1420164 (Migration)

[2015] AATA 3439

1420164 (Migration) [2015] AATA 3439 (24 September 2015)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Fangyuan Wang
Mr Rongping Li
Miss Aojia Li

CASE NUMBER:  1420164

DIBP REFERENCE(S):  CLF2014/136439 CLF2014/136440 CLF2014/136441 CLF2014/83640 CLF2014/83643 CLF2014/83644

MEMBER:Bruce Henry

DATE:24 September 2015

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal affirms the decision not to grant the visa applicant a Business Skills (Residence) (Class DF) visa.

Statement made on 24 September 2015 at 3:36pm

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 27 November 2014 to refuse to grant the visa applicant a Business Skills (Residence) (Class DF) Subclass 890 visa under s.65 of the Migration Act 1958 (the Act).

2. The visa applicant applied for the visa on 12 June 2014. At the time the visa application was lodged, Class DF contained 4 subclasses: 890 (Business Owner); 891 (Investor); 892 (State/Territory Sponsored Business Owner) and 893 (State/Territory Sponsored Investor). In this case, claims have only been made in respect of Subclass 890.

3. The delegate refused to grant the visa on the basis that the first named applicant (the applicant) did not meet the requirements of cl.890.212 as the delegate was not satisfied that the applicant and/or her spouse had net assets of at least $100,000 in the main businesses which were identified as Aurora Property Developments Pty Ltd (Aurora) and Horizon Property Holding Pty Ltd (Horizon) and throughout the period of 12 months ending immediately before the application was made.

4. The applicants Ms Wang and Mr Li appeared before the Tribunal on 13 August 2015 to give evidence and present arguments. Ms Wang also appeared at a further hearing on 24 September 2015. The hearings were conducted with the assistance of an interpreter in the Mandarin and English languages.

5. The applicants were represented in relation to the review by their migration agent, who attended both hearings.

6. For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

7. The issue in this case is whether the applicant had an ownership interest in one or more established main businesses in Australia throughout the period of 12 months immediately before the application was made (cl.890.211) and continues to have an interest of that kind at the time of the Tribunal’s decision (cl.890.221).

8. As noted above, the delegate refused this application on the basis that the applicant failed to satisfy cl.890.212, which provides:

   The assets of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:

   (a)   have a net value of at least AUD100 000; and

   (b)   had a net value of at least AUD100 000 throughout the period of 12 months ending immediately before the application is made; and

   (c)   have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.

9. ‘Main business’ is relevantly defined in r.1.11 as follows:

   (1)   For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:

   (a)   the applicant has, or has had, an ownership interest in the business; and

   (b)   the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

   (c)   the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the business is or was: …

   (ii)   if:

   (A)   the business is not operated by a publicly listed company; and

   (B)   the annual turnover of the business is at least AUD400 000;

   at least 30% of the total value of the business; …

   (iii)      if:

   (A)      the business is not operated by a publicly listed company; and

   (B)      the annual turnover of the business is less than AUD400 000;

   at least 51% of the total value of the business; and

   (d)   the business is a qualifying business.

10. ‘Qualifying business’ is defined in turn in r.1.03:

    qualifying business means an enterprise that:

    (a)   is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

    (b)   is not operated primarily or substantially for the purpose of speculative or passive investment.

11. Also relevant to the application is cl.890.213

    In the 12 months immediately before the application is made, the applicant’s main business in Australia, or main businesses in Australia together, had an annual turnover of at least AUD300 000.

    Background

12. The applicants applied for the visa on 12 June 2014. As noted above, the main businesses identified by the applicants were Horizon and Aurora. Copies of extracts from the records of the Australian Securities & Investments Commission (ASIC) show that the applicant holds 100% of the shares in Aurora and has held those shares since 29 June 2012 when 54% of the shares were transferred to her. She had held the remaining 46% since 3 July 2011, while her husband, Mr Li, held 32% up to 29 June 2012. ASIC records show that Aurora holds a 30% share of Horizon, the transfer of which was registered on 14 July 2011.

13. Consistent with Departmental policy, the applicants provided to the Department financial statements for Horizon and Aurora as at 31 March 2014 (the 2014 accounts), which is within 3 months of the date of the visa application, and as at 31 March 2013 (the 2013 accounts), which is a year earlier.

14. The Departmental files contain numerous other documents relating to the applicants’ businesses, including:

    ·A copy of the Company Tax Return for 2012 for Horizon, showing total income of $1,092,619, of which $1,075,124 was ‘Gross rent and other leasing and hiring income’;

    ·A letter dated 14 April 2014 from Ray White Commercial confirming that they are the ‘appointed Property Manager’ for Horizon’s ‘commercial assets based in … Brisbane’;

    ·A statement by Ms Wang dated 10 June 2014 headed ‘Statement regarding my business activities and assets in Australia’;

    ·A submission from the applicants’ representative describing Horizon as ‘the main business operated by Ms Wang and used by her to claim she has met the criteria set in Reg 890.213 and Reg 890.214’. The submission states that Horizon had acquired land in January 2010 and developed part of the property into a shopping centre which it now manages, and had ‘attained the development approval from the local council to develop the land into 24 townhouses. Currently in the pre-construction phase, finalising the building application documentation and preparation of marketing materials’;

    ·Copies of leases for properties in the Horizon shopping centre development in Brisbane; and

    ·Documents relating to the development application and associated works for the Horizon town unit development claimed to show Ms Wang’s involvement in the management of the development.

15. The financial statements for Horizon were accompanied by a letter dated 5 May 2014 from the certified public accountant responsible for their preparation which stated:

    The extent of our procedures and services will be limited exclusively for this purpose only. As a result, no audit or review will be performed and, accordingly, no assurance will be expressed. Our engagement cannot be relied upon to disclose irregularities including fraud, other illegal acts and errors that may exist. However, we will inform you of any such matters that come to our attention. You also acknowledge your responsibility for the reliability, accuracy and completeness of the accounting records and that you have disclosed to us all material and relevant information.

    The above documents will be prepared for distribution to your immigration agent for the agreed purpose. There is no assumption of responsibility for any reliance on our report by any person or entity other than yourself and those parties relevant to your application for immigration. The report shall not be inferred or used for any purpose other than for which it was specifically prepared. Accordingly, our report may include a disclaimer to this effect

16. The Tribunal pointed out to the applicants at the hearing that it was difficult to see how accounts prepared on such a basis could be relied upon to satisfy the requirements of the Regulations, however for the reasons explained below it was unnecessary for accounts that met relevant Australian standards to be submitted.

17. In her statement Ms Wang described her business activities in Australia as follows:

    I have interests in exporting red wine to China. My husband and I set up Aurora Property Developments Pty Ltd (short for 'Aurora') to export red wine to China. At the beginning my husband Rongping and I each possess 30% of shares of the company. However later there were problems with other shareholders, and also because my husband spent most of his time in China, so I decided to take over all ownership interest in Aurora on 29th June 2012, and became the CEO of the Company. In this company I did not employ other staff, and I had to deal with export, company management, finding retail partners, and import company connections all by myself.

    Two years on, I import red wine from Lavyna Wineyard, and developed several overseas business partners to manage the retail. (Please refer to contract documents)

    At the same time I was still interested in property development. Previously I had used the 30% share of Aurora Property Developments Pty Ltd with other like-minded companies and individuals to form Horizon Property Holdings Pty Ltd (short for 'Horizon'). This company has been developing Horizon @ Wellington Point Shopping Centre and Horizon Vista Townhouse (25 villas) located in North of Brisbane.

    At early stage of development of Wellington Point Shopping Centre, I was responsible for managing company daily activities, and coordinating with other shareholders to manage the construction of Horizon @ Wellington Point Shopping Centre, including building material supply such as aluminum plates. When the construction for Horizon @ Wellington Point Shopping Centre finished, I became Horizon Company's Executive Director focusing on the company's daily management, such as the shopping layout, managing classification, communicating with domestic customers and employees, renting, shopping, office duties, financial management. My company has also employed a number of staffs besides those contractors, including two Australian citizens/PR. I had interviewed them and supervise their work. (Please refer to relevant documents.)

    Since October 2010 my husband Li Rongping has been travelling back and forth between Australia and China because of our Australian business. He spent most of his time in China to supervise production of the construction materials in China for our company's 25 villas to be built in Wellington Point and also conduct market analysis and market activities to sell the properties to Chinese.

18. The respective financial statements for Horizon record the following net asset positions:

    As at 31 March 2013              As at 31 March 2014

    Net assets of Horizon            ($2,428,338)  ($2,572,381)
    Aurora’s 30% share                  ($728,501)   ($772,614)

19. The respective financial statements for Aurora record the following net asset positions:

    As at 31 March 2013              As at 31 March 2014

    Net assets of Aurora              ($1,036.68)  $11,651.97

20. The current assets of Aurora are made up almost entirely of amounts of $1,726,311.34 as at 31 March 2014 and $1,738,125.86 as at 31 March 2013, which are shown in the accounts as ‘shareholder loans’. The accounts for Horizon indicate that almost all of these funds were then loaned to that company by Aurora. As noted above, the Department refused the application on the basis that the delegate was not satisfied as to the source of these funds and therefore not satisfied that Ms Wang and her husband Mr Li had $100,000 of net business assets throughout the relevant period.

21. The accounts provided to the Tribunal also show that the total income (turnover) for Horizon for the year ended 31 March 2014 was $1,357,293 of which $1,329,897 was ‘rents received’. For the year ended 31 March 2013 the total income for Horizon was $1,223,590.88, of which $1,215,385.04 was ‘rents received’.

22. The total sales (turnover) figures for Aurora for the two years were respectively $84,601 and $58,787.

23. At the hearing Ms Wang confirmed that the income of Horizon shown in the 2013 and 2014 accounts was from rental property. She said that she and her husband had been involved in building a shopping centre several years previously, and the income of Horizon for those years was primarily derived from rental of premises in the shopping centre. Ms Wang said, however, that much of her time as Director of Horizon had been spent on the development of the plans for the townhouse development that had been approved for the land adjoining the shopping centre.

24. The Tribunal pointed out to Ms Wang that the evidence before it as to the income and expenses of Horizon in the 2013 and 2014 accounts indicated that the income of the business was almost entirely from rentals, while the expenses appeared to relate to the maintenance and management of those rental properties. She maintained that while the current income stream for Horizon was from the rental of the shopping centre complex it had built, that income was financing the planning and development of the new townhouse complex. The Tribunal asked both Ms Wang and the representative to explain how these claims were supported by the 2013 and 2014 accounts that had been produced, however they were unable to do so.

25. The Tribunal allowed the applicant a further 28 days to provide evidence that the business of Horizon during the relevant two year period related to matters other than the provision of rental property, and to address the evidentiary issues related to the claimed shareholder loans to Aurora and from Aurora to Horizon.

26. After the hearing Ms Wang submitted further materials through her representative, including a letter dated 21 August 2015 in which she further explained her role in developing the town house development proposal for Horizon.

    Do the applicants have an ownership interest in Aurora?

27. As noted above, cl.890.211 requires that an applicant has had, and continues to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately before the application is made. ‘Ownership interest’ is defined in s.134(10) of the Act to include an interest as a shareholder in the company that carries on the business.

28. The accounts provided by the applicants show that the turnover for the business for the 12 months prior to the application was $84,601. Regulation 1.11(1)(c)(iii) requires that if a business has a turnover of less than $400,000, a 51% interest must be held by the applicant or the applicant and their spouse. The Tribunal is satisfied that Ms Wang and her husband, Mr Li, owned 78% of Aurora prior to 29 June 2012, and since that time Ms Wang has owned 100% of the business. The remaining 22% of Aurora was held by Yun Zhang (19%) and Songkun Lu (3%).

29. Accordingly, the Tribunal is satisfied that both at the time of application and now the applicants had an ownership interest in Aurora as that is defined in r.1.11 of the Regulations.

    Do the applicants have an ownership interest in Horizon?

30. As set out above, ASIC records show that Aurora has held a 30% share of Horizon since 14 July 2011. Accordingly, had Aurora been 100% owned by Ms Wang and Mr Li for the two years prior to the application, they would have held a 30% ownership interest in Horizon as required by cl.1.11(1)(c)(ii), which applies because Horizon had a turnover in excess of $400,000 for the relevant period.

31. However, the ASIC documents produced to the Tribunal by the applicants show that Ms Wang did not hold 100% of Aurora until 29 June 2012, until which time she and her husband Mr Li held 78% of the shares in Aurora. The Tribunal put to Ms Wang that on the basis of this information, she and her husband did not appear to have an ownership interest in Horizon until 29 June 2012. She responded that she and her husband ‘did not pay attention to this requirement’. She said that they were focused on building their business, and had relied on their representative to ensure that they met the requirements for the visa.

32. It is clear from the documentation on the files that Horizon and Aurora are serious businesses and that Ms Wang has a senior role in the management and development of their businesses. The Tribunal is required, however, to determine whether the criteria for the visa are met, and on the evidence produced to it must find that the applicants did not hold an ownership interest of 30% in Horizon until 29 June 2012. Accordingly, they did not have the requisite ownership interest in Horizon throughout the two years prior to the application, and cl.1.11(1)(c)(ii) is not satisfied.

33. In these circumstances it is unnecessary for the Tribunal to consider the issues as to whether Horizon is a qualifying business given that its income during the two years immediately prior to the application was derived almost entirely from rentals, or whether Ms Wang and her husband had sufficient assets in Horizon. Horizon cannot be a main business of the applicants for the purposes of Part 890 of Schedule 2 of the Regulations whether or not it is a qualifying business.

34. In these circumstances, the applicants must rely only on Aurora to satisfy the remaining criteria. Given the turnover figures for Aurora referred to above, the Tribunal is satisfied that the turnover for the business for the 12 months prior to the application was less than $300,000 and finds that cl.890.213 is not satisfied.

35. No applicants would satisfy requirements for other subclasses of the Business Skills (Residence) (Class DF) visas because there is no evidence of any relevant investment or sponsorship as required for those subclasses.

36. Given these conclusions no applicant is able to satisfy the criteria for a Business Skills (Residence) (Class DF) visa and each must be refused the grant of such visas under s.65 of the Act. The delegate’s decisions to this effect should be affirmed.

    DECISION

37. The Tribunal affirms the decisions under review refusing the applicants the grant of Business Skills (Residence) (Class DF) visas.

    Bruce Henry

    
    

    Member