Feng (Migration)

[2022] AATA 4701

Feng (Migration) [2022] AATA 4701 (12 December 2022)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Ziyu Feng
Ms Baohui Tong
Master Xitong Feng
Master Yitong Feng

REPRESENTATIVE:  Ms Yujin Shen (MARN: 1172154)

CASE NUMBER:  1933278

HOME AFFAIRS REFERENCE(S):          BCC2017/3939468

MEMBER:Wan Shum

DATE:12 December 2022

PLACE OF DECISION:  Sydney

DECISION:The Tribunal remits the applications for Business Skills (Provisional) visas for reconsideration, with the direction that the first named applicant meets the following criterion for a Subclass 188 visa:

·cl 188.222(1) of Schedule 2 to the Regulations.

Statement made on 12 December 2022 at 11:53am

CATCHWORDS  
MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional)) – points test criterion – business innovation and investment points test – LIN 22/083 – Financial Asset Qualifications – net value of business and personal assets – shareholding in family business – capital contribution – exchange of shares – Business Innovation Qualifications – patent – registered more than 1 year prior – awarded government funding – decision under review remitted

LEGISLATION 
Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), r 1.11; Schedule 2, cl 188.222

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 Home Affairs on 12 November 2019 to refuse to grant the applicants Subclass 188 visas under s 65 of the Migration Act 1958 (Cth) (the Act). This is a points based visa designed for applicants who have submitted an expression of interest and received an invitation to apply for the visa.

2. The first named applicant (the applicant) lodged an expression of interest on 5 April 2017 for the Subclass 188 - Business Innovation and Investment (Provisional) visa and was invited to apply for the visa on 23 October 2017. The visa application was lodged on 25 October 2017. The criteria for the grant of this visa are set out in Part 188 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations). The delegate refused to grant the visas because the applicant did not achieve the necessary points in the ‘business innovation and investment points test’ set out in Schedule 7A to meet cl.188.222(1) and therefore did not satisfy c.188.222.

3. The applicants sought review of that decision and were represented in relation to the review.

4. The applicant appeared before the Tribunal on 26 October 2022 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

6. The issue in the present case is whether the applicant’s score on the business innovation and investment points test is not less than the number of points specified by the Minister in an instrument in writing for that test: cl 188.222(1).

7. The visa application form was completed indicating that the visa stream was Business Innovation and by invitation from the Victorian government. The form was completed with information regarding the business and personal assets of the applicant and his spouse. The details entered for the ‘main business’ in the section for legally registered name and trading name was: Liaoning Donghe Technology Co Ltd (the Company). The industry type was entered as Information Media and Telecommunications and the description of main activities was Building Facility Services (including building intelligent, security system design, installation). The documents provided in support of this included business ownership documents which reflect that the Company was established on 13/09/2011 with a registered capital of RMB 5m. The applicant invested RMB 2.25m for 45% share at the time of establishment and further acquired 45% shareholdings (RMB 2.25m) via share transfer in 01/2013, such that the applicant became a major shareholder with a total of 90% ownership interest in the Company. Review report of the Company for the years 2015 and 2016.

8. It was claimed in the section of the form regarding ‘Statement of Assets and Liabilities Position’ and the submissions that the value of business assets of the Company were as follows:

   ·2014: RMB 4,596,818.09 on 31/12/2014

   ·2015: RMB 4,632,616.05 on 31/12/2015

   ·2016: RMB 5,038,674.53 on 31/12/2016

   ·2017: RMB 5,321,547.77 at time of application

9. It was claimed that the value of the property asset wholly held by the applicant and his spouse based on the valuations obtained were RMB649,700.00 on 31/12/2014; RMB 706,500 on 31/12/2015; RMB 773,800 on 31/12/2016 and RMB 773,800 on 15 August 2017 and that there had not been any changes to that by the date of application. A copy of the property valuation report was provided in respect of a property located at Room 601, Unit 2, Building 2, Wealthy Domain, Tianjia Town, Dawa County, Panjin City, Liaoning.

10. In summary, the total net assets of the applicant and his wife were said to be:

    ·2014: RMB 5,246,518.09 on 31/12/2014, which was equivalent to AUD$1,045,123.12 based on the exchange rate of 5.02.

    ·2015: RMB5,339,116.05 on 31/12/2015, which was equivalent to AUD$1,128,777.17 based on the exchange rate of 4.73

    ·2016: RMB 5,812,474.53 on 31/12/2016, which was equivalent to AUD$1,157,863.45 based on the exchange rate of 5.02.

    ·2017: RMB 6,146,447.77, which was equivalent to AUD$1,179,740.45 based on the exchange rate of 5.21 as at 25/10/2017 at time of application

11. At the time of the delegate’s assessment, the points specified was 65 points. The delegate found that the applicant was only entitled to 50 points, on the following basis:

    7A.2 – Age  25 points    (aged 34 at time of invitation to apply)

    7A3 – English language                0 points    (no evidence provided)           

    7A4 – Educational  0 points    (no evidence provided of qualifications)

    7A5 – Business Experience           10 points    (4/5 years before invitation to apply)

    7A7 – Financial Assets                0 points    (less than $800,000 in last 2 fiscal years)

    7A8 – Business Turnover               15 points    (at least $1 million in last 2/4 fiscal years)

    7A9 – Business Innovation            10 points    (government grant evidence provided)

    7A10 – Special Endorsement         0 points    (no evidence provided)

    TOTAL:  60 points

12. As a result, the delegate found that the applicant did not meet the criteria to be granted a subclass 188 visa. The delegate also refused to grant subclass 188 visas to the other applicants (the applicant’s wife and children) on the basis that they did not meet the secondary visa criteria to be members of the family unit of a person who satisfied the primary visa criteria, and there was no evidence that they met the primary visa criteria in their own right.

13. On review, the Tribunal has assessed for itself the applicant’s entitlement to points under the specified parts of the Schedule 7A Points Test. The points specified by the Minister for this purpose remain at 65: refer LIN 22/083.

    Does the applicant have the score specified?

    Part 7A.2 – Age Qualifications

14. Points are awarded depending on the applicant’s age at the time that he or she was invited to apply for the visa (in this case, he was invited to apply on 23 October 2017, and had until 22 December 2017 to do so).

15. The applicant was born on 9 June 1983 and was therefore 34 at the time he was invited to apply for the visa. The Tribunal finds he is therefore entitled to 25 points for this part as he meets 7A23, as he was not less than 33 and under 40 at the time he was invited to apply.

    Part 7A.3 – English language qualifications

16. Points are awarded under this Part if, at the time he was invited to apply for the visa, the applicant had either vocational English (5 points) or proficient English (10 points), both of which are defined terms in the Regulations.

17. The applicant did not claim or submit any evidence of having either vocational or proficient English at the time that he was invited to apply and is thus not entitled to any points under this part.

18. Accordingly, the Tribunal finds that the applicant is not entitled to any points under this Part.

    Part 7A.4 - Educational Qualifications

19. Points are awarded under this Part if, at the time he was invited to apply for the visa, the applicant met the requirements for either (a) the award of a trade qualification or degree by an Australian educational institution, or (b) the award of a bachelor qualification by an educational institution that is of a recognised standard (5 points); or (a) the award of a bachelor degree in business, science or technology by an Australian educational institution, or (b) the award of a Bachelor qualification in business, science or technology by an educational institution that is of a recognised standard (10 points).

20. The applicant gave evidence that the highest qualification he had completed was a Graduate Diploma in computer science and technology in China. There is no information before the Tribunal that this is comparable to the award of a Bachelor qualification and the applicant did not claim that he was entitled to any points for this when he completed an Expression of Interest (EOI) or on his visa application.

21. While the Tribunal accepts that the applicant was awarded a Diploma and Graduate Diploma qualifications before he was invited to apply for the visa, neither qualification was awarded by an Australian institution. Nor is there evidence of the award of a bachelor qualification by an educational institution that is of a recognised standard.

22. The applicant and his representative did not dispute this and the Tribunal finds that the applicant is not entitled to any points under this Part.

    Part 7A.5 – Business Experience Qualifications

23. Under this Part, the applicant is entitled to 10 points if he has held one or more main businesses for not less than 4 years in the 5 years immediately before being invited to apply for the visa; or 15 points if he had held one or more main businesses for not less than 7 years in the 8 years immediately before being invited to apply for the visa.

24. The delegate awarded the applicant the 10 points for this Part, and the Tribunal concurs, having reviewed the available evidence, including the applicant’s detailed oral evidence of his business history and activities at hearing.

25. The Tribunal therefore finds that the applicant is entitled to 10 points under this Part.

    Part 7A.7 – Financial Asset Qualifications

26. Points are available under this Part depending on the net value of the business and personal assets of the applicant, the applicant’s spouse or de facto partner, or the applicant and his spouse or de facto partner together, immediately before the time of the invitation to apply for the visa.

27. The applicant claims he is entitled to 5 points on the basis that he had net assets of more than AUD $800,000, but not greater than AUD $1,300,000, in each of the 2 fiscal years immediately before the time of invitation. The following documents were submitted in support of this claim:

    ·Statements of assets and liabilities position (SALP) for the years 2015 and 2016 to indicate:

Type of assets	31/12/2016	31/12/2015
Business assets (RMB)	5,038,675	4,632,616
Property (RMB)	773,800	706,500
Total (RMB)	5,812,474	5,339,116
Total (AUD)	1,157,863.45	1,128,777.17
Exchange rate	1 AUD = 5.02 RMB	1 AUD = 4.73 RMB

·Business ownership documents of Liaoning Donghe Technology Co Ltd (the Company) which reflect that the Company was established on 13/09/2011 with a registered capital of RMB 5m. Evidence was provided in support of the applicant’s claims that he invested RMB 2.25m for 45% share at the time of establishment and further acquired 45% shareholdings (RMB 2.25m) via share transfer in 01/2013, such that the applicant became a major shareholder with a total of 90% ownership interest in the Company.

·Review report of the Company for the years 2015 and 2016 to indicate that the value of business assets claimed in SALP and the performance of the Company as follows:

2015: Turnover of RMB 5.67m (AUD 1.199m) with net profit of RMB 39,776

2016: Turnover of RMB 7.93m (AUD 1.580m) with net profit of RMB 445,668

·Property valuation report of a property located at Room 601, Unit 2, Building 2, Wealthy Domain, Tianjia Town, Dawa County, Panjin City, Liaoning to indicate that the value of the property asset wholly held by the applicant and his spouse as of 31/12/2014, 31/12/2015 and 31/12/2016.

·A signed statutory declaration from the applicant dated 25/10/2017.

1. Following a request from the Department for further evidence to support his claims, it was submitted that the applicant established a business in late 2003 and accumulated personal wealth totalling RMB 2.4m by the end of 2006, but that he was unable to provide tax records to support the wealth accumulation because records prior to 2016 were not available for printing out by the tax authority after a system update, so the submitted capital verification report should be sufficient to support the ownership claim. Additional documents were provided which included PRC audited report on financial statements of the Company to indicate that the Company had turnover of RMB 294,248 and net profit of RMB 127,151 for the year ended 31/12/2018; copy of a notarial property ownership certificate of the nominated property dated 6/05/2019 and internal management financial statements of the Company for the years 2012-2014 to indicate the performance of the Company as follows:

   ·     2012: Turnover of RMB 559,500 with net profit of RMB 178,410 and retained earnings of RMB 178,410

   ·     2013: Turnover of RMB 1.33m with net profit of RMB 1.10m and retained earnings of RMB 1.27m

   ·     2014: Turnover of RMB 4.06m with net loss of (RMB 1.16m) and retained earnings of RMB 107,576

2. The delegate did not accept on the evidence provided that the applicant had invested his own funds into the Company so was not satisfied regarding his share of net assets in the Company. As the net value of the property was RMB 706,500 (AUD 149,366) as of 31/12/2015 and RMB 773,800 (AUD 154,143) as of 31/12/2016, the delegate was not satisfied that the applicants had net assets of at least AUD 800,000.

3. Following the invitation to the hearing, the Tribunal received detailed submissions that the applicant met item 7A71 on the basis of having shares in the Company and their property in Panjin City. The submissions sought to clarify the applicant’s capital contribution into the Company in 2011 and describe his majority shareholding following the transfer of shares in the Company between the applicant and Jie Yang.

4. In terms of the capital contribution, it was submitted that the applicant has personally invested into the Company and summarised the manner in which he accumulated sufficient funds as follows:

   ·From December 2003, the applicant registered a business named Donghe Technology & E-business at eCity Dalian. It was his family business and he was the owner and manager of the business. The main business of Donghe Technologies & E-business was in wholesale and retail of IT consumables.

   ·In 2004 and 2005, Donghe Technology & E-business became the exclusive agent for Corvo Computer Cooling fan for the North-East Region. This involves wholesale of computer hardware, internet bar networking and installation of Corvo’s products. The annual profit of Donghe Technology & E-business for year 2004 was around RMB 500,000; and the annual profit for year 2005 was around RMB 600,000. The applicant has accumulated personal income from Donghe Technology & E-business from 2003-2005 of around RMB 1,100,000.

   ·In 2006, the applicant was named as the Leading Entrepreneur in Shahe District, Dalian and awarded RMB 40,000 as an incentive by local government; and he was interviewed by local TV, Radio and newspapers on multiple occasions.

   ·In June 2006, the applicant established Dalian Donghe Cooling Equipment Co., Ltd with a friend. He held 60% of shares in this company with capital contribution RMB 180,000. Dalian Donghe Cooling Equipment Co., Ltd was the patent holder of Eastcooler (2005200921972), which was CPU cooler to enhance computer efficiency.

   ·By 2010, the annual turnover of the business was RMB 1,624,856.

   ·In March 2011, Dalian Donghe Cooling Equipment Co., Ltd. was sold at price of RMB 450,000. The applicant received his 60% of the sold price, which was RMB 270,000.

   ·From April 2002 to August 2004, the applicant was employed as a Designer with Dahe Business (Dalian) Co., Ltd. where he received employer base salary of RMB 3000/per month, plus annual bonus of RMB 130,000 which equates to RMB 140,000 per year. The total income from this job was around RMB 200,000.

   ·From November 2009 to September 2011, the applicant was appointed as the manager of Dalian Eastcooler Technology Co., Ltd whose main business activity was to conduct installation projects in the real estate industry. The total income for this job was claimed to be around RMB 500,000.

   ·Between 10 November 2010 to 1 September 2011, the applicant received amounts from family totalling RMB 532,000. The evidence of this was provided in the form of bank transaction record from Harbin Bank, for a bank account opened on 10 November 2010. There were six transactions which appear below that were over the counter deposits which it is claimed were all gifts from the applicant’s parents.

5. In summary, the total funds the applicant accumulated from 2003 to September 2011 was said to amount to RMB 2,602,000 and the following breakdown was provided:

6. The submissions then detail the applicant’s investment and involvement in the Company which is mainly engaged in building intelligent, engineering consulting, security system design and installation, system integration. The Company was established on 13 September 2011 with total registered capital of RMB 5,000,000 with three shareholders who are all natural persons and, at the date of establishment, the split was as follows:

7. In respect of the applicant’s 45% share at the time of establishment of the Company, it was submitted that the applicant invested RMB 2,250,000 with the source of funds derived from the applicant’s income, sales of business assets and gifts from family as shown in the table above.

8. The submissions then refer to the registration of Huludao Cloud Computing Centre Co., Ltd on 18 January 2012, which was registered with a registered capital of RMB 500,000. This company is mainly engaged in cloud computing operation services, big data analysis and data model supercomputing. It has two shareholders which are two companies:

9. It was explained in the submissions that both the Company and Huludao Cloud Computing Centre Co., Ltd. are registered in Huludao High-tech Zone and are supported enterprises of the Centre for Entrepreneurship of Huludao High-tech Industrial Development Zone which means that the establishment of Huludao Cloud Computing Centre Co., Ltd. is a joint venture between the Company and Huludao High-tech Industrial Development Zone to get project and financial support from the Huludao Government and Department of Science and Technology.

10. The submissions refer to three shareholders in the Company, and outline their percentage of shares in Huludao Cloud Computing Centre Co., Ltd. as follows:

11. It was submitted that due to commercial considerations and to achieve better development of both enterprises, it was agreed that the applicant would focus on the business activities of the Company, and Jie Yang would focus on running the project and business operation of Huludao Cloud Computing Centre Co., Ltd.

1. To achieve this objective, a share transfer occurred between the applicant and Jie Yang on 30 January 2013, with the consequence that the applicant held a majority shareholding in the Company while Jie Yang held a majority shareholding of Huludao Cloud Computing Centre Co., Ltd. It was explained that the shareholders of the Company reached an agreement whereby Jie Yang and the applicant completed an equity exchange of the Company and Huludao Cloud Computing Centre Co., Ltd through an exchange of shares with equivalent value. This resulted in 45% of Jie Yang’s shares in the Company being transferred to the applicant, at which point the applicant obtained 90% shares of the Company, while Xin Jiang’s shares remained unchanged. On the same day, 36% of the applicant’s shares of Huludao Cloud Computing Centre Co., Ltd. and Xin Jiang’s shares (8%) were both transferred to Jie Yang. This resulted in Jie Yang acquiring 80% of the shares of Huludao Cloud Computing Centre Co., Ltd (i.e. the entire shareholding of the Company on registration). The material provided on review in support of these claims include copies of Business Licences and information from on each business, with translations.

   [1] A private platform providing company information. Besides basic registration information, you can also find shareholder structure, beneficial owners, business authorization certificates, patent information, etc. It’s one of the biggest providers of such information in China. (obtained from >

   The Tribunal considers that the additional information and evidence confirms the information provided to the Department and reflects that the applicant did have personal income sufficient to invest initial capital of 45% of the Company. It accepts that the applicant had derived the personal income from employment and business opportunities prior to September 2011 as set out in his career statement and evidence given at the hearing.

2. Having reviewed the documents, the Tribunal is satisfied that the applicant had sufficient funds for the initial investment into the Company from personal and business activities as well as money he claims was gifted from his parents. Taking into account the property valuation report and evidence of ownership, the Tribunal accepts that the value of the applicant’s and his spouse’s net business and personal assets during the period of time that he was invited to apply for the visa was equivalent to AUD$1,179,740.

3. Therefore, the applicant is entitled to receive 5 points for his financial assets qualifications under item 7A71.

   Part 7A.8 – Business Turnover Qualifications

4. Points are awarded under this Part depending on the annual turnover of one or main businesses in which the applicant had an ownership interest, which differs depending on the date of the visa application. The relevant period is at least 2 of the 4 fiscal years before the applicant was invited to apply for the visa.

5. It is submitted that the applicant meets item 7A82 as he had an ownership interest in a main business that had an annual turnover not less than AUD $1 million in at least 2 out of 4 fiscal years immediately before the time of invitation to apply

6. The delegate awarded the applicant 15 points under this Part on the evidence presented which reflected that the annual turnover of the applicant’s main business at 31/12/2015 was RMB 5.672m (AUD 1.20m) and RMB 7.933m (AUD 1.58m) as of 31/12/2016. Having reviewed the material provided to the Department, the Tribunal concurs that this is the appropriate allocation.

7. Accordingly, the Tribunal find that the applicant is entitled to 15 points under this Part.

   Part 7A.9 – Business Innovation Qualifications

8. Points are awarded under this Part depending on whether, at the time of the invitation to apply for the visa, the applicant had 1 or more patents, registered designs, and/or trademarks that were registered not less than 1 year before that time and were used in the day to day activities of the main business, and/or had at least 1 business operating in a formal joint venture agreement relating to export trade and/or operated a business that had an average annualised growth in turnover exceeding 20% per annum over 3 continuous fiscal years and in at least 1 of those fiscal years, employed 10 or more employees (or equivalent). In addition, points could be allocated if the applicant ran a start up business, product commercialisation, business development or business expansion in their home country that had been awarded government funding in that country worth at least AUD $10,000.

9. On the visa application form, the grounds for Business Innovation was completed claiming that the applicant, or applicant's main business(es), had received funding grants for innovation or received any venture capital funding. The details provided were that the applicant had received RMB 100,000 from government for Internet of Things (lOT) Security program.

10. On review, it was initially submitted that the applicant met the requirements of item 7A91(a)(i) on the basis of a patent. When asked about this at the hearing, the applicant confirmed that he had been awarded a patent and the Tribunal requested evidence to corroborate this claim. Following the hearing the Tribunal was provided with a copy of the Patent Specification of Utility Model - Eastcooler (Patent No. ZL 200520092197.2) - Chinese Version and translation into English. The translation indicates that the patent was authorised on 20 September 2006 and that the applicant was the patentee and co-designer of the ‘Liquid cooled computer radiator’. While there is now evidence of the patent, it does not appear to meet the requirements of item 7A91(a)(i) as it was registered more than 1 year before the time of invitation to apply.

11. The submissions following the hearing are that item 7A96(a) is met as the applicant, or at least one main business in which the applicant held an ownership interest, had received a grant that was awarded for the purposes of early phase start up of a business, product commercialisation, business development or business expansion; was at least AUD 10,000; was awarded by a government body in the applicant’s home country; and had been received not more than 4 years immediately before that time. In support of this claim, a certified copy of notarised certificate relating to the award of Science and Technology project funds to the Company by Huludao High and New Technical Industrial Development Zone Entrepreneurship Center of RMB 100,000 on 18 September 2015 and associated bank transfer records with translation were provided. Based on exchange rates current both around the time of the transfer and at the end of the most recent fiscal year to the application of 4.73 and 5.02, this is the equivalent of around $20,000 so was at least AUD $10,000. The Tribunal has made findings above that the Company is a main business in which the applicant held an ownership interest, and finds that the Company had received a grant that was awarded by a government body in the applicant’s home country for the purposes of early phase start up of a business, product commercialisation, business development or business expansion. As the evidence reflects that the grant was at least AUD 10,000 and received not more than 4 years immediately before the time of invitation to apply for the visa, the Tribunal concurs that there is evidence that item 7A96(a) is met and the applicant is entitled to 10 points under this Part.

    Part 7.A10 – Special Endorsement Qualifications

12. Point are awarded under this Part depending on whether, at the time of the invitation to apply for the visa, the nominating State or Territory government agency had determined that the applicant’s proposed business was of unique and important benefit to the State or Territory where that agency was located.

13. There is no evidence of, and the applicant did not claim that there was, such an endorsement.

14. The Tribunal finds no evidence of any such endorsement by the nominating State or Territory government agency.

15. It therefore finds that the applicant is not entitled to any points under this Part.

    Conclusion on points

16. Based on the above assessment, having regard to the legislation in effect at the time of the delegate’s assessment, the number of points to be awarded to the applicant under Schedule 7A is:

    7A.2 - Age  25 points

    7A.3 - English language  0 points

    7A.4 - Education  0 points

    7A.5 – Business experience  10 points

    7A.7 – Financial asset  5 points

    7A.8 – Business turnover  15 points

    7A.9 – Business innovation  10 points

    7A.10 – Special endorsement  0 points

    Total points  65 points

17. The applicant’s assessed score under the points system is therefore 65 points.

18. The Minister has specified that for subclauses 188.222(1) and 188.242(1) of Schedule 2 to the Regulations, the applicant’s score on the business innovation and investment points test must be not less than 65 points: Legislative Instrument LIN 22/083.

19. As the applicant’s score on the business innovation and investment points test is not less than the number of points specified by the Minister in an instrument in writing for this subclause, the applicant meets cl 188.222(1).

    DECISION

20. The Tribunal remits the applications for Business Skills (Provisional) visas for reconsideration, with the direction that the first named applicant meets the following criterion for a Subclass 188 visa:

    ·cl 188.222(1) of Schedule 2 to the Regulations.

    Wan Shum
    Member