Chen (Migration)

[2020] AATA 1168

Chen (Migration) [2020] AATA 1168 (25 February 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Lili Chen
Mr Yonglin Li

CASE NUMBER:  1820175

DIBP REFERENCE(S):  BCC2017/387747 BCC2017/471169

MEMBER:R. Skaros

DATE:25 February 2020

PLACE OF DECISION:  Sydney

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

·cl.890.215 of Schedule 2 of the Regulations.

The Tribunal does not have jurisdiction in respect of the second named applicant.

Statement made on 25 February 2020 at 1:14pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) – net value of business and personal assets – net business assets – director’s loan ledger – discrepancy with bank statements – accounting procedures – tracing of transactions – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), Schedule 2, cl 890.215

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 25 June 2018 to refuse to grant the visa applicant a Business Skills (Residence) (Class DF) Subclass 890 visa under s.65 of the Migration Act 1958 (the Act).

2. The visa applicant applied for the visa on 27 January 2017. 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 applicant in this case is seeking to satisfy the criteria for the grant of a Subclass 890 (Business Owner) visa, 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.

3. The delegate refused to grant the visas on the basis that the first named visa applicant (the applicant) did not satisfy cl.890.215 of Schedule 2 to the Regulations because the delegate was not satisfied that the net value of the business and personal assets in Australia of the applicant, the applicant’s spouse or the applicant and her spouse together is, and has been throughout the 12 months immediately before the application was made, at least $250,000.

4. On review, the applicants provided detailed submissions, together with supporting documents regarding their business and personal assets in Australia.      

5. The Tribunal notes that the second named applicant, Mr Yonglin Li, was not in Australia at the time of the application for review, consequently, the Tribunal does not have jurisdiction in respect of Mr Li’s application for review.

6. The applicant appeared before the Tribunal on 4 December 2019 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

7. The applicants were represented in relation to the review by their registered migration agent. The representative attended the hearing.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. The issue in the present case is whether the applicant meets the criterion in cl.890.215, which requires that the net value of the business and personal assets in Australia of the applicant or the applicant and her spouse together is, and has been throughout the 12 months immediately before the application was made, at least $250,000.   

10. The applicants applied for the visa on 27 January 2017, the 12 months period immediately before the application is made is therefore from 27 January 2016 to 26 January 2017.

    Background

11. The applicant identified “Lili Chen Pty Ltd” trading as Better Home Accessories Turramurra (the business) as her main business in the visa application form. The business, which is located in the Turramurra Plaza in Turramurra NSW is a retail store which sells home accessories, party supplies, stationary and a variety of household and office items to the public. The store is open 7 days a week. The Tribunal has before it a lease agreement in respect of business’ premises which indicates that the period of the lease is for five years from 1 October 2014 to 30 September 2019, together with a letter from the Managing Director of Turramurra Plaza, Mr Chris Evanian, addressed to the applicant, stating that the lease has been extended for a period of 6 months and that applicant is to notify the lessor of the renewal of the lease within 3 months.

12. An officer of the Tribunal contacted Mr Evanian who confirmed that he had issued the letter to the applicant setting out the terms of the extension of the lease. He stated that the applicant has been carrying on the business from the same premises and that they had given her 1 month rent free. He also stated that he has made suggestion to the applicant about improving sales and has encouraged her to sell more seasonal stock. Mr Evanian indicated that there was no expiry date for the lease and that the applicant could continue to renew the lease as required. The evidence obtained from Mr Evanian, together with the oral evidence received from the applicant at the hearing, confirms that the applicant is actively operating a business in Australia. The Tribunal has also received recently activity statements, financial reports, photographs of the business’ premises and copies of recent stock orders all of which support the finding that the applicant continues to actively operate a business in Australia.

13. The Tribunal has before it an extract of the ASIC current and historical company statement in respect of Lili Chen Pty Ltd which indicates that the company was registered on 1 July 2014 and that the applicant and her spouse together hold 100% of the shares in the company.

    Net business and personal assets in Australia

14. When applying for the visa, the applicant relied entirely on her business assets to meet the requirement in cl.890.215. The Tribunal notes that no evidence was provided to the Department of the applicant and/or her spouse’s personal assets in Australia.

15. When considering the evidence regarding the applicant’s net assets in the business, the delegate was not satisfied as to the applicant’s claims regarding the director’s loans to the business.

16. In submissions to the Department, the representative calculated the applicant’s net business assets as follows:

    31 October 2016              $299,865 (including a director’s loan of $40,113)

    31 October 2015              $281,561 (including a director’s loan of $41,016)

17. In support of these submissions, the applicant provided financial reports and a director’s loan ledger. In response to a request for further information regarding the director’s loans to the business, as recorded in the ledger, the representative provided bank statements for the business showing a number of transactions which did not correspond with the amounts recorded on the ledger. In written submission, it was explained that the items recorded on the ledger are balancing and reconciliation items for each quarter based on standard accounting procedures. It was submitted that common to all small businesses, the business withdraws cash from sales for daily expenses or the owner keeps cash from sales to pay expenses with the cash on hand. It was submitted that the credit in the loan ledger relates to expenses paid by the director from the cash on hand and the debits in the loan accounts relate to the cash taken by the director.

18. After considering the explanation, the delegate was not satisfied that each amount claimed as a loan contribution could be traced back to the applicant as the lender. The delegate accordingly deducted the amount of $40,113 and $41,016 respectively from the net business assets and found that the total net business and personal assets of the applicants was $259,753 and $240,545 respectively. As the net assets were calculated as being below $250,000 as at 30 October 2015, the delegate found that the applicants had not maintained the required level of net business and personal assets for the relevant 12 months period.

    Evidence before the Tribunal

19. On review, the Tribunal received a number of documents in support of the application, which relevantly included evidence of the applicants’ personal assets in Australia, the most notable of which is the purchase of an Australian property off the plan on 10 February 2014. The documents received by the Tribunal included:

    a.FIRB approval dated 15 January 2014 for the applicant to acquire a new dwelling in Chatswood NSW.

    b.Copy of exchanged contracts which noted that the applicant paid a deposit of $185,400 (being 10% of the purchase price) towards the purchase of the property at Chatswood for $1,854,000.

    c.Evidence of stamp duty payment, confirmation of settlement and a copy of the occupation certificate.

    d.Home loan documents and loan statements in the applicant’s name in relation to the Chatswood property.

    e.A detailed Valuation Report prepared by Aussets Pty Ltd indicating that the value of the property as at 31 January 2016. 

20. In respect of the claims regarding the director’s loan and how that amount was calculated, the Tribunal received a detailed explanation from the applicant’s accountant. In a letter from Mr Bill Li, Bill Li & Co Chartered Accountant, Mr Li explained that they had prepared the financial statements for company for the period ended 31 October 2016 and that all debit and credit entries in the loan account from 1 July 2014 to 31 October 2016 can be substantiated and explained. Mr Li went on to explain each of the credit and debit transactions that appeared in the director’s loan ledger and how the amounts were reconciled and concluded that, after reconciliation of the accounts, the amounts owed by the company to the director are those shown on the financial statements for the relevant periods.

21. At the hearing, the applicant gave evidence regarding her and her spouse’s decision to invest in Australia and purchase the variety store business. The applicant gave evidence that she and her spouse had transferred over $350,000 to Australia, evidence of which was provided after the hearing, to purchase the business at Turramurra, which was purchased for $220,000, and for the purchase of additional stock for $65,000. It was submitted that the remaining amount was used as operating capital as recorded in the director’s loan ledger.

22. The Tribunal has considered the evidence before it and is satisfied with the applicant’s explanation regarding the calculation of the director’s loan, as these can be substantiated when tracing the transaction from when the applicant’s decided to purchase a business in Australia. The company’s bank account statements show deposits totalling approximately $350,000 which can be traced to Mr Li, the secondary applicant, who transferred the amounts from China. The Tribunal observes that in May 2015, the applicant converted the $220,000, being the amount used to fund the purchase of the business, from being a director’s loan to equity which had the effect of increasing the value of the company’s shares.

23. The Tribunal considers that after accounting for the purchase of stock, which would have been recorded as an asset of the business, the remaining amount (which is recorded as a director’s loan) would have remained as funds owed to the applicants by the company and would have therefore been an asset of the applicants. The Tribunal accepts the explanation provided by the accountant regarding the reconciliation of the transactions on the director’s loan account and is satisfied that the director’s loan as at 31 October 2016 and 31 October 2015, was $40,113 and $41,016 respectively.

24. The Tribunal also notes that the applicant has personal assets in Australia, evidence of which is now before the Tribunal. On the basis of the evidence before it, including evidence of the purchase of the property in Chatswood, the valuation of that property as at the relevant dates and the home loan balance, the Tribunal has calculated the net value of the applicant’s personal assets as at 31 October 2016 and 31 October 2015 to be $381,732 and $185,400 respectively.

25. Accordingly, the total of the applicant’s net personal and business assets in Australia for the relevant 12 months period is as follows:

Asset / Liability	As at 31/10/2016	As at 31/10/2015
Business Assets
Net assets of the business ‘Lili Chen Pty Ltd t/a Better Home Accessories Turramurra’ (100% held by Ms Chen and Mr Li)	$259,752.05	$240,545.03
ADD: Balance of loans advanced to the business by Ms Chen	$40,113.65	$41,016.18
Net business assets	$299, 865.70	$281,561.21
Personal Assets
Resident property at Chatswood NSW 2067 held by Ms Lili Chen Purchase Price: $1,854,000 Contract date and the date of paying 10% deposit ($185,400): 10/02/2014 Settlement date: 29/01/2016 Loan commencement date: 01/02/2016	$1,854,000	$185,400
LESS: Home loan balance	$1,472,267.93	N/A
Net personal assets	$381, 732.07	$185,400
Net personal and business assets	$681,598	$466,961

1. On the basis of the above, the Tribunal is satisfied that the net value of the business and personal assets in Australia of the applicant and her spouse together is, and has been throughout the 12 months immediately before the application was made, at least $250,000. Accordingly, the applicant satisfies cl.890.215.

2. Give the above findings, the appropriate course of action is to remit the matter to the Department for consideration of the remaining criteria for the grant of the visa.

   DECISION

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

   ·cl.890.215 of Schedule 2 of the Regulations.

4. The Tribunal does not have jurisdiction in respect of the second named applicant.

   R. Skaros
   Senior Member