Aussiewolf Pty Ltd (Migration)

Aussiewolf Pty Ltd (Migration) [2022] AATA 2901 (17 May 2022)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Aussiewolf Pty Ltd
REPRESENTATIVE:  Mr Kuei-Min Chang (MARN: 1463945)
CASE NUMBER:  1905803
HOME AFFAIRS REFERENCE(S):          BCC2017/2846281
MEMBER:Karen McNamara
DATE:17 May 2022
PLACE OF DECISION:  Sydney
DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 17 May 2022 at 11:53am
CATCHWORDS
MIGRATION – Employer Nomination – approval of nominated position – Direct Entry Nomination – Accommodation and Hospitality Manager nec – position cannot be filled locally – term of employment of the visa holder – financial capacity to pay the nominated salary – consecutive losses since the 2018 financial year – decision under review affirmed
LEGISLATION
Migration Regulations 1994 (Cth), r 5.19
STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Home Affairs on 19 February 2019 to reject the application by AussieWolf Pty Ltd (the applicant) for approval of the nomination of a position in Australia under reg 5.19 of the Migration Regulations 1994 (Cth) (the Regulations).
The applicant applied for approval on 9 August 2017. The requirements for the approval of the nomination of a position in Australia are found in reg 5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination stream (reg 5.19(3)) and a Direct Entry nomination stream (reg 5.19(4)). If the application is made in accordance with reg 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: reg 5.19(5).
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 reg 5.19(4)(h)(ii)( C) which requires that 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.
The applicant applied to the Tribunal on 12 March 2019 for review of the delegate’s decision. The applicant submitted a copy of the primary decision record with the review application. The Tribunal also has before it the Department file containing all information before the delegate at the time of their decision.
On the 17 February 2022, the Tribunal wrote to the applicant pursuant to section 359(2) of the Act (dispatched by email to the authorised recipient), requesting the applicant to provide updated and current information that would assist to determine whether the criteria in rr. 5.19(2) & (4) of the Regulations were met.
Information provided to the Tribunal
On 3 March 2022, the applicant provided the following documents to the Tribunal;
·      Covering submission from legal representative dated 24 February 2022
·      Support letter from applicant 23 February 2022
·      ANZSCO description of Accommodation & Hospitality Managers
·      RCB certification dated 9 August 2017
·      Financial statements 2018/19 & 2019/20 financial years
·      2019 & 2020 Company Tax returns
·      ASIC extract
·      (Creditor) watch & InfoTrack reports
·      Employment Offer dated 23 February 2022
·      Position Description
·      Organisational Chart
·      Department approval nomination dated 24 May 2013
·      Business Activity Statements October 2019 to September 2021
·      Evidence of Labour Market Testing
On 30 March 2022, the Tribunal invited the applicant and nominee to appear before the Tribunal to give evidence and present arguments. The invitation requested the applicant and nominee to provide the following information at least seven days prior to the hearing scheduled for 4 May 2022.
·Evidence attesting to the current financial position of the business.
·PAYG/Income statements issued to nominee 2017, 2018, 2019, 2020 and 2021 financial years.
·Business bank statements showing payment of salary to nominee from March 2020 to March 2022.
·Notice of Assessments (NOA’s) issued by the Australian Taxation Office to the nominee for 2017, 2018, 2019, 2020 & 2021 financial years.
·Nominee’s personal bank statements showing receipt of salary from the nominator during the period March 2020 to March 2022
·Most recent evidence of receiving superannuation payments from nominator
On 11 April 2022, the applicant and nominee provided the following;
·    Covering submission from representative
·    Letter from applicant’s external accountant dated 31 March 2022
·    Business bank statements March 2020 to March 2022
·    Nominee’s bank statements December 2019 to April 2022
·    Nominee’s NOA’s 2017, 2018, 2019, 2020 and 2021 financial years.
On 4 May 2022, the applicant represented by Mr Attila Farkas appeared before the Tribunal via telephone, to give evidence and present arguments. The Tribunal also received oral evidence from Ms Anett Sesztak (the nominee) in the related matter for the subclass 187 visa (AAT Case file 1909290). The related matters were heard concurrently in a combined hearing.
The applicant was represented in relation to the review by its registered migration agent. The representative attended the Tribunal hearing.
The Tribunal exercised its discretion to hold the hearing by telephone. The hearing was held during the COVID-19 pandemic. The Tribunal determined it was reasonable to hold a hearing by telephone, having regard to the nature of this matter and the individual circumstances of the applicant and nominee. The Tribunal also had regard to the Tribunal’s objective of providing a mechanism of review that is fair, just, economical and quick, and the delay to the matter if the hearing was not to be conducted by telephone. The Tribunal is satisfied that the applicant and nominee were given a fair opportunity to give evidence and present arguments.
At the conclusion of the hearing, the Tribunal invited the applicant to provide further evidence attesting to the current financial position of the business and the capacity of the business to support payment of the nominated salary to the nominee for at least two years.
On 4 May 2022, the applicant provided the following;
·      Covering submission prepared by the representative on behalf of the applicant
·      Financial statements year ended 30 June 2021
·      Company tax return 2021 financial year.
The Tribunal notes that numerous evidence and submissions were lodged by or on behalf of the applicant. While the Tribunal has considered all of same, only that which was considered material to its decision has been expressly referred to herein.
For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.
CONSIDERATION OF CLAIMS AND EVIDENCE
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 reg 5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.
Background
The applicant operates a sharehouse and short/long term accommodation business located at Cairns far north Queensland, catering to international and domestic tourists. ASIC records show the business was registered 21 August 2008.
On 9 August 2017, the applicant lodged an application for an employer nomination approval for the position of Accommodation Manager (Sharehouse) under the occupation of Accommodation and Hospitality Manager nec (ANZSCO 141999) under the Direct Entry stream. The nominated base rate and guaranteed earnings are $54,000 per annum.
Term of employment of the visa holder: reg 5.19(4)(d)
Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years full time, and the terms and conditions of that employment do not expressly exclude the possibility of an extension.
At the hearing the Tribunal discussed with the applicant, the capacity of the business to employ the nominee on a full-time basis in the position for at least two years. The Tribunal discussed with the applicant that the financial statements provided to the Tribunal at the time of the hearing, show that the business has recorded consecutive losses since the 2018 financial year.
Evidence before the Tribunal at the time of the hearing showed that for the 2018 financial year, the business recorded a net operating loss before tax of ($27,296) negative net equity ($127,849). For the 2019 financial year the business recorded net operating loss before tax ($8,562) and negative net equity ($94,520). For the 2020 financial year the business recorded net operating loss ($140,928) and negative net equity ($178,008).
The Tribunal noted that the applicant had engaged the services of the nominee on a subcontractor basis and not as a direct employee. As such the nominee had not been issued PAYG/income statements. The nominee told the Tribunal that she did not contract to anyone else, and that the taxable income reflected in her Notices of Assessments issued by the ATO pertained to payments from the applicant. Both the applicant and the nominee told the Tribunal that the nominee invoices the applicant for worked undertaken at the hourly rate of $30. The nominee’s NOA’s show that for financial years 2018 her taxable income was $20,251; 2019 $21,529; 2020 $23,263 and 2021 $4,215. The nominee told the Tribunal that she has not worked or contracted to anyone else during this time and that in 2021 her partner has assisted her financially.
In assessing the applicant’s capacity to pay the nominated salary of $54,000 plus 10% superannuation to the nominee for at least two years, the Tribunal has taken into consideration inter alia, said contractor payments made to the nominee by the applicant as evidenced by payments contained in the applicant and nominee’s respective bank statements. The Tribunal has also considered the nominee’s NOA’s as an indicative measure of contractor payments.
At the hearing the Tribunal raised its concern that taking into consideration the amount of payments made to the nominee in the form of contractor payments (indicative of the nominee’s NOA’s and bank statements) there appeared to be significant shortfalls in what the applicant would be required to pay in order to meet the nominated salary of $54,000 per annum.
The applicant addressed the Tribunal’s concern at the hearing and told the Tribunal that COVID-19 had seriously impacted the business in so far as reduced bookings (due to domestic and international border closures) and locked in leasing agreements (that were required to be paid despite no bookings) had resulted in reduced revenue. However, the nominee had continued to be engaged by the business by providing contractual cleaning services. The applicant told the Tribunal that the business had an alternate source of income attained through the provision of cleaning services and that this was reflected in the business 2021 financial statements. The Tribunal invited the applicant to provide evidence as to the current financial position of the business including the 2021 financial statements.
The applicant told the Tribunal that during the COVID lockdown period the business embarked on a full renovation of the main share house property and that in 2022 the renovations will be complete and rental income and guest turnover is expected “at least quadruple compared to that of today”.
Post hearing on 4 May 2022, the applicant provided to the Tribunal evidence to address the concerns raised by the Tribunal during the hearing, pertaining to the financial capacity of the business to employ the nominee for at least two years. The information provided included a covering submission by the representative and the applicant’s 2021 Company tax return and financial statements.
In his submission dated 4 May 2021 the representative states;
‘Reflecting on the financials discussed during the Hearing
At the time, the only available reports were the earlier ones by Findex. The Member made mention of the 2019 and 2020 years both producing losses however, please refer to the Findex 2020 financial reports whereby:
For FYE2019 the relevant figure was not the $8,562 "Net operating loss" but instead, the $33,329 "Net profit before income tax".
In other words, despite paying $82,561 to Subcontractors (including the Nominee) in 2019, there was still over $33,000 profit left, in case the business needed to convert the Nominee from contractor to employee, and pay the nominated salary.
For FYE2020 although the relevant "Net loss before income tax" was $83,488 - this loss is partly a result of the $86,642 depreciation expense reducing the profit on paper.
There are further relevant considerations however, the point the Nominator wishes to make is that the financial reports are prepared for accounting purposes, and their representation of the business's viability is not literally accurate, only approximately indicative.’[1]
[1] Prepared and transcribed as provided by the representative on behalf of the applicant
Whilst the representative purports on behalf of the applicant ‘that the financial reports are prepared for accounting purposes, and their representation of the business's viability is not literally accurate, only approximately indicative.’ The Tribunal notes that the Tribunal is required to assess the requirements for approval of the nomination on the evidence before it at the time of decision. In undertaking this assessment, the Tribunal notes that the Courts have held that an applicant will have to supply the relevant facts of the individual case, in as much detail as necessary to enable a decision maker to establish the relevant case, and in as much detail as is necessary to enable a decision maker to establish the relevant facts. As a result, a decision maker is not required to make the applicant’s case for it, nor is the Tribunal required to accept uncritically any of and all the claims an applicant puts forward.
Relevant to this matter, whilst the applicant submits that the financial reports provided to the Tribunal are not literally accurate of the business’s financial viability and provide approximate indication, the Tribunal notes that at the hearing on 4 May 202, the Tribunal raised its concern with the applicant as to the financial capacity of the business to employ the nominee for at least 2 years and afforded the applicant the opportunity to address these concerns during the hearing and to provide post hearing, evidence to support the financial viability and capacity of the business.
Despite being afforded opportunity by the Tribunal to provide evidence to support the viability of the business to employ the nominee for at least two years, the applicant now claims that the financial evidence purporting to the current financial profile of the business is “not literally accurate” and has provided no evidence to support these assertions. In the absence of compelling and persuasive evidence by the applicant to support this assertion the Tribunal has considered the evidence before it, as supplied by the applicant pertaining to the financial profile of the business.
In assessing the applicant’s capacity to employ the nominee full time in the position for at least 2 years, the information considered by the Tribunal includes the applicant’s financial statements (including 2021 financial statements prepared by Trinity Advisory), tax returns, BAS returns, nominee’s employment contract, the nominated salary amount, nominee’s Notice of Assessments and representative’s submission dated 4 May 2022.
According to the applicant’s 2021 financial statements (which provides a four-year comparable assessment) for the 2020/21financial year, the applicant recorded net profit of $18,565. The Tribunal notes the profit and loss statement includes non-operating income sources of Government payments of $47,900. Negative net equity of ($92,777) is recorded.
In 2019/20 the applicant recorded a loss of ($7,913) and negative net equity of ($111,341) and for 2018/19 financial year recorded a profit of $23,077 and negative net equity ($103,428). Whilst the 2020/21 and 2018/19 financial statements record respective profit of $18,565 and $23,077, the Tribunal notes that the applicant’s 2021 and 2019 tax returns record for taxable/ net income or loss, zero profit.
The applicant’s balance sheet as of 30 June 2021, which gives an indication of its financial position at that point in time, shows greater amount of liabilities of $165,103 over its total assets of $72,326, an excess of liabilities over assets of negative ($92,777). In business parlance, a situation where a company’s liabilities exceed its assets and according to the 2021 financial statements provided to the Tribunal, has recorded consecutive negative net equity since the 2016/17 financial year, are considered by the Tribunal not to be indicators of a viable and profitable business.
The applicant provided to the Tribunal a letter from his accountant dated 31 March 2022. The accountant advises ‘ AussieWolf Pty Ltd continues to trade positively. The company is in an ongoing position to meet its sponsorship obligations once the nomination and Ms Sesztak’s visa are approved, and the formal employment relationship begins.’
The Tribunal has considered the accountant’s advice, however, the accountant has not provided an indication as to the current overall financial position of the business, specifically current net equity and profitability. Whilst the accountant states that, ‘AussieWolf Pty Ltd continues to trade positively. The company is an ongoing position to meet its sponsorship obligations…’ in the absence of corroborating evidence to support this view, the Tribunal cannot be satisfied that the accountant’s advice provides a definitive indication of the business’s current financial position and therefore places little weight on this advice.
At the hearing and in his submission of 4 May 2022, the representative noted the applicant’s depreciation expense contributing to the reported losses. The representative notes in his written submission ‘ For FYE2020 although the relevant "Net loss before income tax" was $83,488 - this loss is partly a result of the $86,642 depreciation expense reducing the profit on paper.’
In regard to the claims that depreciation expenses contributed to the applicant’s reported losses, the Tribunal is not persuaded that this makes the business operations profitable and sustainable as depreciation expenses contributing to losses, will need to be met by replacement capital expenditure for those categories for which the business depreciation is claimed, such as plant and equipment. The cost to the business remains a real actual expense for which financial resources will need to be made available.
The Tribunal’s assessment of the business’s capacity to employ the nominee full time for at least two years has weighted heavily upon the evidence before the Tribunal, in so far as the only indication of the business’s most recent financial position, is evidenced in the applicant’s 2021 financial year consolidated financial statements.
The Tribunal is sympathetic to the impact COVID -19 has had on the applicant’s business and notes the applicant’s advice of current renovations and plans for increased patronage in 2022. However, there is no corroborative or independent evidence before the Tribunal to support any improvement in the applicant’s overall financial position to date, or indication as to the medium to long term sustainability of the business to operate with consecutive long term negative net equity and modest profit (2020/21 financial year).
Furthermore, there is no persuasive evidence before the Tribunal including financial forecasting, business plans or evidence to support growth in the business, including evidence of said renovations and how the renovations will generate increased bookings.

Having overall consideration of the evidence before it, the Tribunal is of the view that there is a lack of evidence that the Tribunal considers concrete and persuasive, to suggest that the financial situation of the business will support the full-time employment of the nominee. As stated previously the consecutive negative net equity recorded in the applicant’s 2021 financial statements, since 2016/17, are not indicative of a viable and profitable business.
On the information before it and the reasons noted above, the Tribunal finds it cannot be satisfied that applicant has demonstrated the financial capacity to pay the full-time salary for the nominated position for at least two years. Accordingly, the Tribunal has formed the view that the applicant has not demonstrated that the nominee will be employed as required for the minimum period of two years on a full-time basis as specified in the Regulation. The Tribunal therefore finds the applicant does not satisfy the requirement in r.5.19(4)(d)(i).
Accordingly, the requirements in r.5.19(4)(d) are not met.
As the Tribunal has found the applicant does not meet r.5.19(4)(d) it is not required to consider the rest of the requirements as set out in r.5.19(4).
For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of reg 5.19(4). The applicant has not sought to satisfy the criteria in Temporary Residence Transition Nomination stream, and as such has not met the requirements in reg 5.19(3). Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.
DECISION
The Tribunal affirms the decision under review to refuse the nomination.
Karen McNamara
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 an identified person, 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)       all 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;
(AA)there is a genuine need for the nominator to employ the person identified under subparagraph (a)(ii), as a paid employee, to work in the position under the nominator’s direct control;
(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 the person identified under subparagraph (a)(ii), as 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).

[2022] AATA 2901

17 May 2022

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Immigration

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