1408477 (Migration)

[2015] AATA 3308

1408477 (Migration) [2015] AATA 3308 (11 August 2015)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Eun Mi Lee
Mr WEONGEAL RO
Miss SUYEON RO
Mr HWAJUN NO

CASE NUMBER:  1408477

DIBP REFERENCE(S):  CLF2013/233979 CLF2013/233983

MEMBER:Kate Millar

DATE:11 August 2015

PLACE OF DECISION:  Adelaide

DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets:

·cl.892.212 of Schedule 2 to the Regulations.

Statement made on 11 August 2015 at 8:56am

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. Ms Lee came to Australia from South Korea as a student guardian.  She decided to look for a business in Australia with her husband, and says they sold their assets in South Korea to purchase a business in Australia.

2. Ms Lee and Mr Ro purchased an Asian grocery store called Happy Mart in Norwood.  The corporate structure used to purchase the business is a company, SY and HJ Pty Ltd as the trustee for the Ro Family Trust. Ms Lee and her husband Mr Ro are the only beneficiaries of the trust. 

3. Ms Lee, together with her husband and children, applied for Business Skills (Residence) (Class DF) Subclass 892 visas on 24 September 2013. Their applications were refused by a delegate of the Minister because the delegate was not satisfied that Ms Lee had the personal and business assets required for the grant of the visa. This is an application for review the decision to refuse to grant the visa applicants visas a under s.65 of the Migration Act 1958 (the Act).

4. Ms Lee and Mr Ro appeared before the Tribunal on 28 May 2015 to give evidence and present arguments, and were represented by their registered migration agent. The Tribunal hearing was conducted with the assistance of an interpreter in the Korean and English languages.

5. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The criteria for a subclass 892 visa are set out in Part 892 of Schedule 2 of the Migration Regulations 1994 (the Regulations). The criteria include cl.892.212 which requires Ms Lee to meet two out of three of specified requirements at the time of the visa application unless the appropriate regional authority has determined there are exceptional circumstances. A regional authority has not determined there are special circumstances, and of the three criteria, Ms Lee acknowledges the two criteria that she may meet are:

   ·     That the lawfully acquired combined personal and business assets of Ms Lee and Mr Ro in Australia have a net value of at least AUD250,000; and had a net value of at least AUD250,000 in Australia throughout the period of 12 months immediately before the application is made (cl.892.212(b)); and

   ·     That lawfully acquired assets owned by Ms Lee and Mr Ro in the main business have a net value in Australia of at least AUD75,000;  and had a net value of at least AUD75,000 in Australia throughout the period of 12 months ending immediately before the application is made (cl.892.212(c)).

2. There is no suggestion that an appropriate regional authority has determined there are exceptional circumstances.

3. There are some unusual features about this matter in that according to Ms Lee, the migration agent acting for Ms Lee both introduced the vendor of the business to Ms Lee and loaned Ms Lee $30,000 towards the purchase of the business.  This amount of $30,000 was later gifted to Ms Lee by Mr Chul Park, who provided a statutory declaration stating he had gifted Ms Lee this money.  SY & HJ Pty Ltd then purportedly employed Mr Park and sponsored him for a 457 visa.  The Department cancelled SY & HJ Pty Ltd’s approval as a standard business sponsor after finding Mr Park was not, in fact, working for the company and Mr Park’s 457 visa was refused. SY & HJ Pty Ltd have lodged an application for review of the decision to cancel the sponsorship, and Mr Park has lodged a review of the decision to refuse his visa, and matters are currently under review by this tribunal (differently constituted).

4. Ms Lee said that the gift of money to her for the purchase of the business was made before the company sponsored Mr Park.  She said that because he helped them when they were struggling they volunteered to sponsor him. 

5. Given these unusual features, the tribunal further examined whether the purchase price for the business was transferred and validly appears as a loan or an unpaid trust distribution for Ms Lee in the financial statements of SY & HJ Pty Ltd.

Did Ms Lee and Mr Ro have net assets of $250,000 at the time of the visa application and in the twelve months prior application?

1. The visa application was lodged on 24 September 2013, and the period in question is 23 September 2012 to 23 September 2013. The period 31 August 2012 to 31 August 2013 was chosen by the delegate to show the assets at 23 September in each year as this was the period covered by the financial statements provided to the Department.  Ms Lee says she took no issue with this approach.  The tribunal is satisfied that Ms Lee’s assets at 31 August of each year will show her assets at September 2012 and September 2013. 

2. Ms Lee submits that her assets in the business were $250,045 at 31 August 2012 and $252,559 at 31 August 2013.  She also submits she had personal assets of $18,443 at 31 August 2012 and $19,557 at 31 August 2013. 

3. Personal assets include assets that are held in a business, such as loans to a business.  In the absence of the assets in the business being included as personal assets, Ms Lee and Mr Ro cannot meet the requirement to have $250,000 net assets for the twelve months before the visa application from other sources such as their bank accounts.  In this case, the business in Happy Mart.  The owner of Happy Mart is SY & HJ Pty Ltd as trustee for the Ro Family Trust.  Ms Lee and Mr Ro are the sole beneficiaries of the trust, and Ms Lee is the appointer for the trust.  As a result the tribunal is satisfied Ms Lee and Mr Ro are the beneficial owners of the business. 

4. After the hearing, at the request of the tribunal Ms Lee provided an independent auditor’s report on the financial statements.  This report states the financial reports of SY & HJ Pty Ltd as trustee for the Ro Family Trust presents fairly the financial position of the company and trust and of its financial performance.  As a result the tribunal accepts the financial statements provided by Ms Lee for of SY & HJ Pty Ltd as trustees for the Ro Family Trust.

5. The 2013 financial statements of SY & HJ Pty Ltd as trustees for the Ro Family Trust state Ms Lee has an unpaid trust distribution of $250,050 at 31 August 2012 and at 31 August 2013 of $252,549.  Ms Lee says this amount was loaned to the business for the purchase price of the business and in various expenses she incurred personally on behalf of the business. 

6. The delegate was not satisfied that at the point twelve months before the visa application, or since this time, Ms Lee had assets in the business of more than $10, which was the net equity in the business.  While the delegate stated policy allows for loans to the business from a visa applicant to be included as an asset, the delegate found Ms Lee had failed to provide evidence of her loans to the business of $250,035 at 31 August 2012 with a balance of $252,549 at 31 August 2013. 

7. In this case, the financial statements show money owing to Ms Lee as an unpaid trust distribution and not a loan.  Having regard to the trust deed for the Ro Family Trust, the tribunal infers there is a trust distribution to Ms Lee that she has subsequently personally loaned to the company as trustee for the trust.[1]  In later financial statements this appears as a loan from Ms lee to the business.

   [1] For the effect of an unpaid trust distribution, see, for example, Pope and Commissioner for Taxation [2014] AATA 532

8. Ms Lee was asked to provide further information on the loan, and provided the general ledger for the Ro Family Trust.  This shows amounts of $240,000 paid into the trust as capital introduced for the purchase of the business.  She also provided the contract for the sale of the business, showing a purchase price of $190,000.  After the hearing, a settlement statement for the purchase of the business was provided as requested by the tribunal.  This shows a purchase price of $190,000 plus a $30,000 debit for stock.  The settlement date is 1 September 2011.

9. The settlement statement shows an amount of $30,000 paid as a deposit, and $30,000 debit for stock.  The total cost for the purchase at settlement was listed as $230,543 with the balance of $170,543.02 due on 1 September 2011.  On this date, there is a withdrawal from a bank account in the name of The Director SY & HJ Pty Ltd of $170,196.  Ms Lee declares in her statutory declarations and in evidence at hearing that the $180,000 deposited in this account on 22 August 2011 was from the sale of their assets in Korea. 

10. The $30,000 deposit for the business shows as a withdrawal dated 19 August 2011 from a joint account held by Ms Lee and Mr Ro with Westpac.

11. Vendor finance was provided for $30,000 as shown by a written agreement with the vendors.  This loan agreement appears to be for the value of the stock as the recitals in the loan agreement state the amount of the loan is to be confirmed on stocktake.  As noted above this amount was paid by the migration agent, and this was amount was subsequently gifted to Ms Lee by Mr Park.

12. While the tribunal had concerns about whether the value of the business was the amount paid by Ms Lee, it does not have any evidence before it about the valuation of the business other than the contract for the sale of the business. In her statutory declaration Ms Lee points to the value of the location of the business as a reason the turnover has increased. At hearing, she could describe limited assets of the business and could otherwise only point to the amount that she paid for the business to show this was the value of the business.  While this is not entirely satisfactory, in the absence of any other contrary evidence showing that the business was not worth what Ms Lee paid for it, the tribunal finds the business had a value of $220,000 in 2011.

13. On the basis of the statement from the conveyancer and the transfers from Ms Lee and Mr Ro’s account that the amount in the contract was transferred from Ms Lee and Mr Ro’s account.  While the tribunal had significant concern about the nature of the transfers, it is satisfied that Ms Lee and Mr Ro have loaned the business the total of $230,543 for the purchase of the business. 

14. The trust ledger provided by Ms Lee’s accountant shows total capital introduced to 31 August 2012.  This includes the purchase of equipment for the business, for example a computer, a fridge, advertising and delivery costs.  This is consistent with Ms Lee’s evidence at hearing and the tribunal is satisfied she incurred these costs.  The total capital introduced is offset by drawings of $90,620 leaving a balance of $250,035 that appears in the financial statements.   The turnover of the business has increased in this time, and it is reasonable to assume the value of the business has also increased.

15. There are no loans to Ms Lee or Mr Ro recorded in the financial statements.  There is no evidence of other loans against Ms Lee’s personal assets pledged as collateral.  Ms Lee says the source of the funds for the purchase and capital introduced into he business was the sale of assets in Korea, and there is nothing before the tribunal to show this is not the case.  The tribunal is satisfied that as at 31 August 2012, Ms Lee had personal assets of $250,035.

16. This amount has increased $252,550 in 2013, which is supported by the ledger from the accountant for the year 1 September 2012 to 31 August 2013 provided by Ms Lee.  The tribunal is satisfied that at 31 August 2012, she had personal and business assets of more than $250,000. 

17. The tribunal is satisfied Ms Lee had personal and business assets in excess of $250,000 in Australia at the time of the visa application and in the twelve months before the visa application.  As a result, it is satisfied she meets cl.892.212(b).

    Did the assets of Ms Lee and Mr Ro in the business have a net value of $75,000 at the time of the application and in the twelve months before the application?

18. The Tribunal has found above that Ms Lee has a net asset of over $250,000 in Australia in the business at the time of the application and in the twelve months prior to the application, and therefore she meets cl.892.212(c).

Conclusion

1. As the Tribunal has found that Ms Lee cl.892.212(b) and (c), she meets two of the three criteria, and the tribunal finds she meets cl.892.212. As a result the appropriate course is to remit the visa applications to the Minister for reconsideration in accordance with the direction that Ms Lee meets cl.892.212 of Schedule 2 of the Regulations.

2. As Ms Lee meets cl.892.212, the secondary applicants may meet cl.892.311 if Ms Lee meets the remaining criteria for the grant of the visa.  The appropriate course is to remit the applications of the secondary visa applications for reconsideration. 

DECISION:    

1. The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named applicant meets cl.892.212 of Schedule 2 to the Regulations.

Kate Millar
Member