|Preliminary TaskQuestion 14 of this Knowledge Assessment requires you to refer to the payroll tax law of your state/territory.For your assessor’s reference, indicate below which state/territory you are currently based or located in by ticking the box that corresponds to your answer.
When answering Question 14, you must refer to the payroll tax law of the state/territory you ticked below.
|1. Give two economic trends currently released by the Australian Bureau of Statistics that relates to the construction industry.Economic trend indicates the current direction by which indicators of the economy generally tend to incline.
|2. Provide two building and construction industry trends.Industry trend pertains to the current business patterns that occur in a specific industry.
| 3. Listed below are three possible revenue streams in a building and construction business. For each revenue stream:
i. Provide a brief description, and
ii. Give one example.
|Contract and Bids / Project Revenue
| 4. Listed below are three types of expenses incurred by a building and construction business. For each type of expense:
i. Provide a brief description, and
ii. Give one example.
| 5. Listed below are two types of project costing that occurs in a construction project. For each type of project costing:
i. Identify its purpose, and
ii. Determine the stage at which each project costing occurs in the lifecycle of a construction project
|Stage in Lifecycle of the Project
|6. Define contingency planning in the context of building and construction finances.
|7. Provide two examples of business overhead in the context of building and construction.
|8. Define profit in the context of a building and construction project.
|9. List the three key government bodies that provide sources of information relevant to the building and construction industry.
|10. Access and review the Australian Consumer Law and answer the following questions.
|i. Under the ACL, what classification do builders fall under?
|ii. Give three guarantees relevant to builders in relation to the supply of services they provide to consumers.
|iii. Give three guarantees that builders under the ACL must provide in relation to goods they provide to consumers.
|iv. Identify one example of unfair contract terms found in Part 2-3 of the Australian Consumer Law.
|11. Access and review the Competition and Consumer Act 2010 and answer the following questions.
|i. Identify the object of the Competition and Consumer Act 2010.
|ii. As per the Competition and Consumer Act 2010, all businesses, including businesses engaged in the construction industry, are prohibited from entering into agreements that relates to cartel provisions. Identify one example of a cartel provision as provided in Section 45AA of the Competition and Consumer Act 2010.
|iii. Based on the provisions of the Competition and Consumer Act 2010, what could be the initial consequence of an alleged contravention of a civil penalty provision of industry codes (e.g. National Construction Code)?
|12. Answer the following questions relating to the income tax obligations of a building and construction business to Australian Taxation Office (ATO).
|i. Define income tax.
|ii. A building and construction business will have to assess whether it has Personal Services Income to report in its income tax return. Define Personal Services Income.
|iii. What is the tax report required to be lodged with Australian Taxation Office (ATO) specifically by businesses who employ building and construction services of a contractor?
|iv. A business is considered as primarily operating in building and construction industry for tax purposes if it has satisfied at least one of the conditions set out in Sub regulation 64(5) of Taxation Administration Amendment Regulation 2012 (No.1). Identify one of these conditions.
|v. There are certain activities that are considered for tax purposes as building and constructions services when performed on or in relation to any part of a building, structure, works, surface or sub-surface. Identify one example of these activities.
|13. Answer the following questions about the capital gains tax obligations of a building and construction business to Australian Taxation Office (ATO).
|i. Define Capital Gains Tax (CGT).
|ii. Give one example of an asset that is generally not considered as a CGT asset.
|iii. What is a CGT event?
|iv. Give one type of CGT event classified under Category C.
|v. Identify what legislation contains the provisions on Capital Gains Tax.
|14. Answer the following questions about the payroll tax obligations of a building and construction business based on your state/territory’s payroll tax laws.
|i. Define payroll tax.
|ii. Where can you find the contractor provisions in the payroll tax law relevant in your state or territory?
|iii. Under your state/territory’s payroll tax law, what is the threshold that you must exceed for you to be required to register for payroll tax?
|15. Answer the following questions about the Fringe Benefits Tax (FBT) obligations of a building and construction business to the Australian Taxation Office (ATO).
|i. Define fringe benefits.
|ii. Identify one type of fringe benefit.
|iii. Who shoulders the burden of Fringe Benefits Tax?
|iv. Identify one legislation that governs the assessment and collection of Fringe Benefits Tax.
|v. Who are required to register for Fringe Benefits Tax?
|vi. What tax return do you have to lodge with the ATO when you have an FBT liability to report?
|vii. Why do you have to differentiate between a contractor and an employee for fringe benefits tax purposes?
|16. Answer the following questions about pay as you go (PAYG) instalments.
|i. Describe the PAYG instalments system.
|ii. Identify the legislation that governs the administration of PAYG instalments system.
|iii. Identify one reason why a company would be required to pay by instalments.
|17. Answer the following questions about Goods and Services Tax (GST).
|i. What is GST?
|ii. Who bears the burden of GST?
|iii. Identify the legislation that governs Goods and Services Tax.
|iv. When will a business be required to register for GST?
|v. What report do you need to lodge with Australian Taxation Office (ATO) in relation to your GST obligations?
|vi. Why do you have to differentiate a contractor from an employee for GST purposes?
|18. Identify two tax differences between a sole trader and a company
|19. Answer the following questions about registering for taxes.
|i. Give one reason why a business would need to register for a tax file number (TFN).
|ii. There are different tax registrations, other than TFN registration, that a building and construction business would have to consider. Provide one example of these other tax registrations.
|iii. Identify one way of how you can register for GST.
|iv. What do you need to register for before you can register for GST?
|v. Identify the number of penalty units imposed for failing to meet your obligation to register for GST.
|vi. What should you register for before making a payment subject to withholding tax?
|vii. What tax registration should you complete before registering for Fuel Tax Credit?
|viii. Why would a business want to register for Fuel Tax Credit?
| 20. Listed below are two methods for paying taxes in Australia. For each method:
i. Identify the requirements you need to have in order to complete the related payment transactions
ii. Identify one advantage of choosing each
iii. Identify one disadvantage of choosing each
|In Person at Australia Post
|i. Payment Requirements
|21. Answer the following questions about maintaining business and taxation records.
|i. List three reasons why it is important to keep business records for taxation purposes.
|ii. As per taxation laws, how long do you need to keep business and taxation records?
|iii. As per the Corporations Act 2001, how long do companies have to keep their financial records?
|iv. According to the Fair Work Act, how long should an entity keep its employee records?
|v. Identify one of the five rules of record keeping enumerated by ATO.
|vi. What would be the penalty for failing to meet your record-keeping obligations to ATO?
|vii. Give one example of a record that must be kept by a business engaging with a contractor or a supplier.
|22. Identify the two most common types of invoices and determine what types of businesses can issue the respective invoices.
|Type of Invoice
|The type of business who can issue the invoice
|23. List the seven details that you have to include in a tax invoice.
|24. Identify five different ways of how a business can send invoices to its clients.
|25. Answer the following questions about invoicing.
|i. What should the project manager do when issuing the invoice to the client?
|ii. What happens if there is a delay in the process of invoicing?
|iii. How do you record the invoicing of progress payments in the accounting system?
|26. Explain how collection of payments is recorded in the accounting system of a business.
|27. Answer the following questions about budgeting
|i. Why is it important to prepare a budget?
|ii. What is a Project Budget?
|iii. Most businesses have established code of accounts in their accounting system. What is the relevance of these codes of account in budgeting?
|28. Explain the use of the listed types of financial reports in managing business finances.
|Use in Managing Business Finances
|Profit or Loss Statement
|Statement of Cash Flows
|29. Identify two essential tasks that a business must accomplish by the end of the financial year.
|30. Identify one advantage and one disadvantage of employing the following payment methods in a building and construction business.
|31. Answer the following questions about financial health.
|i. What does financial health of business mean?
|ii. Identify one example of a ratio that most businesses will have to analyse when performing a financial health check.
| 32. Listed below are two examples of sale calculations. For each sale calculation:
i. Provide its definition
ii. Provide the related formula
iii. Determine how the result of the calculation is analysed
|Break-even Point (BEP) in Dollars
|Gross Profit Margin
| 33. Listed below are six different financial ratios. For each financial ratio:
i. Identify what type of financial ratio it is
ii. Explain what is being measured by the ratio
iii. Explain how the ratio is computed
iv. Explain how the ratio should be evaluated
|Type of ratio
|What is being measured by this ratio
|How this ratio is computed (formula)
|How this ratio should be evaluated
|Gross Profit Ratio
|Return on Equity (ROE)
|Debt to Equity Ratio
|Loan to value Ratio(LVR)
|34. Identify the six steps of how a business can recover outstanding debts as recommended in business.gov.au.
|35. Identify one way on how a building and construction business can reduce its expenses.
|36. Identify one way on how a business can rearrange its expenses to improve its financial position
|37. Explain how selling of assets can improve the financial position of a business.
|38. Provide the primary reason why price increase would be necessary to improve a business’s financial position.
|39. Answer the following questions about consolidation of debt.
|i. What is debt consolidation?
|ii. How can consolidation of debts help in improving and managing a business’s financial position?
|40. Answer the following questions about keeping track of cash flows.
|i. Provide one way of how a building and construction business can keep track of its cash flows.
|ii. Describe what a Cash Flow Status Report is.
|41. Identify two ways of how a business can improve its cash flows.
|42. Describe each type of insurance.
|43. Answer the following questions about contractual financial arrangements in building and construction.
|i. Where would you usually find the terms on payments subject to quality of work in a construction contract?
|ii. What does ‘Retention’ mean in the context of contractual agreements?
|iii. What does product quality mean in a construction contract?
|iv. What does product compliance mean in a construction contract?
|v. Why do you need the terms on product quality and compliance on the construction contract?
|vi. Why do you need to know the terms and conditions of payment in the construction contract?
|44. Provide two reasons why it is important to know the terms and conditions of payment in a construction project