by lodging:

  1. A fringe benefits tax return
  2. An annual payroll tax return
  3. A quarterly PAYG summary
  4. A business activity statement Correct answer.

Explanation

GST is reported on the business activity statement, which is generally lodged monthly or quarterly depending on the business's registration. The statement also captures PAYG withholding and instalment obligations.

Question 13Unverified content area 1

Under Australian tax law, businesses must generally retain records supporting their tax affairs for:

  1. Seven years
  2. Ten years
  3. Five years Correct answer.
  4. Two years

Explanation

Records must generally be kept for five years after they are prepared or after the relevant transactions are completed, whichever is later. Records relating to certain assets may need to be kept longer.

Question 14Unverified content area 1

How many Australian Privacy Principles are contained in the Privacy Act 1988?

  1. 8
  2. 10
  3. 13 Correct answer.
  4. 15

Explanation

The Privacy Act contains 13 Australian Privacy Principles, which replaced the earlier National Privacy Principles and Information Privacy Principles. They cover matters such as collection, use, disclosure, security and access.

Question 15Unverified content area 1

PAYG withholding requires an employer to:

  1. Report total wages only at the end of the year
  2. Lodge a fringe benefits return each quarter
  3. Pay superannuation on behalf of contractors
  4. Deduct tax from wages and remit it to the ATO Correct answer.

Explanation

Under the PAYG withholding system, employers deduct tax from payments to employees and remit the amounts to the ATO at the required intervals. The amounts withheld are credited to the employee on their income tax assessment.

Question 16Unverified content area 1

For the 2024–25 income year, the company tax rate applying to a base rate entity is:

  1. 15 per cent
  2. 30 per cent
  3. 20 per cent
  4. 25 per cent Correct answer.

Explanation

A company that meets the base rate entity conditions is taxed at 25 per cent for the 2024–25 income year. Base rate entity status depends on aggregated turnover and the proportion of passive income.

Question 17Unverified content area 1

Which statement best describes the liability position of a sole trader?

  1. The owner's liability is capped at the value of business assets
  2. The owner's liability is limited to their capital contribution
  3. The owner is liable only for debts they personally signed
  4. The owner is personally liable for all business debts Correct answer.

Explanation

A sole trader has no separate legal entity, so the individual is personally responsible for all business debts and obligations. This contrasts with a company, where shareholder liability is generally limited.

Question 18Unverified content area 1

In a discretionary trust, which party decides how trust income is distributed among beneficiaries each year?

  1. The beneficiaries' accountant
  2. The trustee Correct answer.
  3. ASIC
  4. The beneficiaries by majority vote

Explanation

In a discretionary trust the trustee holds the trust property and resolves each year how income and capital are appointed among the objects of the trust. Beneficiaries have no fixed entitlement until a distribution is resolved.

Question 19Unverified content area 1

In contract law, 'consideration' refers to:

  1. Something of value given in exchange for a promise Correct answer.
  2. The written formality required for the contract
  3. The length of time taken to negotiate the deal
  4. The parties' intention to create legal relations

Explanation

Consideration is the price or benefit each party gives in exchange for the other's promise, such as money, goods or a promise to do something. A promise made without consideration is generally not enforceable as a contract.

Question 20Unverified content area 1

Under the model work health and safety laws, a person conducting a business or undertaking must ensure health and safety:

  1. So far as is reasonably practicable Correct answer.
  2. To the extent that insurance cover allows
  3. Only where a risk assessment has been requested
  4. Only for full-time employees

Explanation

The primary duty of care requires a person conducting a business or undertaking to eliminate or minimise risks to health and safety so far as is reasonably practicable. The duty extends beyond employees to workers, contractors and others affected by the business.

Question 21Unverified content area 1

A consumer buys a new kettle that stops working after three weeks. Under the Australian Consumer Law, the consumer is generally entitled to:

  1. A remedy only if the kettle was purchased on credit
  2. A remedy from the retailer, such as a refund or replacement Correct answer.
  3. A remedy only from the manufacturer
  4. No remedy, because the manufacturer's warranty has expired

Explanation

Goods supplied to a consumer must be of acceptable quality under the consumer guarantees, and the consumer's remedy is available from the supplier or retailer. Where the failure is major, the consumer may generally choose a refund or replacement.

Question 22Unverified content area 1

Most Australian resident individual taxpayers pay a Medicare levy equal to what proportion of taxable income?

  1. 3 per cent
  2. 2 per cent Correct answer.
  3. 2.5 per cent
  4. 1 per cent

Explanation

The Medicare levy is generally 2 per cent of taxable income for resident individuals, with reductions for low-income earners. It is calculated and collected through the income tax return.

Question 23Unverified content area 1

Under the Insurance Contracts Act 1984, before entering an insurance contract the insured must:

  1. Disclose only matters the insurer specifically asks about
  2. Disclose every matter they know to be relevant to the insurer's decision Correct answer.
  3. Disclose only matters that have been recorded in writing
  4. Disclose matters only if the insurer orders a medical examination

Explanation

The Act imposes a duty of disclosure requiring the insured to reveal every matter they know, or a reasonable person could be expected to know, is relevant to the insurer's decision to accept the risk. Failure to comply can allow the insurer to reduce a claim or avoid the contract.

Question 24Unverified content area 1

How many minimum employment entitlements are contained in the National Employment Standards?

  1. 9
  2. 12 Correct answer.
  3. 11
  4. 10

Explanation

The National Employment Standards in the Fair Work Act 2009 set 11 minimum entitlements, covering matters such as maximum weekly hours, leave, notice of termination and requests for flexible working arrangements. Awards and enterprise agreements cannot undercut these standards.

Question 25Unverified content area 1

Which of the following supplies is generally GST-free in Australia?

  1. Confectionery and snack foods
  2. Hot takeaway coffee
  3. Plain bread and milk Correct answer.
  4. Restaurant meals and takeaways

Explanation

Basic food intended for human consumption, such as plain bread and milk, is GST-free under the GST Act. Restaurant meals, confectionery and hot takeaway food are specifically excluded and are taxable.

Question 26Unverified content area 1

At what level of GST turnover is a business generally required to register for GST?

  1. $50,000 or more
  2. $150,000 or more
  3. $100,000 or more
  4. $75,000 or more Correct answer.

Explanation

A business must register for GST once its GST turnover reaches or exceeds the registration threshold of $75,000, or $150,000 for a non-profit organisation. Taxi and rideshare drivers must register regardless of turnover. Registration can also be voluntary below the threshold.

Question 27Unverified content area 1

The primary purpose of an Australian Business Number (ABN) is to:

  1. replace the need for a tax file number
  2. grant the holder exclusive rights to a business name
  3. register the business for income tax exemptions
  4. identify a business in dealings with government and other businesses Correct answer.

Explanation

An ABN is a unique identifier used when a business deals with government agencies, other businesses and the community. It does not replace a tax file number, confer name ownership or create tax exemptions. Separate registrations may be needed for those purposes.

Question 28Unverified content area 1

Under Australian law, a partnership is best described as:

  1. a company owned by two or more shareholders
  2. the relationship between persons carrying on a business in common with a view to profit Correct answer.
  3. an employment arrangement in which staff share commissions
  4. a trust with fixed beneficiaries

Explanation

Partnership is defined as the relationship between persons carrying on a business in common with a view to profit. It is generally not a separate legal entity like a company. The definition focuses on common business activity and profit motive.

Question 29Unverified content area 1

In a company limited by shares, a shareholder's liability for company debts is generally limited to:

  1. nothing at all, in every circumstance
  2. the unpaid amount on their shares Correct answer.
  3. an amount guaranteed in the constitution
  4. the full amount of any company debt

Explanation

Shareholders in a company limited by shares are liable only for any amount unpaid on their shares. Once shares are fully paid, they generally have no further liability for company debts. This limited liability is a key feature of the company structure.

Question 30Unverified content area 1

Under the Privacy Act 1988, an entity covered by the Notifiable Data Breaches scheme must notify whom of an eligible data breach likely to cause serious harm?

  1. the OAIC and affected individuals Correct answer.
  2. the Attorney-General only
  3. ASIC and the entity's shareholders
  4. the ACCC and all customers

Explanation

The Notifiable Data Breaches scheme requires notification to the Office of the Australian Information Commissioner and to affected individuals as soon as practicable. The test is whether the breach is likely to result in serious harm. Notification to other regulators is not the general requirement under the scheme.

Question 31Unverified content area 1

The National Employment Standards set the maximum ordinary hours of work for a full-time employee at:

  1. 37.5 hours per week
  2. 38 hours per week Correct answer.
  3. 40 hours per week
  4. 35 hours per week

Explanation

The National Employment Standards set maximum ordinary hours at 38 hours per week for a full-time employee, plus reasonable additional hours. Part-time employees have proportionate ordinary hours. The figure applies as a statutory maximum, not a guaranteed minimum.

Question 32Unverified content area 1

A consumer receives goods they did not order and did not agree to buy. Under the Australian Consumer Law, the consumer generally:

  1. becomes the owner after 30 days but must pay
  2. is not liable to pay for the unsolicited goods Correct answer.
  3. must pay the supplier's usual retail price
  4. must return the goods within seven days or be charged

Explanation

The Australian Consumer Law protects consumers from unsolicited supplies. A person is generally not liable to pay for goods or services they did not request. The supplier cannot force payment simply by sending the goods.

Question 33Unverified content area 1

In contract law, an acceptance of an offer is generally effective only when:

  1. the offeree decides to accept it privately
  2. consideration has already been paid in full
  3. it is communicated to the offeror Correct answer.
  4. the offeror signs a written deed

Explanation

Acceptance must generally be communicated to the offeror for a contract to be formed. A private decision to accept is not enough. Postal acceptance is a recognised exception in some circumstances.

Question 34Unverified content area 1

A GST-registered business can generally claim an input tax credit for:

  1. GST included in the price of purchases used to make taxable supplies Correct answer.
  2. all wages paid to employees
  3. GST paid on private household expenses
  4. the company income tax it has paid

Explanation

Input tax credits allow a GST-registered business to claim back GST included in creditable acquisitions used in carrying on its enterprise. The purchase must generally relate to making taxable or GST-free supplies. Private expenses and income tax are not creditable on this basis.

Question 35Unverified content area 1

When an employer provides a fringe benefit to an employee, who is generally liable to pay fringe benefits tax?

  1. the employer Correct answer.
  2. the employee, through their income tax return
  3. the employee, via payroll deduction
  4. the ATO, which recovers it from the employee

Explanation

Fringe benefits tax is imposed on the employer for benefits provided to an employee or an associate in respect of employment. The employer is responsible for calculating and paying FBT. The benefit may also have income tax or reporting consequences for the employee, but the FBT liability sits with the employer.

Question 36Unverified content area 1

The PAYG instalment system is designed to:

  1. collect income tax progressively from business and investment income during the year Correct answer.
  2. replace the annual income tax return for companies
  3. collect employee superannuation contributions
  4. refund GST credits to small businesses

Explanation

PAYG instalments collect income tax progressively during the year from people and entities earning business or investment income. The amounts paid are credited against the final tax liability when the return is lodged. The system does not replace the annual return.

Question 37Unverified content area 1

A business advertises a headline price that excludes a compulsory booking fee. Under the Australian Consumer Law, this is most likely to be:

  1. acceptable if the fee is mentioned in the terms and conditions
  2. permitted for online sales only
  3. misleading, as the single price is not stated Correct answer.
  4. lawful if the total price is under $100

Explanation

Component pricing rules require a single total price to be stated if part of the price is quantifiable and unavoidable. Hiding a compulsory fee in terms and conditions can mislead consumers about the real cost. The rule is not limited by sales channel or a dollar threshold.

Question 38Unverified content area 1

Competitors agreeing to fix the prices they will charge is prohibited under the Competition and Consumer Act as:

  1. cartel conduct Correct answer.
  2. merger authorisation
  3. resale price maintenance
  4. exclusive dealing

Explanation

Price fixing between competitors is a form of cartel conduct and is prohibited under the Competition and Consumer Act. Cartel conduct also includes output restrictions, market allocation and bid rigging. It is treated as serious because it harms competition and consumers.

Question 39Unverified content area 1

Registering a business name with ASIC:

  1. is the same as registering a trademark
  2. does not by itself give the owner exclusive rights to use the name Correct answer.
  3. prevents any other business from using a similar name
  4. gives the owner exclusive legal rights to the name

Explanation

Business name registration identifies the owner of a business but does not create ownership or exclusive rights in the name. Exclusive rights generally come from trademark registration or other legal action. A registered business name does not by itself stop another business using a similar name.

Question 40Unverified content area 1

An Australian proprietary company must have at least how many directors ordinarily resident in Australia?

  1. one Correct answer.
  2. none, if a foreign company owns it
  3. two
  4. three

Explanation

The Corporations Act requires a proprietary company to have at least one director who ordinarily resides in Australia. A public company must have at least three directors, at least two of whom ordinarily reside in Australia. Foreign ownership does not remove the resident-director requirement for a proprietary company.

Question 41Unverified content area 1

Is an Australian proprietary company required to appoint a company secretary?

  1. Yes, but only if it has more than five shareholders
  2. Yes, unless it is a small proprietary company
  3. No, it is optional for a proprietary company Correct answer.
  4. Yes, always

Explanation

A proprietary company is not required to appoint a company secretary. If it chooses to appoint one, certain residency requirements may apply. A public company, by contrast, must have at least one secretary.

Question 42Unverified content area 1

A company may generally pay dividends to shareholders only out of:

  1. company profits Correct answer.
  2. borrowed funds
  3. share capital
  4. government grants

Explanation

Dividends are generally paid from company profits, subject to the directors' duty to ensure the company remains solvent and the payment is not materially prejudicial to creditors. Share capital is not ordinarily available for dividends. Dividends are not funded by borrowing or grants as a matter of ordinary company law principle.

Question 43Unverified content area 1

Under the Fair Work Act, an employee of a small business employer generally must complete what minimum employment period before becoming eligible to lodge an unfair dismissal claim?

  1. three months
  2. twenty-four months
  3. six months
  4. twelve months Correct answer.

Explanation

For a small business employer, the minimum employment period for unfair dismissal eligibility is generally twelve months. For other employers, the period is generally six months. The small business threshold involves fewer than 15 employees.

Question 44Unverified content area 1

Under the National Employment Standards, an eligible casual employee of a non-small business employer may request conversion to permanent employment after how long?

  1. eighteen months
  2. three months
  3. two years
  4. twelve months Correct answer.

Explanation

An eligible casual employee of a non-small business employer may request conversion after twelve months of service. For a small business employer, the period is generally six months. Eligibility also depends on the employee meeting the other statutory conditions.

Question 45Unverified content area 1

Australian Privacy Principle 1 requires an APP entity to:

  1. maintain a clear and current privacy policy Correct answer.
  2. destroy all personal information after exactly one year
  3. appoint a privacy officer approved by the OAIC
  4. obtain consent before collecting every item of personal information

Explanation

APP 1 requires open and transparent management of personal information, including a clearly expressed and up-to-date privacy policy. Consent is not required for every collection; other APPs govern when consent or notice is needed. There is no blanket one-year destruction rule or OAIC approval of privacy officers.

Question 46Unverified content area 1

For GST purposes, financial supplies such as lending money are generally treated as:

  1. GST-free supplies
  2. supplies outside the GST system entirely
  3. input taxed supplies Correct answer.
  4. taxable supplies at 10%

Explanation

Financial supplies are generally input taxed for GST purposes. The supplier does not charge GST on the supply and is generally not entitled to input tax credits for related acquisitions. This avoids taxing margins in financial transactions.

Question 47Unverified content area 1

A director who allows a company to incur a debt while there are reasonable grounds to suspect the company is insolvent may be personally liable for the debt. This is known as:

  1. a capital reduction
  2. insolvent trading Correct answer.
  3. a related-party transaction
  4. phoenix activity

Explanation

Insolvent trading occurs where a company incurs a debt when there are reasonable grounds to suspect insolvency. Directors can be personally liable for losses arising from the contravention. The rule is designed to protect creditors and discourage continued trading while insolvent.

Question 48Unverified content area 1

In a unit trust, investors hold:

  1. general partnership interests
  2. units in the trust Correct answer.
  3. fully paid shares in a trustee company
  4. secured debentures issued by the trustee

Explanation

A unit trust divides beneficial interests in the trust into units held by unitholders. The trustee holds legal title to trust property for the benefit of unitholders. Units are not shares, partnership interests or debentures, although they may be traded or valued similarly in some respects.

Question 49Unverified content area 1

Under the Competition and Consumer Act, a corporation with substantial market power must not engage in conduct that has the purpose, effect or likely effect of:

  1. increasing its own efficiency
  2. offering lower prices to customers
  3. refusing to supply a customer for any reason
  4. substantially lessening competition in a market Correct answer.

Explanation

The misuse of market power provision prohibits conduct by a corporation with substantial market power that has the purpose, effect or likely effect of substantially lessening competition. Improving efficiency or offering lower prices is not prohibited merely because it harms competitors. A refusal to supply is not automatically unlawful; the competitive effect must be assessed.

Question 50Unverified content area 1

Under Australian Privacy Principle 8, an APP entity that discloses personal information to an overseas recipient generally:

  1. has no further responsibility once the information leaves Australia
  2. remains accountable unless an exception applies Correct answer.
  3. can rely on the recipient's foreign law without checks
  4. must obtain ASIC approval first

Explanation

APP 8 generally makes the disclosing entity accountable for personal information sent overseas. The entity must take reasonable steps to ensure the overseas recipient complies with the APPs, unless an exception applies. The accountability does not end simply because the information leaves Australia.