ANH PHUONG TRA and MINISTER FOR IMMIGRATION AND CITIZENSHIP

[2009] AATA 421

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 421

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/4086

GENERAL ADMINISTRATIVE DIVISION		)
Re		ANH PHUONG TRA

Applicant

And MINISTER FOR IMMIGRATION AND CITIZENSHIP

Respondent

DECISION

Tribunal Ms Regina Perton, Member

Date11 June 2009

PlaceMelbourne

Decision The Tribunal affirms the decision under review.

(sgd) Regina Perton

Member

CITIZENSHIP – application for Australian citizenship – failure to satisfy residence requirements – accounting professional – resident in Vietnam – whether activities outside Australia beneficial to the interests of Australia – exercise of discretion – decision affirmed.

Australian Citizenship Act 2007 ss 21, 22

Australian Citizenship (Transitionals and Consequentials) Act 2007 Item 7 of Schedule 3

Minister for Immigration, Local Government & Ethnic Affairs v Roberts (1993) 41 FCR 82

Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634

Re Fraser and Minister for Immigration, Local Government and Ethnic Affairs (AAT No. S91/205, 15 October 1991) 

Re McCarthy and Minister for Immigration, Local Government and Ethnic Affairs

(1993) 30 ALD 447

Re Pai and Minister for Immigration and Ethnic Affairs (1994) 35 ALD 762

Re Tsui and Minister for Immigration, Local Government and Ethnic Affairs (1991) 24 ALD 236

REASONS FOR DECISION

11 June 2009 Ms Regina Perton, Member          

1.      Anh Phuong Tra, a citizen of Vietnam and an Australian permanent resident, currently works for an Australian accounting practice in Vietnam.  She first arrived in Australia in November 1999 as the holder of a temporary student visa.  On 10 May 2005 Ms Tra was granted a Skilled Independent Overseas Student visa.  Ms Tra applied for citizenship on 18 May 2007.  Her application was refused on 10 August 2007 because she did not satisfy the normal residence requirements for the grant of citizenship.  The delegate of the Minister for Immigration and Citizenship (the Minister) also concluded that the residence requirements should not be set aside on the basis that Ms Tra’s business activities were beneficial to the interests of Australia. 

2.      Ms Tra applied to the Tribunal for review of the decision on 27 August 2007.  On 10 December 2007 Ms Tra withdrew her application for review.  On 27 June 2008 Ms Tra was granted reinstatement of her application for review.

3.      The issue before the Tribunal is whether to exercise the discretion to treat periods outside Australia as periods in which Ms Tra was present in Australia. 

LEGISLATIVE AND POLICY BACKGROUND

4.      The Australian Citizenship Act 2007 (the Act) came into operation on 1 July 2007. As Ms Tra lodged her application for grant of Australian citizenship on 18 May 2007 (prior to the commencement of the Act) but a decision had not been made by 1 July 2007, under Item 7(2) of Schedule 3 of the Australian Citizenship (Transitionals and Consequentials) Act 2007 (the Transitionals Act) the application became a new application which was taken to have been made under s 21 of the Act.

5. Sub-item 7(8)(1) of Schedule 3 of the Transitionals Act provides:

(8)In applying section 22 of the new Act to a new application covered by subitem (2), subsections 22(1) to (2), (4A) and (5A) of the new Act do not apply and the following subsections of section 22 of the new Act apply instead:

(1)For the purposes of section 21, a person satisfies the residence requirement if the person has been present in Australia as a permanent resident for:

(a)a total period of at least 1 year in the period of 2 years before the day the person made the application; and

(b)a total period of at least 2 years in the period of 5 years before that day.

Sub-Item 7(8)(4) of Schedule 3 of the Transitionals Act provides:

(4)The Minister may treat a period as one in which the person was present in Australia as a permanent resident if:

(a)the person was engaged in activities during that period that the Minister considers to be beneficial to Australia; and

(b)the person was not present in Australia during that period but was a permanent resident during that period.

6. The relevant policy is contained in Chapter 5 of the Australian Citizenship Instructions (ACI).  The Tribunal should have regard to these instructions unless there is good reason not to do so (Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634). In relation to the discretion in sub-item 7(8)(4) of Schedule 3 of the Transitionals Act, Chapter 5 of the ACI provides:

Periods during which the applicant was a permanent resident and was outside Australia engaged in activities beneficial to the interests of Australia may be treated as periods in which the applicant was present in Australia as a permanent resident.  This discretion applies to both residence requirements (ie both “2 years in the last 5” and “1 year in the last 2”).

As a matter of policy:

·the applicant must have been personally engaged in activities overseas beneficial to the interests of Australia, not just, for example, the company or organisation for which the applicant worked; and

·the applicant must have been engaged in a series of activities, not just a one-off transaction; and

·the activities must also be during the relevant period/s under consideration; and

·the activities must have been “beneficial to the interests of Australia” during the relevant period/s.  It is not intended that the provision apply where there are no current benefits irrespective of whether benefits may accrue in the future.

Policy also states that the discretion will usually only be exercised if the applicant is in Australia and was either:

·required to work overseas by a Federal, State or Territory Department, semi-government authority or private employer; or

·self-employed and frequent travel abroad was essential to the successful operation of their business, whether for an extended period or on a regular, short-term basis; or

·engaged overseas in activities of a social, cultural, economic or political nature which are clearly beneficial to the interests of Australia and are widely recognised as such by either;

-     the Australian community generally; or

-     prominent persons associated with the applicant’s field of endeavour (for example, people engaged in aid programs, artists and entertainers of world standing).

Activities beneficial to the interests of Australia

In assessing whether activities are beneficial to the interests of Australia, consider the following:

·It requires “something in the nature of activities which provide some advantage to Australia, whether commercial or otherwise.  The concept necessarily connotes some public interest of Australia …and means more than the private interests of the (applicant).  The section requires some objective benefit to Australia” (Federal Court in Roberts).

·It requires “something in the nature of activities which achieve recognition of Australia or of Australian achievements or commercial advantage for Australia, or increase the international respect and goodwill for Australia …(it) refers to the public interests of Australia” (AAT in Fraser).

·“The claim that the applicant’s employer has enhanced the reputation of its parent company and Australian companies in general, falls short of demonstrating that the applicant’s activities were beneficial to the interests of Australia” (AAT in McCarthy).

·“There should be a close nexus between the overseas activities and the subsequent benefit to Australia to exercise the discretion” (AAT in Tsui).  The benefit should be largely as a result of the applicant’s activities and must not be residual, remote, indirect or speculative (For example, AAT in McCarthy).

SHOULD THE DISCRETION TO TREAT PERIODS OUTSIDE AUSTRALIA AS PERIODS IN WHICH MS TRA WAS PRESENT IN AUSTRALIA BE EXERCISED?

7. Ms Tra was granted permanent residency on 10 May 2005. She left Australia on 5 November 2005 for 3 weeks, 11 March 2006 for several weeks and then on 2 May 2006 for a year returning to Australia on 3 May 2007. She applied for citizenship 15 days later. At the date of her application for citizenship, Departmental records indicated that Ms Tra had spent 299 days in Australia in the preceding two years, and 307 days in the preceding five years. Hence she does not meet the residency requirements of the Transitionals Act. However, Ms Tra submits that her activities outside Australia have been beneficial to the interests of Australia and warrant the exercise of the discretion.

8.      In a written statement dated 24 October 2008, Ms Tra stated that she completed a commerce degree at the University of Melbourne in 2005.  She commenced working for McMasters’ (Vic) Pty Ltd (McMasters) in April 2005 and subsequently for its Vietnamese subsidiary, McMasters VN.  Ms Tra stated that she helped McMasters set up an office in Ho Chi Minh City.  Ms Tra indicated that her position was manager of McMasters VN and that her duties, responsibilities and activities while overseas were setting up the Vietnam office; hiring and recruiting Vietnamese accountants; training Vietnamese accountants; supervising the work of the Vietnamese staff; managing McMasters VN; other work-related activities and involvement in the Australian  Chamber of Commerce. 

9.      Ms Tra stated that her activities overseas in setting up and managing McMasters VN resulted in significant benefits not only to McMasters but also to the wider Australian community in terms of cost savings for clients, creation of jobs and career development opportunities for Australians and the development and fostering of better ties between Australia and Vietnam.  Ms Tra stated that McMasters VN provides services to Australian clients, mainly doctors, dentists and self-managed superannuation funds (SMSFs).  She indicated that setting up the Vietnamese office has resulted in lower operating costs and increased revenue for McMasters, enabling the company to achieve higher profits and therefore paying more tax in Australia.  Ms Tra stated that a further result was the employment of three additional staff in the Melbourne office of McMasters who liaise with the Vietnamese office.  She described the expansion of the office in Vietnam to 17 employees who handle the more basic accounting work, with the Australian staff concentrating on the higher end consulting work and creating more value added services to Australian clients.  

10.     Ms Tra expressed the belief that her overseas activities in establishing and operating McMasters VN had helped to foster and improve relations between Australia and Vietnam.  She states:

·Both our Australian and Vietnamese staff have a better appreciation and understanding and respect of each country’s respective culture, values and lifestyle.

·The regular visits by our Australian staff to Vietnam and visits by our Vietnamese staff to Australia have flow on economic benefits to other organizations in both Vietnam and Australia through the expenditure related to such visits, including airline tickets, accommodation, insurance, banking and related spending.

·Several of our Vietnamese accountants have had the opportunity to visit Melbourne for 2 weeks to undertake further training….During this visit our Vietnamese staff gain real experience in Australian office environment and lifestyle.

·Our Vietnamese accountants are given excellent opportunities and career development ….Not only do they obtain knowledge and hands on experience in Australian accounting and tax system, but through pursuing higher qualification at Swinburne University and CPA membership, this will significantly improve their career prospects to work for other Australian companies and to migrate to Australia where their skills will benefit other Australian employers.

·Our Vietnamese staff receive salary which is comparatively higher than local salary offered by local employers.

·Our Vietnamese staff are proud to work for an Australian company….They feel a stronger connection with Australia and many hope that the skills and experience which they are gaining through McMasters VN will help them to migrate to Australia.

11.     Ms Tra described the skills she had gained through her activities in Vietnam which she believes will assist her future employment prospects.  She stated that she has a strong and ongoing connection with Australia.  She has had a long term relationship with an Australian citizen to whom she is engaged.  She owns a property in Melbourne with a mortgage she is paying off.  Ms Tra stated that she considers Australia to be her home. 

12.     In oral evidence, Ms Tra said that she had started as a trainee accountant with McMasters’ in April 2005 just after her graduation.  On her first visit to Vietnam for McMasters’ she was looking around for office space and sought help from RMIT University’s Ho Chi Minh City campus on accessing the relevant labour market.  On her second visit, she found appropriate office space, placed advertisements at RMIT University for graduates, signed relevant legal documents and commenced recruitment of staff.  She described the interviews and the early stages of training the staff, setting up the office etc and what has developed since then.  She said that she was proud to have succeeded and has learned a lot despite all the hard work.

13.     Terrence McMaster, director and majority shareholder of McMasters and other related companies provided a written statement dated 23 October 2008.  He stated that Ms Tra was initially based at McMasters Melbourne office until she was asked to set up a subsidiary branch in Vietnam and manage its operations.  He indicated that Ms Tra was selected because she held a Bachelor of Commerce degree majoring in accounting from the University of Melbourne, had extensive and intensive experience in accounting and auditing Australian SMSFs, spoke fluent Vietnamese and English and had the skills and experience to train and supervise McMasters Vietnamese staff.

14.     Mr McMaster stated that the Vietnam office acts as an accounting back office for his company’s Australian clients, who include about 1000 doctors and dentists and about 600 SMSFs.  He indicated that Ms Tra’s activities in Vietnam had resulted in significant financial and non-financial benefits including:

·increased profits in Australia and increased revenue/taxation base;

·lower costs for Australian enterprises and individuals using McMasters services and increase in services provided to Australian clients;

·additional employment in Australia.  Three Australian staff are employed in Australia as a direct result of McMasters VN office and would not have been employed but for the creation of the Vietnam office; and

·McMasters also rotates its young Australian accountants through the Vietnam office, one month at a time.  This means 12 Australian accountants obtain valuable overseas work experience each year, thereby enhancing their career development and future employment prospects.

15.     Mr McMaster indicated that a large part of McMasters’ profits were generated by McMasters VN activities and that all profit is repatriated to Australia and is taxed in Australia under Australian law.  He stated that that it was now much cheaper to set up superannuation funds and undertake routine accounting work.  He mentioned the relationship with the Vietnam campus of Swinburne University, with study fees for Vietnamese staff being paid to upgrade their qualifications, thereby benefiting both the staff and the university.  He indicated that due to the lower cost of labour in Vietnam, they could now expand their Australian operations and cited the benefits for Australian staff experiencing Vietnamese culture and vice versa.  Mr McMaster stated that the Vietnam office is a response to the shortage of appropriately qualified and experienced accounting staff in Australia.

16.     In oral evidence, Mr McMaster said that he had initially considered outsourcing basic accounting work to India but it did not work out.  He then decided that Vietnam would be a better location.  Mr McMaster said that the university system in Vietnam turned out economics graduates with little training in accounting.  He said that Ms Tra is responsible for training staff, managing workflows and day to day supervision of the staff.  Australian accountants check the work done by the Vietnamese staff over the internet and maintain contact with Australian clients.  He described the work done in Vietnam as the bottom part of the pyramid.  He said that the work they did resulted in lower costs for doctors, dentists and SMSFs for his firm’s clients.  He also provided a wholesale service for other Australian firms.  He said that the Vietnamese employees were paid higher rates than the usual rates for graduates in Vietnam and were given marketable skills.

17.     Mr McMaster said that Ms Tra co-managed the Vietnam office with another person of Vietnamese background.  Mr McMaster said that McMasters VN is not allowed to make a profit in Vietnam.  The billing of clients takes place in Australia. 

18.     Mr McMaster said that he usually employs about eight graduates per year through advertisements at the University of Melbourne.  Some of them are non-resident Asian graduates with good results who are happy to have the opportunity to do their professional year.  They bring additional language skills besides English.  Ms Tra was hired with the Vietnamese operation in mind.  He said that she went there to work at the firm’s request.  He said that they thought it was worth a try and it has worked out.  He said that as Ms Tra and her co-manager spoke Vietnamese, they could make arrangements in relation to leases, fit out etc and deal with relevant agencies there.  

19.     In a letter dated 21 October 2008, Jeremy Wong, an accountant working for McMasters, confirmed Ms Tra is a manager at the Vietnam office.  He also stated that since the Vietnam office of the firm had been established, there had been an increase in revenue for McMasters and hence in taxes paid by the company.

20.     Brett Rose, Manager - Superannuation for McMasters, in a letter dated 22 October 2008, stated that he makes regular visits to the Vietnam office about every 10 weeks.  He described the impact of having an office in Vietnam in these terms:

In a now very global economic environment the skills required to manage, integrate, communicate, train and understand differing cultures and work practices to our own is crucial to the future of organisations and economies as a whole.  No better demonstrated than the recent collaboration of the G20 to stabalise [sic] the world economic decline. 

Though on a much smaller scale the management provided by Ms Tra has enabled graduates from our organization to visit, train and become exposed to such environments.  This has vastly improved their ability to communicate, understand and succeed in developing a multinational corporate culture.

….

The skills developed by our Australian staff place them and the firms that they work for, should they not continue with McMasters’, with the ability to integrate and understand the global economic environment.  And with the necessity to have qualified experienced staff in international business Ms Tra’s environment provides no better breeding ground for such people.

21.     McMasters provided a large number of documents to the Tribunal relating to McMasters and McMasters VN.  These included:

·Sample employment contracts for five Australian staff who were described as having been employed due to the Applicant’s overseas activities as well as employment contracts for three staff employed in Australia with Vietnamese language skills;

·Passport details and visas for Vietnam for three Australian employees;

·Receipts made out to McMasters for airline tickets for a Vietnamese employee visiting Australia; membership renewals for Ms Tra for the National Institute of Accountants and CPA Australia; IT services for the Vietnam operations; 

·A certificate of registration dated 22 December 2005 allowing McMasters to set up a representative office in Ho Chi Minh city as well as a lease document (the latter in Vietnamese);

·Documents relating to the Vietnamese staff including a list of staff employed; invitations to visit Australia for training; a letter of thanks from one of those staff after a trip to Melbourne; CPA Australian assessments of Vietnamese staff; a letter of offer and invoice for fees for staff members to study through Swinburne’s Vietnamese campus;  

·A comparison between McMasters cost for setting up trusts and super funds with some other companies;

·Tax returns, profit and loss statements and other documents for McMasters (Super 2000 Trust) over several years, as well as a document setting out the relationship between McMasters and McMasters VN.

22.     As indicated above, the ACI sets out pertinent matters to consider where a permanent resident has not been in Australia for the prescribed periods prior to applying for citizenship.  The Tribunal accepts that Ms Tra is a bright, hard-working and talented person who is a loyal employee.  She took on a role that had drawbacks including temporary separation from her Australian  fiancé.  However, the advantages included an opportunity to develop and demonstrate her skills at an early stage in her career.  Ms Tra joined McMasters as a trainee accountant in April 2005 after completing her university degree.  Less than a year later, she was given responsibilities that appear to be quite onerous for such a recent graduate.  The Tribunal notes that Ms Tra shares management of the Ho Chi Minh City operations with a co-manager, also of Vietnamese background, and that staff at the Australian head office also have input.  Nonetheless, the Tribunal accepts that she has successfully taken on a role that involved helping to set up and then manage an accounting outpost of an Australian firm.  The Tribunal notes that McMasters VN is a Vietnamese entity but its profits all go to Super 2000 Trust, i.e. McMasters.

23.     In terms of the matters set out in the ACI, the Tribunal needs to consider if Ms Tra was personally engaged in activities overseas beneficial to the interests of Australia and not just the company for which she worked.  Ms Tra was asked by McMasters to help establish its Vietnam operations.  McMasters had previously tried a similar venture in India that did not work out.  While Ms Tra’s activities have been at the behest of her employer rather than something she initiated, she has had an active role in its operations.  The Tribunal is satisfied that Ms Tra was personally engaged in activities overseas that are claimed to be beneficial to the interests of Australia.  She was a permanent resident during the period she spent in Vietnam prior to applying for citizenship.  She was engaged in a series of activities, not just a one-off transaction and the activities were during the relevant period under consideration.  Ms Tra submits that these were activities that could be described as beneficial to Australia at that time and in the future.    

24.     The ACI spells out that the discretion will usually only be exercised if the applicant was in Australia (as Ms Tra was) and required to work overseas by a range of government and semi-government agencies or a private employer (there are also other provisions concerning work overseas which do not apply to Ms Tra).  Ms Tra agreed to go to Vietnam at her private employer’s request but there is no evidence to suggest that she was required to do so.  There was no evidence to suggest that had Ms Tra refused to take on the offer to set up the Ho Chi Minh City office, she would not have had ongoing employment in McMasters’ Melbourne office.  Mr McMaster gave evidence that he hired many graduates of Asian background with some of the other appointees being of Vietnamese heritage.  Ms Tra chose to take up an opportunity offered to her.  Hence, the Tribunal is not satisfied that Ms Tra was required to work overseas.    

25.     Another basis for exercising the discretion to treat a period overseas as if the applicant was in Australia, is engagement overseas in activities of a social, cultural, economic or political nature which are widely recognised as such by either the Australian community generally or prominent persons associated with the applicant’s field of endeavour.  Ms Tra submitted that by managing the operations of McMasters VN, she had helped to foster and improve relations between Australia and Vietnam in several ways: through a better understanding by the staff in both locations of their counterparts’ culture, values and lifestyle; by creating economic benefits through travel and associated expenditure; through training opportunities for their Vietnamese staff which could lead to eventual migration to Australia and through providing other benefits for the Vietnamese staff.  Other activities attributed to Ms Tra’s role in Vietnam were a lower cost to McMasters’ Australian clients; the direct employment of additional Australian staff and increased taxes paid by McMasters’ partners.  Her membership of the Australian Chamber of Commerce in Vietnam was also cited but she conceded that her role in that was not prominent. 

26.     In Re Fraser and Minister for Immigration, Local Government and Ethnic Affairs (AAT No. S91/205, 15 October 1991) the Tribunal held that activities beneficial to the interests of Australia refers to the public interests of Australia such as activities that will achieve recognition of Australia or increase international respect and goodwill for Australia.

27.     In RePai and  Minister for Immigration and Ethnic Affairs (1994) 35 ALD 762, Deputy President McDonald held (at 20):

I agree…that less direct benefits, e.g. the payment of tax, school fees, engagement of accountants and general consumption (i.e. by the applicant or members of his family), are secondary. They are too remote to be given any weight when considering the exercise of the discretion under section 13(4)(b) of the Act.

28.     The Tribunal was also provided with many other decisions where the applicant did not meet residence requirements for citizenship and hence sought the exercise of discretion. 

29.     Many of the activities cited as beneficial to Australia in this matter have been directly beneficial to the clients, partners and some staff of McMasters.  The Tribunal accepts that there may well have been lower fees for some of McMasters’ clients and potential clients and greater profits for McMasters’ partners.  However, the Tribunal is not convinced that lower fees for some of its clients, the engagement of staff in Australia to do the more complex accounting work and some additional tax that may have been paid by the McMasters’ partners could be described as activities of a social, cultural, economic or political nature widely recognised as such by the Australian community in general or by prominent persons in Ms Tra’s field of endeavour. 

30.     Apart from statements made by McMasters’ staff and partners, there was no evidence presented to indicate that the setting up and operation of the Vietnam processing centre is viewed as beneficial to Australia by prominent persons in Ms Tra’s field of endeavour. 

31.     The Tribunal is not satisfied that there would be wide recognition by the Australian community that the activities engaged in by Ms Tra were beneficial to Australia.  It seems more likely that many in the general community would view the setting up of an accountancy processing centre in Vietnam in a similar fashion to the way that they would perceive a call centre in the Philippines or India, namely as taking jobs away from Australians.  The Tribunal notes that over recent years, there has been significant public community hostility when companies outsource some of their operations overseas on the basis of the savings that will ensue to the company and its clients.  The amount of extra tax paid by McMasters’ and its partners is not a large amount in terms of overall taxation revenue and the Tribunal is not satisfied that the general community would view a small number of people paying additional tax through trust structures as being beneficial to Australia.  While McMasters’ may well have employed three additional Australian staff who undertake liaison with their Australian clients and may have Vietnamese staff doing the lower end work, the Tribunal is not satisfied that those staff might not have been employed by McMasters or some other employer if Ms Tra had not been undertaking activities in Vietnam.  Mr McMaster himself indicated that there is a shortage of accounting staff in Australia. 

32.     The Tribunal accepts that there are around 17 Vietnamese citizens who are receiving good salaries and are undertaking further education through the campus of an Australian university based in Vietnam as a result of working for McMasters VN.  Mr McMaster suggested that they could eventually qualify for Australian migration and hence help to alleviate a shortage of accountants.  The case law (for example, Re McCarthy and Minister for Immigration Local Government and Ethnic Affairs (1993) 30 ALD 447) and current policy clearly indicate that the claimed beneficial activities should not be possible future benefits. The Tribunal is not satisfied that better working conditions and prospects for a small number of individuals in another country warrants an exercise of the discretion. A possible enhanced understanding of each others’ cultures and lifestyle by Australian and Vietnamese employees of McMasters and a relatively small expenditure on travel etc would also not constitute activities beneficial to Australia in the way envisaged in the ACI.

33.     For these reasons the Tribunal finds that at the date of her application for citizenship Ms Tra was not engaged in activities outside Australia that were beneficial to the interests of Australia. As a result the discretion in sub-item 7(8)(4) of the Transitionals Act to treat the period she was not in Australia as a period that she was in Australia should not be exercised.

DECISION

34.     The Tribunal affirms the decision under review.

I certify that the thirty-four [34] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd):   Leah Berardi

Clerk

Date of hearing:  2 March 2009

Date of decision:  11 June 2009

Counsel for the applicant:            Mr J Gibson

Solicitor for the applicant:            AJH Lawyers

Advocate for the respondent:       Mr T Eteuati        
Solicitor for the respondent:         Clayton Utz