Students are tested for the ranks, normally by a panel of instructors. Grading is designed to be a learning experience. Students learn where their weaknesses are. They learn that success doesn't come easy but requires hard work and commitment. There is typically a minimal fee for grading (dependant on the rank) but it helps to pay your organisation membership fees and to purchase the belts and certificates for each rank.
Kyu and Dan grading is done a panel of Japanese Karate Association World Federation of Australia (JKA/WF) instructors.
Progress depends on the skill of the student and how often and how hard they practice. Normally 9th kyu takes about 3 months to achieve. Sixth kyu takes about another 9 months. Third kyu normally takes another 12 - 18 months, with another 2-3 years to reach dan ranking. Five years to reach probationary shodan (called shodan-ho) is very good progress.
JKA Grading Criteria