Anne Bee Holdings Pty Ltd (Migration)

[2018] AATA 3530

Anne Bee Holdings Pty Ltd (Migration) [2018] AATA 3530 (7 August 2018)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  ANNE BEE HOLDINGS PTY LTD

CASE NUMBER:  1712981

DIBP REFERENCE(S):  BCC2016/4063250

MEMBER:Ian Berry

DATE:7 August 2018

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 07 August 2018 at 12:02pm

CATCHWORDS
Migration – Nomination approval – Temporary Residence Transition stream – Marketing Specialist – Whether the applicant can sustain the nominated position for at least 2 years – Limited evidence before the Tribunal – Evidence indicates limited financial capacity of the nominator – Decision affirmed

LEGISLATION
Migration Act 1958 (Cth), ss 65, 359A
Migration Regulations 1994 (Cth), r 5.19

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 30 May 2017 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations).

2. The applicant applied for approval on 2 December 2016. The requirements for the approval of the nomination of a position in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination (r.5.19(3)) stream and a Direct Entry nomination (r.5.19(4)) stream. If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).

3. In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Temporary Residence Transition nomination stream. The position is Marketing Specialist with ANZSCO code 225113.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(3)(d)(i) of the Regulations because the applicant could not sustain a nominee working full-time in the position, for at least 2 years.

5. The applicant, by its Chief Executive Officer Mr Navnish, appeared before the Tribunal on 1 August 2018 to give evidence and present arguments.

6. The applicant was represented in relation to the review by its registered migration agent. That representative attended the Tribunal hearing.

7. For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.

   CONSIDERATION OF CLAIMS AND EVIDENCE

8. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Temporary Residence Transition nomination stream set out in r.5.19(3), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

9. The applicant is a training organisation working from Brisbane. The Chief Executive Officer’s wife is the sole director and shareholder. The applicant’s  business is in training staff of other businesses throughout Australia. It pays commissions for work contracts, then engages contractors to tutor the courses which the applicant develops and writes through other contractors. The applicant operates under trading names and markets the name at predominately Indian companies and individuals at conferences throughout Australia. Examples of that marketing were produced at the hearing.

10. The applicant commenced trading from 29 April 2013 for 1 trading name and from 27 November 2013 in respect of the other. The applicant has been registered for GST from 1 January 2013.

11. The delegate’s decision focused on the financial information given to the Department in support of the position of marketing specialist. The relevant part of that decision is:

    “The nominator has submitted financial statements for the 2014/15 financial year, indicating income... of $440,000 and expenses of $432,000 resulting in a net profit of $12,000, and a wage expenditure of $126,000. The balance sheet indicated total equity of $32,000. The nominator has also submitted financial statements for the 2015/16 financial year, indicating income of $246,000 and expenses of $246,000 resulting in a net profit of $0, and the wage expenditure of $55,000. The balance sheet indicated total equity of $21,000. These figures were substantially corroborated by the relevant tax returns and business activity statements lodged with the application.

    The nominator further provided BAS for the 1^st quarter of 2016/2017 showing total sales of $44,000, non-capital expenses of $8000 and wage expenditure of $12,000. The nominator also provided BAS for the 2^nd quarter of 2016/2017 showing total sales of $11,000, non-capital expenses of $5000 and wage expenditure of $13,000.

    The nominator has not provided a letter from their accountant attesting to the financial position of the business and its capacity to meet all employment obligations in regards to employing the nominated person for a period of at least 2 years.  It has instead provided a letter confirming wage expenditure during each year of its standard business sponsorship from 24 December 2013 to 24 January 2016 inclusive, namely, $106,000, $99,000 and $60,000 respectively.

    These figures indicate a steady and marketed downward trend in the fortunes of the business to the point that the last BAS showed the business would not even be able to sustain the nominated persons wage. The business has not provided an explanation of the circumstances which have caused their financial position, or how this position is likely to improve in the future. As the nominated person is already working for the nominator in the nominated position, approval of this nomination in itself will not improve the financial outlook of the business via increased output.”

12. The financial statements are summarised in the following table:

Fiscal Year	Income	Expenses	Profit/(Loss)	Assets	Liabilities	Equity
2015	$444,463	$432,494	$11,969	$44,624	$102,478	$32,914
2016	$246,327	$246,327	$0	$116,671	$95,725	$20,946
2017	$230,259	$230,260	$1	$153,145	$132,201	$20,944

1. There is a downward trend as illustrated by the financial statements for which an explanation is required.  On 19 February 2018, Tribunal wrote to the applicant requesting more detailed financial information[1].

   [1] T1, Folio 19-20 the information request consisted of 8 points.

2. Paragraph 3 of the 19 February 2018 letter stated “Information about the applicant directly operating a lawful business in Australia, and its financial position for at least the last 2 Financial years.  An example was given as to the information which ordinarily would be required including the financial years ending 30 June 2016 and 30 June 2017.

3. On 14 May 2018, the Tribunal wrote to the applicant pursuant to section 359A. The information given to the applicant summarised the business activity statements in respect of each of the quarters given the gross sales noncapital expenses and to wage expenses. It also detailed the financial information given in respect of the years 2015, 2016, 2017.

4. The Tribunal advised the applicant, the information referred in the 14 May 2018 letter is relevant because the Tribunal may not be satisfied that it can pay the salary of the nominee to work in the position of ‘marketing specialist’.  The applicant may be unable to sustain the position of marketing specialist for at least 2 years. 

5. The applicant states, as a submission, it has been in business since 2013 and from the time when the nominee nominee joined the applicant, it has been doing much better. The applicant emphasised that it was continuing to expand the business to meet the market needs.  On this point, the evidence of the Chief Executive Officer was that two certain strategies had been developed.

6. For example, Mr Navnish confirmed that there were difficulties encountered.  Commissioned agents who had directed work to the applicant were being enticed to other competing businesses who were paying greater commissions.  In response, the nominee, with Mr Navnish, developed  strategies to receive work from potential visa applicants who need to undertake courses (in particular English learning) in preparation of their successful testing in English testing centres such as IELTS.  The nominee had travelled to India to promote this initiative.  Mr Navnish confirmed once that strategy is in place material is being written and trainers contracted to deliver upon the strategy.

7. This is one strategy that has been deployed since the nominee has been employed, but, since the employment of the nominee, the net profit has not shown to have increased.

8. The applicant’s accountants, who had been the accountants for the applicant for at least five years, wrote in their 25 May 2018 letter the following:

   (a)“The company has operated profitably each of years in question for example – 2014 - 15, 2015-16 and 2016-17.  The profit in each year has been given to the Associated Individuals by way of salary/directors fee.  This has been done as a tax planning exercise in accordance with the Australian taxation laws.  Whilst the Financial Statements May show a nil profit for the company, effective profit of the company in each of the years has been as follows

Financial year	Turnover	Effective profit (Amounts paid to associated individuals as Salary/Directors Fee
2014-15	$444,463	$89,347
2015-16	$246,327	$49,071
2016-17	$230,259	$50,168

(b)it is my understanding based on review of the company documents that the company has consistently paid the sponsored staff and any other staff members in time and I see no reason why this would not be the case going forward.

To the best of our knowledge, it is our opinion that Anne Bee Holdings Pty Ltd has the financial viability to meet its sponsorship and nomination obligations under the terms and conditions of the 457 Visa programme stop the business has the financial capacity to support the nominated position.

Should the current economic conditions continue and there are no unforeseen circumstances that may impact the business, Anne Bee Holdings Pty Ltd will continue to experience financial growth and has the financial viability to meet its sponsorship obligations under the 457 scheme.”

1. The 25 May 2018 letter was qualified in that the accountant’s opinion was subject to external factors such as the economy. However, the opinion does address matters which an accountant would be expected to comment. For example, financial planning, taxation minimisation or the applicant’s strategies to expand the business.

2. There is a limit that could be relied on in determining the financial health of the applicant by comparing the turnover. A company, for instance, could have an increasing turnover but a decreasing profit. The accountants use of “turnover” does not support the applicant as the turnover is decreasing. The accountants would not be suggesting a decrease in the turnover is sign that profits are on the increase.

3. The second point raised by the accountants is the separation from the expenses, the variable expenses over which the applicant has direct control. The Tribunal challenged the reasoning of the accountants by suggesting that salary and directors fees, attributable to the Chief Executive Officer and the director/shareholder cannot be used in their entirety in a reducing those expenses as circumstances may dictate. Both Mr Navnish and his wife have their own expenses for which the applicant’s net profit, the salary expense item or undistributed dividends in the balance sheet, can be utilised to cover decreasing revenue.

4. Mr Navnish advised the Tribunal of there being a change in the market place by competitors offering greater commissions to the applicant’s agents. The Tribunal does not have any financial information of the income and expenses of the director and the Chief Executive Officer. The question then becomes as to how much the Tribunal can be utilised for that purpose. 

5. At the hearing, Mr Navnish gave evidence of him having independent income apart from the business. This is an application of the nominator, the income of Mr Navnish and his wife is irrelevant to the extent that income and assets not shown in the applicants financial statements cannot be relevant. The Tribunal is to determine the ability for the applicant taking on the responsibilities of employing a nominee for two or more years. An obligation to support the applicant financially is not a legally binding obligation and involves another path of enquiry the Tribunal might be required to follow, if that information became relevant.

6. The Tribunal was informed and corroborated by the nominee in his hearing, the nominee’s salary increasing from 1 July 2017.  An increase of $10,000 per annum was given to the nominee when he asked Mr Navnish for an increase and it was given. The Tribunal does not negatively give it weight. It does not significantly bear on the financial position of the applicant except in a very minor way.

   Future employment of the visa holder: r.5.19(3)(d)

7. Regulation 5.19(3)(d) only applies to certain nominees (those described in r.5.19(3)(c)(i)). For this class of person, the regulations require that the nominee will be employed on a full time basis for at least 2 years on terms that do not expressly preclude the possibility of an extension.

8. The Tribunal finds the applicant does not show that it has the financial ability to employ the nominee in the position for a period of two years.

9. Given the above findings, the requirement in r.5.19(3)(d) is not met.

10. For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of r.5.19(3). The applicant has not sought to satisfy the criteria in Direct Entry nomination stream, and as such has not met the requirements in r.5.19(4). Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.

    DECISION

11. The Tribunal affirms the decision under review to refuse the nomination.

    Ian Berry
    Member

    
    

    ATTACHMENT  -  EXTRACTS FROM THE MIGRATION REGULATIONS 1994

    5.19Approval of nominated positions (employer nomination)

    …

    (2)The application must:

    (a)be made in accordance with approved form 1395…; and

    (aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; and

    (b)be accompanied by the fee mentioned in regulation 5.37.

    Temporary Residence Transition nomination

    (3)The Minister must, in writing, approve a nomination if:

    (a)the application for approval:

    (i)       is made in accordance with subregulation (2); and

    (ii)      identifies a person who holds a Subclass 457 … visa granted on the basis that the person satisfied the criterion in subclause 457.223(4) of Schedule 2; and

    (iii)     identifies an occupation, in relation to the position, that:

    (A)is listed in ANZSCO; and

    (B)has the same 4-digit occupation unit group code as the occupation carried  out by the holder of the Subclass 457 … visa; and

    (b)the nominator:

    (i)       is, or was, the standard business sponsor who last identified the holder of the Subclass 457 … visa in a nomination made under section 140GB of the Act or under regulation 1.20G or 1.20GA as in force immediately before 14 September 2009; and

    (ii)      is actively and lawfully operating a business in Australia; and

    (iii)     did not, as that standard business sponsor, meet regulation 1.20DA, or paragraph 2.59(h) or 2.68(i), in the most recent approval as a standard business sponsor; and

    (c)either:

    (i)       both of the following apply:

    (A)in the period of 3 years immediately before the nominator made the application, the holder of the Subclass 457 …visa identified in subparagraph (a) (ii) has:            

    (I)held one or more Subclass 457 visas for a total period of at least 2 years; and

    (II)been employed in the position in respect of which the person holds the Subclass 457 … visa for a total period of at least 2 years (not including any period of unpaid leave);

    (B)the employment in the position has been full-time, and undertaken in Australia; or

    (ii)      all of the following apply:

    (A)the person holds the Subclass 457 … visa on the basis that the person was identified in a nomination of an occupation mentioned in sub-subparagraph 2.72(10)(d)(iii)(B) or sub-subparagraph 2.72(10)(e)(iii)(B);

    (B)the nominator nominated the occupation;

    (C)the person has been employed, in the occupation in respect of which the person holds the Subclass 457 … visa, for a total period of at least 2 years in the period of 3 years immediately before the nominator made the application; and

    (d)for a person to whom subparagraph (c)(i) applies:

    (i)       the person will be employed on a full-time basis in the position for at least 2 years; and

    (ii)      the terms and conditions of the person’s employment will not include an express exclusion of the possibility of extending the period of employment; and

    (e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:

    (i)are provided; or

    (ii)would be provided;

    to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and

    (f)either:

    (i)       the nominator:

    (A)fulfilled any commitments the nominator made relating to meeting the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; and

    (B)complied with the applicable obligations under Division 2.19 relating to the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; or

    (ii)      it is reasonable to disregard subparagraph (i); and

    Note Different training requirements apply depending on whether the application for approval as a standard business sponsor was made before 14 September 2009 or on or after that date.

    (g)either:

    (i)       there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or

    (ii)      it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and

    (h)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations.