Chen (Migration)

[2020] AATA 4017

Chen (Migration) [2020] AATA 4017 (4 September 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Zhonghua CHEN

Dadi XIAO

CASE NUMBER:  1921833

HOME AFFAIRS REFERENCE(S): BCC20173312536

MEMBER:Peter Ranson

DATE:4 September 2020

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction the first named visa Applicant meets the following criteria for a Subclass 890 (Business Owner) visa:

·cl.890.211 and 890.212 of Schedule 2 to the Regulations.

Statement made on 04 September 2020 at 1:58pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) – Subclass 890 (Business Owner) – net assets of the nominated main business – more than A$100,000 at each balance date 12 months before application – 100% ownership of business trading in Australia – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), ss 65, 134(10)
Migration Regulations 1994 (Cth), Schedule 2, cls 890.211(1), 890.211(2), 890.212 r 1.11A

STATEMENT OF DECISION AND REASONS

Table of Contents

APPLICATION FOR REVIEW

CONSIDERATION OF CLAIMS AND EVIDENCE

Ownership interest in main business

Does the Applicant have an ownership interest in each business relied on at all relevant times?

Was each business relied on actively operating at all relevant times?

Does each business relied on satisfy the definition of ‘main business’, at all relevant points in time?

Australian Business Number and Business Activity Statements

Requirements relating to Applicant’s assets

DECISION

ATTACHMENT A - LEGISLATION

Migration Regulations 1994

1.03  Definitions

1.11  Main business

1.11A Ownership for the purposes of certain Parts of Schedule 2

Migration Act 1958

134  Cancellation of business visas

ATTACHMENT B – Balance Sheet of ZLA

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 17 July 2019 to refuse to grant the visa Applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visas on 1 September 2017. Certain criteria must be satisfied during the two years immediately before the application is made, that is, 1 September 2015 to 31 August 2017 (the Application Period).

3. At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The Applicants in this case are seeking to satisfy the criteria for the grant of Subclass 890 (Business Owner) visas, as set out in Part 890 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 890.2. The others need only to satisfy the secondary criteria set out in Subdivision 890.3.

4. The delegate in this case refused to grant the visas on the basis the first named visa applicant, Ms Zhonghua Chen, (the Applicant) did not satisfy the requirements of cl.890.212 of Schedule 2 to the Regulations because the net assets of the nominated main business did not reach the required threshold of A$100,000. Mr Dadi Xiao (the Second Visa Applicant) is the spouse of the Applicant.

5. The review application was lodged on 7 August 2019. On 29 May 2020 the Tribunal wrote to the Applicant requesting further information, which was due by 12 June 2020 (the 29 May 2020 Letter). In that letter the Applicant was advised: ‘If we do not receive the information within the period allowed or as extended, we may make a decision on the review without taking any further action to obtain the information. You will also lose any entitlement you might otherwise have had under the Migration Act 1958 to appear before us to give evidence and present arguments.’

6. On 1 June 2020 the Tribunal wrote to the Applicant inviting her to a hearing on 26 June 2020 to give evidence and present arguments. When no response was received to the 29 May 2020 Letter, on 15 June 2020 the Tribunal wrote to the Applicant advising: ‘To date, we have not received any response from you. Therefore, pursuant to the Migration Act 1958, you have lost your right to a hearing. This means that the hearing, which has been previously set down for 26 June 2020, will no longer proceed and the Member will proceed to making a decision based on the information that is before the Tribunal.’

7. The Applicant was originally represented in relation to the review by Ms Shouyi Wu[1] (the Original Representative). On 3 July 2020 the Tribunal received notification of the appointment of Mr Liang Liu[2] (The Representative) as the new representative for the Applicant. No submissions have been received from the Applicant since 7 August 2019.

   [1] Migration Agent Registration Number: 1575315

   [2] Migration Agent Registration Number: 1681634

8. For the following reasons, the Tribunal has concluded the matter should be remitted for reconsideration.

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue in this case is whether the net assets of the Applicant’s main business meet the required threshold of A$100,000. In accordance with the President’s Direction[3], the Tribunal will only address those elements of the criteria on which the delegate made an adverse finding and will first determine whether the Applicant meets the main business test as required by 890.211(1) before determining whether the net assets reach the required level.

   [3] Presidents Direction for Conducting Migration and Refugee Reviews dated 1 August 2018

Ownership interest in main business

1. Clause 890.211(1) requires the Applicant had an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the visa application was made and continued to have that interest at the time the visa application was made. The Applicant must continue to satisfy this requirement at the time of this decision[4]. No more than two businesses can be nominated for this purpose[5] and one or both businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion[6].

   [4] cl.890.221

   [5] r.1.11(2)

   [6] Yang v Minister for Immigration and Border Protection [2014] FCCA 1576

2. The business relied on by the Applicant to satisfy these requirements is sales of hardware and building materials (the Business) conducted by Zhong Lian Australia Pty Ltd ACN 166 821 361 (ZLA). Accordingly, the Tribunal must consider the nature of the Applicant’s interest in this business, by assessing her ownership interest in ZLA, whether the business was actively operating and whether it met the definition of ‘main business’ during the Application Period and as at the date of application.

Does the Applicant have an ownership interest in each business relied on at all relevant times?

1. An ‘ownership interest’, in relation to a business, means an interest in the business as:

   ·a shareholder in a company that carries on the business, or

   ·a partner in a partnership that carries on the business, or

   ·the sole proprietor of the business;

   including such an interest held indirectly through one or more interposed companies, partnerships or trusts[7] of the Regulations and s.134(10) of the Act. Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations, set out in the attachment to this decision[8].

   [7] r.1.03

   [8] r.1.11A(1)

2. In order to meet cl.890.211(1) the Tribunal must be satisfied the Applicant had an interest of this kind in the relevant business or businesses for at least two years immediately before the application was made, that is, during the whole of the Application Period.

1. On 11 August 2020, the Tribunal conducted a search of the Australian Securities & Investments Commission (ASIC) records of ZLA. That search reveals ZLA was registered in New South Wales (NSW) on 18 November 2013 and the Applicant was appointed a director that day and remains so today. Her husband, Mr Dadi Xiao, (the Second Visa Applicant) was also appointed a director of ZLA on 18 November 2013 and resigned on 18 August 2015. The company was established with 100 founder’s shares. The founder’s shares became ordinary shares and on 20 August 2015 an additional 99,900 ordinary shares were allotted. The shareholders of ZLA are as follows:

Name	Founder’s shares	Additional ordinary shares	Total Held	%
Ms Zhonghua Chen	60	79,940	80,000	80%
Mr Dadi Xiao	40	19,960	20,000	20%
Total	100	99,900	100,000	100%

1. The Tribunal finds the Applicant held a 60% interest in ZLA from 18 November 2013 to 20 August 2015 and an 80% interest in ZLA from 20 August 2015. The Business is conducted by ZLA. This means the Applicant alone held an 80% interest in the Business and the Applicant and the Second Visa Applicant together held a 100% interest in the Business throughout the Application Period.

2. Accordingly, the Tribunal is satisfied the Applicant did have an ownership interest in the nominated business during the Application Period and as at the date of application.

Was each business relied on actively operating at all relevant times?

1. In order to meet cl.890.211(1) the Tribunal must be satisfied the relevant business or businesses were actively operating in Australia for at least two years immediately before the application was made, that is, during the whole of the Application Period.

2. The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period[9].

   [9] Shahpari v Minister for Border Protection [2016] FCCA 513 at [71]

3. The Applicant provided a copy of the financial statements for ZLA for the year ended 30 June 2017 which include comparatives for the year ended 30 June 2016. That means these financial statements cover the period from 1 July 2015 to 30 June 2017.

1. Those financial statements reveal the following:

2017	2016
Sales	673,930	261,196
Cost of sales	382,296	185,745
Gross profit	291,634	75,451
Other income	297	451
Total income	291,931	75,902
Expenses	279,582	57,819
Profit before tax	12,349	18,083
Income tax expense	3,396	5,154
Profit after tax	8,953	12,929

1. On 15 August 2016, ZLA entered a commercial lease of premises at 12 Airds Road, Minto NSW 2566 (the Minto Office) at monthly rent of $2,000 commencing that day. The Applicant was a party to the lease as guarantor for ZLA. The permitted use of the premises was office for one year with no option to renew. The Tribunal considers the terms of the lease appear to be standard for this type of contract. The term of this lease falls fully within the Application Period.

2. Curiously, in the Statement of Management discussed later, the Applicant says the company rented the Minto Office from 1 April 2016, whereas the lease says the start date was 15 August 2016. The Statement of Management also says the Minto Premises were used as a showroom and warehouse, which is inconsistent with the permitted use shown on the lease. The Tribunal does not place much weight on these inconsistencies as ZLA may have occupied the Minto Office on a month to month basis from 1 April 2016 until the formal lease was put in place from 15 August 2016 and the actual use of the premises is not completely inconsistent with the permitted use.

3. Included in a submission to the Tribunal on 22 June 2019 was a copy of a second lease of the Minto Office dated 16 August 2017 again for one year at a rent of $2,000 per calendar month with no option to renew. This means the Minto Office was leased by ZLA at least from 15 August 2016 to 16 August 2018.

4. The ASIC search referred to above reveals the principal place of business for ZLA has been at Unit 120, 2 Meredith Avenue, Rhodes NSW 2138 (the Meredith Avenue Property) since 12 August 2015 and the registered office has been at that address since 19 August 2015. That means throughout the Application Period the principal place of business for ZLA was the Meredith Avenue Property. The Minto Office was never advised to ASIC as the principal place of business of ZLA.

5. The Applicant provided a copy of the contract dated 14 April 2011 to purchase a residential property at Unit 120, 52 Walker Street, Rhodes NSW 2138 (the Walker Street Property) for $742,000. The purchaser is the Applicant and the Second Visa Applicant. The statement of assets and liabilities provided by the Applicant includes the Meredith Avenue Property at a value of $742,000.

6. The Tribunal notes on the application for registration of ZLA lodged on 16 November 2013 (Document ID: 028574229) the address of the Applicant and the Second Visa Applicant is the Walker Street Property whereas the ASIC search conducted on 11 August 2020 makes no mention of the Walker Street Property rather only referring to the Meredith Avenue Property.

7. The Tribunal wrote to the Representative on 11 August 2020 requesting clarification about the two addresses, viz, the Waker Street Property and the Meredith Avenue Property. The Representative replied that day and confirmed the addresses are one and the same. Accordingly, for the purpose of this decision, the property will be referred to as the Meredith Avenue Property.

8. During the 2016 and 2017 financial years ZLA had combined sales of $635,126 and generated combined net profit after tax of $21,882. Whilst the fate of the Minto Office at the conclusion of the second lease is not known, its utilisation almost coincides with a time when the company incurred gross wages of $207,172 during the 2017 financial year. The principal place of business of ZLA has been at the Meredith Avenue Property continuously since 12 August 2015 and remains so today. Whilst the Meredith Avenue Property is residential there is no prohibition on a business operating from such premises.

9. The Applicant provided various evidence of trading with external parties including:

   ·Purchase contract dated 3 March 2017and sales invoice dated 6 March 2017 with Ready Fence (NSW) Pty. Limited;

   ·Purchase contract dated 24 August 2015 with Highlight Interior Pty Ltd; and

   ·Sales invoice dated 28 June 2017 to Highlight Building Supplies Pty Ltd

10. The Tribunal has obtained ASIC searches of Highlight Interior Pty Ltd and Highlight Building Supplies Pty Ltd and found both companies are owned and directed by the same people, albeit with no apparent connection with the Applicant or the Second Visa Applicant. Ready Fence (NSW) Pty. Limited (Ready Fence) appears to be an arm’s length business to ZLA, the Applicant and the Second Visa Applicant.

11. Ready Fence appears to be a major customer of ZLA as the bulk, but not all, of the deposits into CBA #2614 (see paragraph ‎62) are from that company.

12. Reverting to the test of actively operating, the Tribunal considers whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period.

13. The Tribunal finds ZLA was actively operating the Business during the Application Period because it had arm’s length customers, made arm’s length sales and generated sales and after-tax profits during the 2016 and 2017 financial years.

Does each business relied on satisfy the definition of ‘main business’, at all relevant points in time?

1. In order to satisfy the requirements of cl.890.211(1), the business or businesses relied on by the Applicant must meet the definition of ‘main business’, at the time of application and during the two years immediately before.

2. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.

3. Firstly, the Applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in s.134(10) of the Act[10]. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met[11]. These provisions are set out in full in the attachment to this decision.

   [10] r.1.03

   [11] r.1.11A

4. Secondly, the Applicant must maintain or have maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business.

5. Thirdly, the value of the Applicant’s ownership interest, or the total value of the ownership interests of the Applicant and the Applicant’s spouse or de facto partner, in the business must meet certain thresholds:

   ·if the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;

   ·if the business is not operated by a publicly listed company and the annual turnover of the business is at least A$400,000, the value of the ownership interest must be at least 30% of the total value of the business;

   ·If the business is not operated by a publicly listed company and the annual turnover of the business is less than A$400,000; the value of the ownership interest must be at least 51% of the total value of the business.

6. Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public, and is not operated primarily or substantially for the purpose of speculative or passive investment[12].

   [12] r.1.03

7. The Tribunal finds the first and third elements of the definition of main business are satisfied because the turnover of ZLA, see paragraph [‎20], in 2016 was $261,196, that is, less than A$400,000 and in 2017 was $673,930, that is, more than A$400,000 so the ownership interest required to be held by the Applicant is 51% in 2016 and 30% in 2017. The Tribunal has previously established the Applicant, as a shareholder in ZLA, has held an 80% interest the Business since 20 August 2015 and before that a 60% interest, both of which exceed the required thresholds.

8. The Applicant has been a director of ZLA since it was registered on 18 November 2013 and sole director since 18 August 2015 when the Second Visa Applicant resigned as a director. This means the Applicant has been the sole director throughout the Application Period. Further, the Applicant signed the purchase contracts with Ready Fence (NSW) Pty. Limited and Highlight Interior Pty Ltd.

1. The Original Representative sent an e-mail to the department, which was forwarded to the delegate on 7 June 2019 (the 7 June 2019 Submission) and included a document entitled Statement of Management. It incorrectly states ZLA was established in 2015 instead of 2013, which the Tribunal accepts was a typographical error.

2. This document is unsigned and undated however it is clear from the wording it is by the Applicant who is described in the accompanying organisation chart as ‘Director & General Manager’.

3. In the Statement of Management, the Applicant describes her duties including:

Customer relations	Negotiate transport rates and services
Vendor and supplier relations	Warehouse & inventory management
Originating and placing orders for stock	Packing & shipping orders
Monitor and supervise logistics	Showroom merchandising
Process documentation	Marketing
Staff training	Compliance with relevant laws

1. In the submission dated 22 June 2019 (the 22 June 2019 Submission), the Applicant provided evidence of her duties by including examples of e-mails, contracts, for example, to and from Ready Fence, training plan for employees, minutes of meetings and advertisements.

2. The Tribunal checked the movement records for the Applicant during the Application period and found she had been offshore for a total of 115 days, which equates to 16% of her time. In considering the requirement for the Applicant to be continuously involved in the day to day management of the Business, the Tribunal is unconcerned about these absences from Australia as some were as short as 13 days and the longest was 41 days, which is reasonable allowance for holidays or business related travel.

3. The Tribunal finds the Applicant has maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business during the Application Period because she was the sole director actively involved in sales, marketing and generally managing the business.

4. The Tribunal has already found ZLA was actively operating the Business during the Application Period because it had arm’s length customers, made sales and generated after tax profits. The Tribunal further finds the Business is a qualifying business because it sells building and hardware products to the public and there is no evidence it has been operated primarily or substantially for the purpose of speculative or passive investment such as property rental.

5. Accordingly, the Tribunal is satisfied the Business does meet the definition of main business during the Application Period.

6. Given the findings above, the Tribunal is satisfied cl.890.211(1) is met. The Tribunal has also considered cl.890.211(2) and cl.890.212.

Australian Business Number and Business Activity Statements

1. Clause 890.211(2) must be satisfied as at the time of visa application. It requires for each business to which cl.890.211(1) applies:

   ·an Australian Business Number (ABN) has been obtained, and

   ·all Business Activity Statements required by the Australian Taxation Office (the ATO) for the two years immediately before the visa application was made have been submitted to the ATO and have been included in the application.

2. The Business, that is, sales of hardware and building materials conducted by Zhong Lian Australia Pty Ltd, is relied on the Applicant to satisfy these requirements.

3. The Applicant provided an extract from the notice received from the ATO advising the ABN for ZLA is 18 166 821 361 and has been active since 1 July 2015. The Tribunal checked the Australian Business Register (ABR) on 11 August 2020 and confirmed the ABN for ZLA remains current as does the Goods & Services Tax (GST) registration which also applies from 1 July 2015.

4. BAS for ZLA were submitted by the Applicant and it is evident to the Tribunal they were downloaded from the ATO confirming they had been submitted to the ATO. They reflect the following sales:

Quarter ended	Amount (excl. GST)
30 September 2015	5,000
31 December 2015	84,883
31 March 2016	36,364
30 June 2016	134,950
Total (2016 year)	$261,197
30 September 2016	209,913
31 December 2016	270,599
31 March 2017	72,004
30 June 2017	121,416
Total (2017 year)	$673,932

1. The totals for the 2016 year of $261,197 and for the 2017 year of $673,932 agree with the amounts shown on the financial statements set out above at paragraph ‎[‎20]. Further, there is only one quarter, 30 June 2016, when the BAS shows export sales of $7,180, which confirms the business was trading in Australia.

2. The Applicant provided extracts from the ATO integrated client account for ZLA, covering the period 30 July 2015 to 13 March 2019. Those reports show ZLA lodged and paid each of the above BAS on time.

3. The Tribunal finds an Australian Business Number (ABN) has been obtained by ZLA, and all BAS required by the ATO for the two years immediately before the visa application was made have been submitted to the ATO and were included in the application because they are included in the department’s file provided to the Tribunal and there is no evidence before the Tribunal to indicate they were not included in the application.

4. Given the findings above, the Tribunal is satisfied cl.890.211(2) is met. The Tribunal has also considered cl.890.212 being the criterion on which the visa application was refused by the delegate.

Requirements relating to Applicant’s assets

1. Clause 890.212 requires the Applicant to meet certain requirements relating to their assets. At the time of visa application and in the 12 months immediately before the time of application, the value of the net assets in the main business(es) in Australia of the Applicant, or the Applicant’s spouse or de facto partner, or the Applicant and his spouse or de facto partner together have a net value of at least A$100,000. Further, these assets must have been lawfully acquired. Accordingly, the Tribunal has considered whether the substantive requirements of this criterion are met.

2. The Applicant has submitted the requirements concerning assets in the main business are met and provided a copy of the financial statements for ZLA, prepared by J & W Accounting Services Pty Ltd, for the year ended 30 June 2017 with comparative figures for the year ended 30 June 2016. Clause 890.212 anticipates the financial statements provided to test this criterion will be for the year ended on the application date (1 September 2017 in this case) with comparative figures. Under departmental policy, immediately before means any date in the three-month period immediately before the visa application was made. As there are no financial statements before the Tribunal, which are any more current that 30 June 2017, it has made its decision accepting departmental policy in this case.

3. The balance sheet of ZLA as at 30 June 2016 and 30 June 2017 is reproduced below at Attachment B.

4. The department’s file included copies of statements from Commonwealth Bank of Australia (CBA) account number ending 2614 (CBA #2614) in the name of ZLA. The Tribunal has checked the balances as at 30 June 2016 and 30 June 2017 and finds they agree with the amounts shown on the balance sheet above described as ‘Cash at bank’.

5. The Representative’s submission of 18 July 2019 included copies of statements from CBA account number ending 2630 (CBA #2630) in the name of ZLA. The Tribunal has checked the balance as at 30 June 2016 and finds it agrees with the amount shown on the balance sheet above described as ‘Cash at bank – Online Saver’.

6. The Tribunal was unable to locate statements for CBA #2630 covering the period which includes 30 June 2017 so has been unable to verify the balance as at that date. Given the certainty the Tribunal has with the other cash balances it accepts the balance of $14,710 as shown on the accountant prepared balance sheet.

7. The Tribunal has checked the statements for CBA #2614 for deposits in July 2016 and July 2017 and found a deposit of $30,914 on 8 July 2016 described as ‘2016062201 RF’ which is the amount of the balance of trade debtors as at 30 June 2016. The Tribunal accepts the reference to ‘RF’ is to Ready Fence with which ZLA has a signed purchase agreement, see paragraph [‎29]. The Tribunal conducted a similar check in July 2017 and found a deposit of $30,000 described as ‘READ FENC BAL’. The balance of trade debtors as at 30 June 2017 was $37,557. The Tribunal accepts this deposit of $30,000 was a part payment of the Ready Fence account with ZLA and substantially covers the 30 June 2017 balance.

8. The Tribunal finds the balances of trade debtors as at 30 June 2016 and 30 June 2017 to be reliable and validly included in the net business assets of ZLA.

1. Included in the 7 June 2019 Submission is an extract from the general ledger of ZLA for the account described as ‘Shareholders Loan’. It shows the Applicant contributed cash $1,000 on 2 September 2015 and $50,000 on two occasions. Both contributions of $50,000 were transferred to the equity account in August and November 2015, which explains the current balance of issued share capital of $100,000. It also shows the Applicant received a director’s fee of $25,000 on 30 June 2016 and paid a training expense for ZLA on 2 June 2016 of $5,260. This expense was reimbursed to the Applicant on 11 July 2016 however the balance at 30 June 2016 was $31,260, viz, $1,000 + $5,260 + $25,000. The Applicant was paid a further director’s fee of $24,000 on 30 June 2017, which left the balance at 30 June 2017 of $50,000, viz, $1,000 + $25,000 + $24,000.

2. The Tribunal is aware it is common for director’s remuneration in private companies, such as director’s fees, to be credited to a loan account in the name of the recipient rather than taken as cash. The Tribunal has ascertained these director’s fees were properly charged as an expense in arriving at the disclosed profit for ZLA for the 2016 and 2017 financial years.

3. The Tribunal finds the balance of the shareholders loan as at 30 June 2016 and 30 June 2017 to be valid.

4. The current liabilities described as ‘GST payable’, PAYG withholding payable’ and ‘Provision for income tax’ appear appropriate for a business of the size of ZLA and are accepted at face value.

5. Given the findings above, the Tribunal finds the net assets of ZLA are as shown on the balance sheet above, viz, $112,929 as at 30 June 2016 and $121,883 as at 30 June 2017, which means the net business assets of ZLA are more than $100,000 at each balance date. The Tribunal finds the assets of the Applicant together with the Second Visa Applicant in the main business are more than A$100,000 at the time of visa application and in the 12 months immediately before the time of application because at 30 June 2016 and 30 June 3017 they owned 100% of ZLA which operates the Business. The Tribunal further finds the net business assets were lawfully acquired as they arose from normal business trading in Australia.

6. Given the findings above, the Tribunal is satisfied cl.890.212 is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.

7. The secondary applicant is remitted for reconsideration by the Department based on the outcome of the primary applicant’s application.

DECISION

1. The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction the first named visa Applicant meets the following criteria for a Subclass 890 (Business Owner) visa:

   ·cl.890.211 and 890.212 of Schedule 2 to the Regulations.

ATTACHMENT A - LEGISLATION

Migration Regulations 1994

1.03  Definitions

In these Regulations, unless the contrary intention appears:

…

ownership interest has the meaning given to it in subsection 134(10) of the Act.

…

qualifying business means an enterprise that:

(a) is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

(b)is not operated primarily or substantially for the purpose of speculative or passive investment.

…

1.11  Main business

(1)For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an Applicant for a visa if:

(a)the Applicant has, or has had, an ownership interest in the business; and

(b)the Applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

(c)the value of the Applicant’s ownership interest, or the total value of the ownership interests of the Applicant and the Applicant’s spouse or de facto partner, in the business is or was:

(i)if the business is operated by a publicly listed company—at least 10% of the total value of the business; or

(ii)if:

(A)the business is not operated by a publicly listed company; and

(B)the annual turnover of the business is at least AUD400 000;

at least 30% of the total value of the business; or

(iii)if:

(A)the business is not operated by a publicly listed company; and

(B)the annual turnover of the business is less than AUD400 000;

at least 51% of the total value of the business; and

(d)the business is a qualifying business.

(2)If an Applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the Applicant, the Applicant must not nominate more than 2 of those qualifying businesses as main businesses.

1.11A  Ownership for the purposes of certain Parts of Schedule 2

(1)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 890 and 893 of Schedule 2, ownership by an Applicant, or the Applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

(2)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the Applicant must show to the Minister:

(a)a trust instrument; or

(b)a contract; or

(c)any other document capable of being used to enforce the rights of the Applicant, or the Applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

(3)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

(4)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the Applicant, or the Applicant’s spouse or de facto partner, has beneficial ownership:

(a)is a dependent child of the Applicant; and

(b)made a combined application with the Applicant; and

(c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.

Migration Act 1958

134  Cancellation of business visas

….

1. In this section:

….

ownership interest, in relation to a business, means an interest in the business as:

(a) a shareholder in a company that carries on the business; or

(b) a partner in a partnership that carries on the business; or

(c) the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

ATTACHMENT B – BALANCE SHEET OF ZLA

2017	2016
Current Assets
Cash at bank	131,118	76,592
Cash at bank – Online saver	14,710	44,451
Trade debtors	37,557	30,914
Stock on hand	0	0
183,385	151,957
Non-Current Assets
Office equipment at WDV[13]	0	0
Total Assets	183,385	151,957
Current Liabilities
Trade creditors	0	1,969
GST payable	2,249	(1,551)
PAYG[14] withholding payable	9,799	2,196
Provision for income tax	(546)	5,154
11,502	7,768
Non-Current Liabilities
Loan from Director	50,000	31,260
Total Liabilities	61,502	39,028
Net Assets	$121,883	$112,929
Equity
Issued share capital	100,000	100,000
Retained profits	21,883	12,929
Total Equity	$121,883	$112,929

[13] Written down value is Nil as the assets are fully depreciated.

[14] Pay as you go