Annilax Enterprises Pty Ltd (Migration)

[2020] AATA 202

Annilax Enterprises Pty Ltd (Migration) [2020] AATA 202 (31 January 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Annilax Enterprises Pty Ltd

CASE NUMBER:  1806563

DIBP REFERENCE(S):  BCC2016/4195852

MEMBER:Mr S Norman

DATE:31 January 2020

PLACE OF DECISION:  Sydney

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

Statement made on 31 January 2020 at 12:22pm

CATCHWORDS
MIGRATION – application for approval of nomination of position – Direct Entry Nomination stream – employment for at least two years – capacity to pay salary – plans for expansion to improve profitability, but closure of one restaurant and smaller number of employees may indicate business is contracting – employer’s multiple applications to department and tribunal – decision under review affirmed

LEGISLATION

Migration Act 1958 (Cth), s 359(2), 359AA

Migration Regulations 1994 (Cth), r 5.19(3), (4)(d)(i)

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 February 2018 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). The Department delegate’s decision was lodged with the Tribunal.

2. The applicant applied for approval on 12 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 Direct Entry Nomination stream. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(d) of the Regulations.

4. The applicant (represented by the Director, Mr Anand GOPINATH) appeared before the Tribunal on 16 January 2020 to give evidence and present arguments. The Tribunal also received oral evidence from the associated visa applicant (Ms Amandeep Kaur SRAN). The applicant was represented in relation to the review by its registered migration agent.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

6. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

7. The applicant/nominator (Annilax Enterprises P/L; trading as Namastey Indian Cuisine), lodged a nomination application on 12 December 2016, with an associated Subclass 187 visa applicant. The nominated occupation was as a Pastry Cook (ANZSCO: 351112) under the Direct Entry stream. The visa applicant/nominee was Amandeep Kaur Sran (DOB: 20/01/1987); and the visa applicant was to be employed in the Young restaurant.

   Term of employment of the visa holder: r.5.19(4)(d)

8. Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years full time, and that the terms and conditions of that employment do not expressly exclude the possibility of an extension.

9. In their decision, the delegate noted the applicant had lodged:

   ·     Company Tax Return for 2015

   ·     Financial Statement for period 1 July 2014 to 30 June 2015

   ·     Financial Statement for period 1 July 2015 to 30 June 2016

   ·     Business Activity Statements (BAS) for each quarter (except one April 2016 to 30 June 2016) – for the period 1 January 2015 to 31 December 2016 - as did the Company Tax Return, the statements said “Sensitive (when completed)”

   ·     Form 1404 – Regional Certifying Body Advice – Satisfied Outcome, dated 31 January 2017

   ·     Employment Agreement signed by the nominator representative and the visa applicant dated 24 October 2016

   ·     application form for a Regional Sponsored Migration Scheme (Subclass 187) visa

10. The delegate noted the nominator said they would provide full-time employment for the visa applicant for at least two years. In support of this claim the nominator provided an Employment Agreement for the nominee; and BAS statements. However, the delegate gave little weight to the BAS statements as they had not been lodged with the Australian Tax Office and could not be verified. The delegate also noted the nominator had provided a Company Tax Return for 2015. However again, they gave little weight to this document as it had not been lodged with the Australian Tax Office and could not be verified.

11. Next, the delegate considered the Financial Statements for financial years ending June 2015 and 2016. The income statements for year ending 30 June 2015, showed a salary expense of $345,353, while the Income Statement for the year ending 30 June 2016 showed a salary expense of $391,565. The delegate noted these figures corresponded to the information in the nomination application and indicated a then current workforce of seven employees in the company – attracting a total wage expenditure of $345,353 in the past 12 months. The delegate put some weight on this information notwithstanding they did not accept it was third-party verifiable information.

12. After then taking into consideration the lack of independent verifiable evidence, the delegate was not satisfied the nominator had demonstrated they could pay the nominee’s salary for at least the next two years. Therefore, the nominator had not met the requirement of r.5.19(4)(d)(i); and had not met r.5.19(4).

13. Next, the delegate noted the applicant only provided claims against r.5.19(4); and that since insufficient claims and evidence had been lodged with respect to r.5.19(3), the delegate was not satisfied the applicant had demonstrated they met r.5.19(3).

14. Since neither r.5.19(3) or (4) were met, the delegate refused the nomination application lodged by Annilax Enterprises P/L.

15. By s.359(2) letter dated 12 September 2019,[1] the Tribunal requested information that may assist it in determining whether the applicant met r.5.19(2) or (4) (suggestions were provided therein). Amongst other things, with the Tribunal the applicant lodged:

    ·     Tax Invoice dated 10/12/2017, which indicated two named employees had attended a workplace professional development workshop training course[2]

    ·     a confirmation of completion[3]

    ·     a training benchmark training plan[4]

    ·     BAS statements

    ·     ATO Activity Statement - lodged 31 January 2019 - total sales of $462,860[5]

    ·     a Income Statement signed by the applicant’s accountant (Taxwave) for the period ended 30 June 2018. That claimed profit from ordinary activities before income tax was $40,179.78[6]

    ·     a Detailed Profit and Loss Statement for the year ended 30 June 2019. That claimed profit from ordinary activities before income tax was $219,734.99[7]

    ·     a letter dated 27 September 2019. That referred to 5 restaurants across New South Wales; an organisation chart; and relevant tasks for the nominated position[8]  

    [1] Tribunal – folio 18.

    [2] Tribunal – from folio 71.

    [3] Tribunal – folio 76.

    [4] Tribunal – folio 80 (reverse side).

    [5] Tribunal – folio 93.

    [6] Tribunal – folio 100.

    [7] Tribunal – folio 104 (reverse side).

    [8] Tribunal – from folio 110.

16. At the Tribunal hearing, the applicant advised that he now owned/operated five (not six) restaurants (the Campbelltown restaurant was closed in May 2018/9). The applicant also explained:

    ·     The business now has a total of 6 full time and 15 part time staff (21 in total)

    ·     That the Young restaurant (where the visa applicant is to be employed as a full time Pastry Cook), is intended to be the supplier for pastry’s for his restaurant chain (the applicant currently has two part time staff who assist in making Indian pastries, and he also purchases some Indian pastries from a wholesale supplier)

    ·     When asked (words to the effect) about the substantial reduction in salaries between $822,276 (year ended 30 June 2018), and $360,391.66 (year ended 30 June 2019), the applicant said that he ceased the Campbelltown restaurant in May 2018/9, and this (largely) accounted for the drop in salary

    ·     Based on the evidence lodged, the Tribunal notes the business commenced in 2011 and had a fairly steady profit growth up to year ended 30 June 2018 (Profit before Income tax - $40,179,78). However, Profit before Income tax at year ended 30 June 2019 was $219,734.99. When asked why the sudden increase in profit, the applicant said due to the savings in wages from the closed Campbelltown restaurant. The applicant had also advised he proposed to expand his business in order to attract more sales, so that he could pay for all his new sponsored visa applicants

    ·     By letter of 27 September 2019,[9] it was claimed the employment contract is for a period of two years (commencing from the date the visa is granted).

    ·     The applicant is also hoping to commence two new restaurants in early 2020 (in Sydney city, and Wagga Wagga)

    ·     Perhaps importantly, when asked, the applicant said the visa applicant had not, and did not work for his business

    [9] Tribunal – folio 109.

17. The Tribunal noted the applicant had claimed he was ‘ready to invest AUD $200,000.00 in the next 24 months, with a milestone based further injection of AUD $500,000.00’. At hearing, the applicant explained he proposed to sell one floor of the building he had purchased for his Young restaurant (which had re-commenced in 2017). That sale had not yet taken place. The applicant was none-the-less confident the profitability of the business would grow, and he had previously lodged a document titled ‘Namaste Cuisine – Strategic Business Plan – September 2016, which referred to ‘future predicted sales’.

18. At hearing, the Tribunal put information to the applicant by way of s.359AA. That information included that at the time of the delegate’s decision, there were 17 nomination applications before the Department lodged by the same nominator. Further, that the Tribunal was aware of 22 merits review applications (for refused nomination applications) before the Tribunal; and all lodged by the same nominator. Of those around ten of the nominations had been withdrawn after a merits review application had been lodged. Therefore, given that each nomination application cost up to $500, and given that each merits review application cost up to $1,800, and given that each withdrawn nomination application had the assistance and cost of a migration agent, this appeared to be a very costly and unusual exercise (particularly where profits in the business appeared to be modest). The Tribunal said (words to the effect) that subject to his comments, it may consider inter alia whether this exercise, and or the applicant, were credible. The applicant said he had ‘lost a lot of money’ and that he hoped by expanding his business he would improve business profitability.  

19. By way of s.359AA, the Tribunal also noted that at the time of lodgement of the nomination application, the applicant’s business employed 13 full time, and 24 part time staff. As at the date of the Tribunal hearing, the applicant’s business employed 6 full time and 15 part time staff. The Tribunal explained this may indicate (words to the effect) the applicant’s business was contracting and he may not be able to afford to pay the nominated position/s for two years full time. The applicant felt confident that he could guarantee two years full time work. 

20. However, the Tribunal is not satisfied the applicant needs or could afford a full time Pastry Cook at the Young restaurant. That is because of inter alia the apparent capacity of the business to provide for pastries within existing arrangements. Further, the Tribunal is not satisfied the actual shrinking of the applicant’s business supports a conclusion that it will continue to be profitable, even if it expands in the future as planned, or even with the applicant’s claimed experience in running restaurants.

21. The most recent claimed before tax profit was said to have arisen due to the closing of the Campbelltown business, but any consequent profit for so doing would very likely be adversely impacted by the (imminent) commencement of the two new restaurants the applicant is claiming to be developing. The Tribunal is also not satisfied the applicant will likely be (or soon be) in a position to invest the money he claimed, and even based on the more modest recent profits, I am not satisfied the investment of the applicant’s private equity would do more than provide at temporary relief for the business.

22. Further, and notwithstanding the applicant’s confidence, given the recent modest growth of the business (since its commencement in 2011) and the fact there are now approximately 10-12 nominations before the Tribunal with associated visa applicants, the Tribunal is satisfied the business may likely collapse under the financial strain placed on it, should all be successful.[10]

    [10] The Tribunal now notes some of the nomination applications have been approved.

23. Given the findings and reasons herein, the Tribunal is not satisfied the applicant has the capacity to employee the visa applicant in the nominated position for at least 2 years full time. Accordingly, the requirement in r.5.19(4)(d) is not met.

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

    DECISION

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

    Mr S Norman
    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.

    …

    Direct Entry nomination

    (4)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 need for the nominator to employ a paid employee to work in the position under the nominator’s direct control; and

    (b)the nominator:

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

    (ii)     directly operates the business; and

    (c)for a nominator whose business activities include activities relating to the hiring of labour to other unrelated businesses — the position is within the business activities of the nominator and not for hire to other unrelated businesses; and

    (d)both of the following apply:

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

    (ii)     the terms and conditions of the employee’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)      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

    (g)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; and

    (h)either:

    (i)      both of the following apply:

    (A)the tasks to be performed in the position will be performed in Australia and correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

    (AAA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;

    (B)either:

    (I)the nominator’s business has operated for at least 12 months, and the nominator meets the requirements for the training of Australian citizens and Australian permanent residents that are specified by the Minister in an instrument in writing for this sub-sub-subparagraph; or

    (II)the nominator’s business has operated for less than 12 months, and the nominator has an auditable plan for meeting the requirements specified in the instrument mentioned in sub-sub-subparagraph (I); or

    (ii)     all of the following apply:

    (A)the position is located in regional Australia;

    (B)there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;

    (C)the position cannot be filled by an Australian citizen or an Australian permanent resident who is living in the same local area as that place;

    (D)the tasks to be performed in the position correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

    (DA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;

    (E)the business operated by the nominator is located at that place;

    (F)a body that is:

    (I)specified by the Minister in an instrument in writing for this sub-subparagraph; and

    (II)located in the same State or Territory as the location of the position;

    has advised the Minister about the matters mentioned in paragraph (e) and sub-subparagraphs (B) and (C).