Australian Biz Exchange PTY LTD (Migration)

[2018] AATA 1785

Australian Biz Exchange PTY LTD (Migration) [2018] AATA 1785 (8 May 2018)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Australian Biz Exchange PTY LTD

CASE NUMBER:  1711928

DIBP REFERENCE(S):  BCC2016/1675053

MEMBER:Penelope Hunter

DATE:8 May 2018

PLACE OF DECISION:  Sydney

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

Statement made on 08 May 2018 at 4:36pm

CATCHWORDS
Migration – Approval of nominated position (employer nomination) – Capacity to cover nominee’s wages – Reliability of financial statement – Franchise fees – Expenditure reduction – Increase in sales – Discharge of current employee – GST liability – Decision under review affirmed

LEGISLATION
Migration Regulations 1994, 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 17 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 9 May 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.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4) of the Regulations because the delegate was not satisfied that the applicant had the financial capacity to sustain the wages offered for the nominated position, of a graphic pre-press trades worker, as well as other staff members of the applicant.

5. Mr Aroon Singh, director, appeared before the Tribunal representing the applicant on 26 April 2018 to give evidence and present arguments. The related visa applicant, Mr Ghulum Jilani also made an application for review in relation to the refusal of the visa. That application is also before the Tribunal. The hearing of the related visa applicant was held at the same time.

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

   Background

7. The applicant is a company that operates a franchise, Minuteman Press, and produces promotional advertising material such as brochures, business cards, flyers and catalogues.

8. The applicant provided various documents in support of the application including the following;

   i.Company Tax Return for the 2015/2016 and 2016/2017 Financial Years.

   ii.Financial Statements and Annual Report as at 30 June 2016 and 30 June 2017, including Company Balance, Profit and Loss Statement and Directors Report.

   iii.Receipts for payment to TAFE NSW.

   iv.Organisational Chart.

   v.Business Activity Statements (BAS) for the financial years 2015/2016 and 2016/2017.

   vi.Registered lease for Shop 1, 140 -144 Polding Street Fairfield.

   vii.Employment contract for the nominated Employee, and position description.

   viii.Applicant’s wages and subcontractors ledger for the period 20/04/15 to 20/04/16.

   ix.Certification of Registration of the company dated 1 July 2014, and current and historical Company Extract.

   x.Correspondence from the applicant’s tax agent.

   xi.Extracts of equipment lease.

9. At the hearing, Mr Singh confirmed that he was the director and chief executive officer of the applicant. He acted as a manager at the business and was in charge of marketing and printing. His main role was sales and marketing, he claimed he was not a technician but was able to work most of the machinery in the business.

10. The Tribunal noted that the new financial statements provided by the applicant for the 2016/2017 financial year showed a significant turnaround in the sales/income generated for the company. This figure had increased from $97,575 in 2015/2016 to $252,341 in the 2016/2017 financial year. Mr Singh claimed that during the 2015/2016 financial year he had health issues, he had suffered a significant stroke, and since that time he had undergone procedures to have eight stents inserted. Additionally, he had some family issues relating to the breakdown of his son’s marriage, the care of his granddaughter, and consequential legal action. He claimed to have suffered depression and had difficulty focusing on the business. In the two years since these events, Mr Singh claimed he had brought his attention back to the business, concentrated on marketing, and been able to increase the sales.

11. Mr Singh had confirmed at the commencement of the hearing that all of the information that he had submitted to the Tribunal and the Department was true and accurate. The Tribunal explored with him issues that had arisen upon review of the financial statements. The Tribunal questioned why the financial liabilities of the applicant had also decreased considerably between the 2015/2016 and the 2016/2015 financial years. Particularly, why the loan to John Walker recorded as $116,110 in 2015/2016, was no longer present in the 2016/2017 financials. Mr Singh told the Tribunal that John Walker was a former business partner who also became sick and had to retire from his position. The evidence initially provided by Mr Singh was that the applicant had paid back the loan. The Tribunal asked Mr Singh where this was recorded in the in the financial statements. Mr Singh claimed that this may be an accounting error, and when pressed by the Tribunal subsequently gave evidence that he took a personal loan from his daughter to discharge the debt. He acknowledged that the loan from his daughter was not recorded anywhere in the applicant’s financial statements. He claimed this was a personal matter. The Tribunal also noted that Mr Singh’s loan to the applicant, initially recorded as $48,227 in the 2015/2016, had been reduced to $18,770 in the 2016/2017 financials. Mr Singh claimed that the applicant had repaid this amount but was again unable to direct the Tribunal to a record of this repayment in the itemised expenditure for the applicant.

12. Tribunal raised with Mr Singh concerns that although sales for the applicant had significantly increased, the expenditure for the applicant to produce it goods and services had also decreased. Mr Singh confirmed that the applicant operated a franchise and the franchise agreement was still current. It was noted that there was no record of payment of franchise fees in the 2016/2017 financials, yet they were recorded in the 2015/2016 financials. Mr Singh told the Tribunal that he had not paid them in 2016/2017. His evidence was that he was now trying to get out of the franchise as the fees were too high, and the franchisor did almost nothing. It was also noted that expenses relating to printing and stationery had decreased, although the sales revenue had more than doubled. Mr Singh claimed that when the business had been acquired in 2014, there had been plenty of paper and ex-stock and this had been utilised. Mr Singh said that John Walker also had some stock at his house, that the applicant was able to acquire this at a lower cost. The Tribunal questioned Mr Singh as to why although more sales were being generated, the applicant’s subcontractors fees had also reduced by more than $10,000 in the 2016/2017 financial year. Mr Singh claimed that he was trying to cut costs and where possible do the work himself. He also said that there had not been much call for installation work, which is was the main source of subcontractors fees. Additionally, the Tribunal questioned Mr Singh as to how merchant fees and bank charges had been reduced in circumstances if increased sales. He claimed that he had changed banks and gotten rid of the overdraft and the applicant no longer had an eftpos machine. Now all sales were cash or cheque. The applicant currently operated a bank account with Westpac and Mr Singh told the Tribunal that there was about $5,000 to $6,000 cash on hand currently held in the applicant’s account. This was the only business account.

13. Mr Singh confirmed that the applicant was still operating the business out of premises at Fairfield and pursuant to the lease that had been submitted. Mr Singh was asked to explain to the Tribunal how the rental expenses for the 2016/2017 financial year had decreased by $4,109 when the lease provided for an annual increase of 1.04%. He told the Tribunal that he had negotiated a decrease in the rental with the landlord because of his health issues, and the problems he was having with the business. He claimed that he had told the landlord that if rental relief was not granted that the applicant would relocate. The landlord did not want this as the premises in which the business situated was small and had already lost one long term tenant.

14. The Tribunal directed Mr Singh to information provided to the Department by his tax agent to the effect that in the financial year ended 30 June 2015, it was claimed that the applicant had invested $200,000 to purchase new printing machines to make the business more profitable. Mr Singh told the Tribunal that the machines were not purchased, but leased over several years. The Tribunal thus considered that the equipment rental payments in the financial statements for the applicant should remain consistent. When asked to explain why the expenses had reduced by two thirds to $4,182 in the 2016/2017 financial year, Mr Singh told the Tribunal that one of the large printers was returned. He also claimed that this was the reason that the electricity expenses for the applicant had also reduced by a third in the 2016/2017 financial year.

15. Mr Singh claimed that currently the applicant had three employees. These were himself, a part time graphic designer Bijana, and his wife.  Mr Singh claimed that he received a salary of $60,000 - $70,000 per annum from the applicant in 2016/2017. Bijana worked part time 2 or 3 days per week. She was paid $30 per hour, and would have received a salary of $20,000 to $30,000 per annum in 2016/2017. He claimed that his wife was not paid a salary.

16. The Tribunal then discussed with Mr Singh the BAS statements for 2016/2017 submitted to the Tribunal. It was noted that these were all recorded as submitted on 18 March 2018, Mr Singh was asked to explain why this had occurred on this date and he was unsure. He acknowledged that the statements had been revised, and concluded that it was possibly because his accountant had been awaiting some outstanding bank statements. The Tribunal asked Mr Singh whether any of the tax liability to the ATO recorded in the statements in excess of $27,000 had been discharged, and he said that it had not. Mr Singh conceded that this payment was overdue. He claimed that he had contacted the ATO and explained that the business had experienced some problems due to his health and was making an instalment arrangement. When pressed further by the Tribunal Mr Singh claimed that he was told by an officer of the ATO to just pay whatever he could. He claimed to have made a payment of $100 toward this debt. In the week following the Tribunal hearing he said he intended to contact the ATO again to negotiate further payment. He did not have anything in writing to confirm his communication or arrangements with the ATO.

17. Mr Singh claimed that the applicant could afford to employ Mr Jilani because the income that he would be paid was peanuts. He claimed that the business was growing. If the nomination was approved and Mr Jilani came on board, the applicant would probably let Bijana go and just employ him full time. The applicant would then save expense of her wages. It was claimed that Mr Jilani was also an experienced installer and the applicant would be able to take on more installation work, which was more lucrative. The Tribunal questioned whether it would be more cost effective for the applicant to employ Bijana full time. Mr Singh then told the Tribunal that Bijana was not a very effective employee, and made mistakes. He also confirmed that the Bijana had been working for the applicant for a couple of years and that the applicant was paying for her to undertake further study. 

18. Mr Jilani gave evidence that he was not currently working for the applicant as the nomination was not approved. He had previously been working for another printing company, iMedia but they had closed down and he was currently working for himself. Mr Jilani also discussed his experience and qualifications suitable for the nominated position.

    CONSIDERATION OF CLAIMS AND EVIDENCE

19. 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. The Tribunal has first considered whether the employee (the visa applicant) will be employed on a full-time basis in the position for at least two years.

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

20. 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.

21. The Tribunal has considerable concerns with the reliability of the financial statements submitted by the applicant. The Tribunal is not satisfied that in circumstances that where the sales of the applicant had increased from $98,197 to $252,341 for a business that produces printed materials almost all expenditure could be reduced to the extent claimed. The Tribunal does not accept that the costs of materials and supplies were reduced by a third when the applicant had more than doubled its sales. The Tribunal does not accept that the applicant was just able to utilise ex-stock from when the business was purchased. It is also noted that in 2014/2015 the applicant recorded an income of $182,485 and an expenditure of $54,000 on materials and supplies. At this time the applicant would have had an even greater resource of surplus stock. The evidence of Mr Singh revealed that certain liabilities had been left out of the financials for 2016/2017 such as franchise fees and adequate provision of gst. It is noted that the franchise fees for 2014/2015 were in the sum of $$25,778 on sales of $182,000. 

22. Although Mr Singh claimed that the applicant was getting out of the franchise as of 2016/2017, it continued to operate under the name Minuteman Press. The Tribunal does not accept in the absence of further evidence that the applicant could avoid its liability for these fees in such circumstances. Similarly, the Tribunal considered the claims by Mr Singh that he was able to obtain a rental reduction by proposing to leave the premises mid-way through a 5 year contract as unreliable.

23. It was clear from the evidence of Mr Singh that the liabilities of the applicant were not accurately recorded in the financial statements. The Tribunal is not satisfied that his loan and the loan to John Walker had been discharged to the extent of $120,000. Mr Singh claimed the applicant was able to reduce bank fees yet the 2016/2016 financials record a $20,502 overdraft that was not previously present.

24. Likewise, it is not credible that in circumstances where the applicant had significant increased sales, that other expenses such as equipment lease rental, subcontractors fees, postage and telephone would be reduced to the extent shown in the financial statements. It was not credible if the applicant was producing more goods it would reduce its capacity to undertake that work by removing one of its printers as claimed by Mr Singh. Furthermore, the amount for wages listed in the 2016/2017 financial statements of $65,000 does not reflect the wages of $60,000 -$70,000 paid to Mr Singh and $15,000 to $20,000 paid to the employed graphic designer. The Tribunal is not satisfied that the financial statements submitted provide an accurate portrayal of the financial circumstances of the applicant. It would appear that most expenses have been written down and liabilities removed in order to show a profit of $88,772. Furthermore, this is a figure that barely covers the proposed wage for Mr Jilani. The Tribunal also found the claim by Mr Singh that the applicant would likely terminate its only other employee, in order to ameliorate the costs of Mr Jilani, unreliable. This action is not reflective of a business that was growing and questionable in circumstances when she has been with the business for several years, assisted it to achieve the greatly increased sales, and the applicant is currently funding her further training.

25. Finally, the Tribunal is not satisfied that the applicant currently has the capacity to discharge the gst liability to the ATO recorded in the BAS statements submitted to the Tribunal. The liability for the first instalment of $6,781 dates back to 25 November 2016. This amount alone is in excess of the higher amount of $6,000, that Mr Singh told the Tribunal was currently held by the applicant in its account. In total, the liability to the ATO for the updated BAS statements submitted to the Tribunal is in excess of $27,000, and it was the evidence of Mr Singh that the applicant has only attended to payment of $100 of this debt, with an undocumented instalment arrangement yet to be negotiated. 

26. The Tribunal is unable to be satisfied that the applicant has the capacity to cover the nominees wage of $65,000 per annum plus the compulsory 9.5% superannuation for the next two years. The financial documents submitted by the applicant are not considered reliable and the Tribunal is not satisfied that the applicant has demonstrated that it would have the capacity to meet its employment obligations.

27. The Tribunal has considered all the information provided by the applicant. The Tribunal is not satisfied that the applicant has demonstrated that the nominee will be employed by the applicant on a full-time basis in the nominated position for at least two years. Accordingly, the requirement in r.5.19(4)(d) is not met.

28. The applicant has not demonstrated that r.5.19(4)(d)(i) has been met.

29. 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 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

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

    Penelope Hunter
    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).