1404685 (Migration) - [2015] AATA 3352

1404685 (Migration) [2015] AATA 3352 (18 August 2015)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:  Mr Junfeng Shan
Ms Jing Zhang
Ms Jue Shan
Master William Shan
CASE NUMBER:  1404685
DIBP REFERENCE(S):  CLF2013/194181 CLF2013/194184 CLF2013/194186
MEMBER:Jennifer Ciantar
DATE:18 August 2015
PLACE OF DECISION:  Sydney
DECISION:  The Tribunal affirms the decision not to grant the applicants Business Skills (Residence) (Class DF) visas.

Statement made on 18 August 2015 at 9:53am
STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Immigration on 21 February 2014 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) Subclass 890 visas under s.65 of the Migration Act 1958 (the Act).
The applicants applied for the visas on 15 August 2013. The visa application indicates that Sun Holidays Pty Ltd is the main business. The delegate treated the applicant as a travel agent and deducted the cost of sales from the turnover. The delegate refused to grant the visas on the basis that cl.890.213 was not met. The delegate found that after the cost of sales was deducted, the turnover of the business was $69,919 in 2012 and $162,049 in 2013, which was less than a turnover of $300,000 in the 12 months immediately before the application was made.
The first named applicant (the applicant) appeared before the Tribunal on 29 January 2015 and 4 August 2015 to give evidence and present arguments.
The applicants were represented in relation to the review by their registered migration agent. The representative attended the Tribunal hearing.
At the first hearing, the applicant gave evidence that his business is that of an Inbound Tour Operator (ITO), which is different to a travel agent. He makes arrangements for accommodation, meals, internal travel and tours for tour groups from China but it is his business which has contracts with Australian providers, and contracts with tourist groups who come from China, and it is Sun Holidays that bears the risk. The business has insurance for this reason. The applicant submitted that the total trading income of $710,993.78 in the 12 months prior to the lodgement of the application, that is, 15 August 2012 to 14 August 2013, should be accepted as turnover and the cost of sales, which was $518,159.92, should not be deducted.
The representative provided the Tribunal with information from the ATO regarding the treatment of inbound tour operators, which is the based on the findings of the Federal Court in ATS Pacific Pty Ltd v Commissioner of Taxation, (provided to the Tribunal) and also drew the Tribunal’s attention to the Department’s policy regarding the definition of turnover.
After the hearing the applicant provided further documents including agreements with Australian service providers such as hotels and tour operators, copies of some contracts he had with clients in China in the 12 months immediately prior to the lodgement of the visa application, financial information for the period 1 July…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] AATA 3352
Decision Date: 18 August 2015

CaseChat Overview and Summary

In the matter of 1404685 (Migration), the applicants, who had applied for Business Skills (Residence) (Class DF) visas, contested the delegate's decision to refuse their visa applications. The Tribunal was tasked with determining whether the applicants satisfied the criteria for either subclass 890 (Business Owner) or subclass 892 (State/Territory Sponsored Business Owner) of the Business Skills (Residence) Class DF visa. The primary issue was whether the applicants' business met the turnover requirement under clause 890.213 of the Regulations.

The Tribunal carefully examined the nature of the applicants' business as an Inbound Tour Operator (ITO), comparing it with the role of a travel agent. The Tribunal noted that the Federal Court had determined that ITOs are treated as principals, not agents, for GST purposes. However, the Tribunal found that the applicants' business activities did not meet the essential prescribed criteria for either subclass 890 or 892 visas. Specifically, the Tribunal was not convinced that the applicants' business had achieved the required turnover of $300,000 in the 12 months before the application was made.

After considering the evidence and arguments presented, the Tribunal concluded that the applicants did not satisfy the criteria for a Business Skills (Residence) (Class DF) visa. The Tribunal affirmed the decision to refuse the applicants' visa applications. The Tribunal's reasoning was based on the lack of sufficient evidence to demonstrate that the applicants' business met the essential criteria, particularly the turnover requirement. The Tribunal did not find any material to support a conclusion that the applicants met the requirements for any of the subclasses of the visa.

In light of the above, the Tribunal upheld the delegate's decision and affirmed the refusal of the applicants' visa applications.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.CONSIDERATION OF CLAIMS AND EVIDENCE At the time the visa application was lodged, the Business Skills (Residence) Class DF visa contained four subclasses: subclass 890 (Business Owner), subclass 891 (Investor), subclass 892 (State/Territory Sponsored Business Owner) and subclass 893 (State/Territory Sponsored Investor). The visa applicants have made claims in relation to subclass 890 and subclass 892 (MRT file 1008453). The criteria for a subclass 890 visa are set out in Part 890 of Schedule 2 to the Regulations. At least one member of the family unit must satisfy the primary criteria. The primary criteria include the following requirements at time of application:·The applicant has had, and continues to have, an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the application is made: clause 890.211(1).·for each business to which cl.890.211(1) above applies, an Australian Business Number (‘ABN’) has been obtained; and all Business Activity Statements (‘BAS’) required by the Australian Taxation Office (the ATO) for the period mentioned in cl.890.211 have been submitted to the ATO and have been included in the application: clause 890.211(2). ·The net value of the assets of the applicant, of his or her spouse or of the applicant and the spouse together in the main business or main businesses in Australia is, and has been throughout the 12 months immediately before the application is made, at least $100,000: clause 890.212.·In the 12 months immediately before the application is made, the main business or main businesses had a turnover of at least $300,000: clause 890.213. At the time of the decision, the applicant must continue to satisfy the primary criteria in clause 890.211, 890.215 and 890.216: clause 890.221. The delegate refused the application on the basis that cl.890.213 was not met. Departmental guidelines (PAM3) on ‘turnover’ relevantly state that “turnover is the revenue generated by an entity as a result of the ordinary activities of the business” and it includes the sale of goods and can include fees for services provided and commission revenue. However, revenue excludes amounts collected by an agent on behalf of a principal such as might be collected by a travel agent. In Cheng v MIAC[1] the Court upheld the tribunal’s finding that a business acting as an intermediary between two other businesses, and not as a merchant in its own right, could only claim the commissions it was paid as constituting its ‘turnover’. [1] [2012] FMCA 911 (Driver FM, 16 November 2012). This finding was upheld on appeal by the Federal Court in Cheng v MIAC [2013] FCA 405 (Cowdroy J, 6 May 2013). Prior to the second hearing, the Tribunal spent a considerable amount of time giving consideration to whether the applicant’s business is that of an Inbound Tour Operator (ITO) and whether this can be distinguished from that of a travel agent. The Tribunal accepts that following the full Federal Court decision of ATS Pacific Pty Ltd v Commissioner of Taxation [2013] FCA 341, the ATO treats ITOs as principals and not as agents, for GST purposes. The applicant claims that the BAS he has provided show that the ATO treated the business as an ITO and a principal.

Decision

Reasons for decision

Neither has it been submitted, nor is there any material otherwise known to the Tribunal, which would support a conclusion that any applicants meet requirements prescribed at Parts 891, 892 or 893 of Schedule 2 to the Regulations. This being the case, the Tribunal is not satisfied that the applicants meet essential prescribed criteria for any Class DF visa. The grant of such visas to them must be refused.DECISION The Tribunal affirms the decision not to grant the applicants Business Skills (Residence) (Class DF) visas.Jennifer CiantarMember

Ratio Decidendi

Legal Principle Established

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