Key Legal and Government Regulations (VCE SSCE Business Management): Revision Notes

Key Legal and Government Regulations

Understanding legal compliance in business

When establishing a business, you must meet various legal requirements before you begin operating and continue to comply throughout the business's life. Just as individuals must follow laws, businesses are also subject to numerous government regulations that both restrict and shape how they operate.

Legal compliance means ensuring your business observes and follows all external statutory laws and regulations. This is not optional—failure to comply can result in legal prosecution, professional deregistration, or forced closure of the business.

Businesses today must also understand corporate citizenship, which refers to accepting responsibility to stakeholders for the business's actions and decisions. This concept has received increasing media attention in recent years as society expects businesses to act ethically and responsibly.

National business names register

The Australian Securities and Investments Commission (ASIC) manages Australia's Business Names Register. This national system replaced the previous state and territory systems, making registration simpler for business owners.

When you need to register

You need an Australian Business Number (ABN) before you can register a business name. Once registered, your business name has national recognition across Australia.

When registration is required:

• Sole traders operating under a name other than their own personal name
• Partnerships
• Family trusts
• Joint ventures

When registration is not required:

• Operating as a sole trader using your own personal name

Why register a business name?

Selecting and registering a business name serves important purposes:

• Identifies your business to customers
• Differentiates your business from competitors
• Provides legal protection for your trading name
• Establishes your brand identity

Registering a company

A company is a separate legal entity, which means it exists independently from its owners and is taxed at different rates to individuals.

What you need

To register a company, you must obtain:

1. Australian Company Number (ACN): A unique, nine-digit number issued by ASIC that identifies your company
2. Australian Business Number (ABN): An 11-digit number for business transactions

Legal requirements

Registering a website domain

While not legally compulsory, registering a domain name is highly recommended when starting a new business. A domain name is your website address (URL) that provides your business with an online identity.

Benefits of domain registration

A domain name serves as a crucial marketing tool:

• Helps customers find your business online
• Creates a professional image
• Provides brand recognition
• Enables digital marketing activities

Choosing a domain name

Select a name that:

• Represents your business uniquely
• Is easy to remember
• Is simple to pronounce and spell
• Aligns with your business name

Registration process

You must register .com.au domains through a domain register accredited by the Australian Domain Name Authority (auDA). To register a .com.au domain, you need either an ABN or ACN.

Social media considerations

If you plan to use social media for marketing, check that your business name is available on the platforms you intend to use. This ensures consistency across your online presence.

Business taxation compliance

All businesses must pay tax and meet specific taxation obligations managed by the Australian Taxation Office (ATO).

Core taxation requirements

Australian Business Number (ABN):

• Required for any business carrying out an enterprise in Australia
• Without an ABN, business clients must withhold 46.5 per cent of any payments to your business
• This significant penalty makes obtaining an ABN essential

Tax File Number (TFN):

• Business partnerships and companies need their own TFN
• Issued by the ATO
• Helps manage tax and other government services

Income tax obligations

All businesses must:

• Pay tax on business income
• Collect income tax from employee wages through the Pay As You Go (PAYG) withholding system

PAYG withholding is a legal requirement when making payments to employees and some contractors. The business withholds a designated amount from payments and sends it to the ATO at regular intervals.

Goods and Services Tax (GST)

If your business earns over $75,000, you must:

• Register for GST
• Collect GST from sales
• Submit this to the ATO

Business Activity Statement (BAS)

Businesses submit a BAS periodically to:

• Advise the ATO of income earned during that period
• Remit tax due on income
• Pay any GST collected
• Submit employee income tax withheld

Other taxes

Depending on your business, you may also need to pay:

• Fringe benefits tax (FBT): Tax on non-wage benefits provided to employees
• Capital gains tax (CGT): Tax on profits from selling assets
• State government payroll tax: For businesses with employees (state-specific thresholds apply)

Superannuation obligations

Businesses must contribute to superannuation for their employees. Superannuation is a pension or lump sum payment made to workers on retirement, funded by employers' contributions during the employee's working life.

Trade practices legislation and consumer rights

The Competition and Consumer Act 2010 replaced the Trade Practices Act 1974. Schedule 2 of this Act is known as the Australian Consumer Law 2011 (ACL), which all Australian businesses must follow.

The Australian Competition and Consumer Commission (ACCC)

The ACCC is the government body that enforces consumer protection laws. Its responsibilities include:

• Protecting consumer rights
• Establishing business rights and obligations
• Regulating certain industries
• Monitoring prices
• Preventing illegal anti-competitive behaviour
• Ensuring businesses and consumers understand their responsibilities and rights

The ACCC ensures Australian consumers have consistent rights regardless of where they live, where they purchase goods, or where the supplier is located.

Consumer guarantees

Consumer guarantees protect purchasers of goods and services under the ACL. These guarantees apply to items purchased up to $40,000 for domestic, household, or personal use.

Legal obligations for businesses:

Businesses must ensure their products and services:

• Are suitable for their intended purpose
• Are not faulty
• Will perform satisfactorily
• Meet quality standards for normal use

These obligations apply to both retailers and manufacturers. Manufacturers must ensure their products are properly designed and suitable for use.

Consumer remedies:

When a product fails to meet these guarantees, consumers have the right to:

• Repair
• Replacement
• Refund
• Compensation

Penalties:

Businesses face penalties for failing to follow provisions relating to:

• Guarantees
• Warranties
• Advertising claims

Misleading and deceptive conduct

Businesses must not make false and misleading representations to consumers. This means they cannot lie or exaggerate about the quality, benefits, warranty, possible uses, or prices of products they sell.

The ACCC investigates complaints and can take legal action against businesses that engage in misleading conduct. Penalties can be substantial and damage business reputation significantly.

Business licences, permits and approvals

Many businesses require licences, permits, or approvals from government authorities or professional associations to operate legally.

Understanding licences

A licence is a document or permit that gives official permission to conduct specific activities or perform certain roles.

Key features of licences:

• Grant the right to perform specified activities
• Often require specific qualifications
• Are issued for a limited period
• Must be renewed when they expire

Australian Business Licence and Information Service (ABLIS)

Local government by-laws

By-laws are local government laws and regulations relating to activities within a municipality. These vary between different local government areas and affect how businesses operate in specific locations.

Building and planning controls

Each local government has a planning scheme managed by its planning department. The scheme designates different areas for different types of use through zoning.

Purpose of zoning:

The zoning system ensures:

• Similar businesses are located in appropriate areas
• Residential areas remain primarily residential
• Industrial operations don't disrupt residential neighbourhoods
• Business types are compatible with their surroundings

Planning approval requirements:

Council planning approval must be obtained for:

• All plumbing and building work
• Operating a home office
• Making fit-out changes to business premises
• Setting up new business premises

Other by-laws impacting business

Local governments regulate various aspects of business operations through by-laws covering:

• Parking restrictions: Where and when businesses and customers can park
• Hours of operation: When businesses can open and close
• Health regulations: Hygiene and food handling requirements
• Activity restrictions: Such as outdoor dining, signage, noise levels

Multiple licences example

Some businesses require several different licences and permits. For example, a restaurant might need:

Employment laws

Both Australian federal and Victorian state governments create and implement workplace laws. These laws establish employers' obligations and protect employees' rights in key areas including workplace safety, wages and conditions, equal opportunity, and anti-discrimination.

Workplace relations laws

The Fair Work Commission (FWC) is Australia's national workplace relations tribunal established under the Fair Work Act 2009. The FWC is independent and assists employees and employers to maintain fair and productive workplaces.

FWC responsibilities:

The FWC regulates workplace relations (the relationship between employers and employees regarding contractual, emotional, physical, and practical concerns) by:

• Setting minimum wages and conditions
• Resolving disputes in the workplace
• Overseeing enterprise bargaining
• Managing industrial action
• Handling dispute resolution
• Dealing with termination of employment
• Managing other workplace matters

Awards:

The FWC determines minimum standards for wages and conditions specific to particular industries, known as awards. These set out industry-specific requirements that employers must meet.

The Fair Work Ombudsman (FWO) is an independent statutory agency that acts as a central hub for information and advice about the Australian national workplace relations system.

FWO responsibilities:

• Providing free advice and information to employers and employees
• Investigating workplace complaints
• Enforcing compliance with workplace laws
• Acting as a resource for understanding rights and obligations

Occupational health and safety laws

Occupational health and safety (OH&S) laws are concerned with the safety and welfare of people engaged in work or employment. In Victoria, the Occupational Health and Safety Act 2004 sets out the responsibilities of both employers and employees.

OH&S aims:

These laws aim to prevent workplace accidents by:

• Involving everyone in the business in identifying hazards
• Working actively to remove hazards
• Being proactive in reducing physical, chemical, and behavioural hazards as far as practicable

Elements of a health and safety management system:

• Hazard identification and assessment
• Hazard control
• Worker training
• Ongoing worksite inspection
• Emergency response and planning
• Accident and incident investigation
• Program administration and review

WorkSafe Victoria

WorkSafe is the Victorian Government's regulator responsible for enforcing health and safety in all Victorian workplaces.

WorkSafe powers:

WorkSafe inspectors can:

• Assess risks and hazards in workplaces
• Issue improvement notices
• Issue prohibition notices
• Close down businesses until hazards are removed
• Prosecute businesses that breach OH&S laws

WorkCover insurance

WorkCover is a compulsory insurance scheme that provides employers with insurance cover for the cost of benefits if workers are injured or become ill because of their work.

What WorkCover provides:

The insurance offers income and compensation for employees and their families in the event of:

• Workplace injury
• Work-related disability
• Death in the workplace

Coverage includes:

• Replacement of lost income
• Medical and rehabilitation treatment costs
• Legal costs
• Lump sum compensation for serious injuries

Equal opportunity, anti-discrimination and sexual harassment laws

The Victorian Equal Opportunity and Human Rights Commission defines discrimination as 'treating, or proposing to treat, someone unfavourably because of a personal characteristic protected by law.'

The Equal Opportunity Act 2010:

This Victorian law protects people from discrimination and harassment in all areas of public life, including the workplace.

Examples of discrimination:

Discrimination can occur in various workplace situations:

• Recruitment process: Job advertisements or interviews being inaccessible due to disability
• Terms of employment: Offering unfair employment terms because of race or religion
• Training access: Denying access to training because of age
• Opportunities: Refusing or limiting access to promotions or transfers because of parental status
• Dismissal: Unfairly dismissing, retrenching, or demoting someone because of pregnancy

Types of discrimination:

Discrimination can be:

• Direct: Openly treating someone less favourably
• Indirect: Imposing requirements that unfairly disadvantage certain groups

Penalties:

The Victorian Equal Opportunity and Human Rights Commission can fine employers who:

• Perpetrate discrimination
• Allow discrimination to occur in their workplace
• Fail to address harassment complaints properly

Further obligations with insurance

Insurance is a contract where the insured (client) pays a sum of money (called a premium) to an insurer (usually an insurance company). In return, the insurer guarantees to financially compensate the client for accidental losses or liability to compensate others for damage or loss caused by the business's operations.

Understanding risk and premiums

Premiums increase based on:

• The amount of risk involved
• The cost of replacement
• The amount of financial protection offered

Risk management and assessment

Risk management involves:

• Investigating potential safety risks and hazards
• Taking action to reduce identified risks
• Taking out appropriate insurance
• Regularly reviewing risks as the business develops

Risk assessment is conducted by insurance companies to gauge appropriate premiums. Business owners can obtain reduced premiums by taking action to reduce risk levels.

Compulsory insurance

Some types of insurance are legally required:

Optional insurance

While not compulsory, many businesses take out additional insurance to protect against:

• Fire damage
• Theft
• Accidental damage to property
• Loss of income due to business interruption
• Professional indemnity claims

The specific insurance needs depend on the nature and risks of the business.

Remember!