Global Chinese Christian Unity Federation Incorporated and Australian Trade and Investment Commission (Austrade)

[2023] AATA 1336

Global Chinese Christian Unity Federation Incorporated and Australian Trade and Investment Commission (Austrade) [2023] AATA 1336 (26 May 2023)

Division:GENERAL DIVISION

File Number(s):      2021/9741

Re:Global Chinese Christian Unity Federation Incorporated

APPLICANT

AndAustralian Trade and Investment Commission (Austrade)

RESPONDENT

DECISION

Tribunal:Deputy President B W Rayment OAM KC
Ms G Lazanas, Senior Member

Date:26 May 2023

Place:Sydney

The decision under review is varied to allow a further grant amount of $1,904.

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Deputy President B W Rayment OAM KC

CATCHWORDS

FOREIGN AFFAIRS AND TRADE – export market development grants – travel expenses for promotion of eligible product – salary expenses for marketing manager – substantiation of loan repayment and reimbursement – decision under review varied

LEGISLATION

Export Market Development Grants Act 1997 (Cth)

REASONS FOR DECISION

Deputy President B W Rayment OAM KC

Ms G Lazanas, Senior Member

26 May 2023

1. For the financial year ended 30 June 2020, the applicant claimed a grant totalling $291,397 under the Export Market Development Grants Act 1997 (the Act).[1] The respondent, the Australian Trade and Investment Commission (Austrade), administers grants made under the Act.

   [1] New grants legislation has been enacted since the relevant grant year with prospective effect, however, these reasons are based on the relevant legislation in force in relation to grants in respect of grant years ending 30 June 2021 or earlier.

2. The applicant claimed that it promoted events as an “event holder”, and that it received payments through sponsorship or donations to attend its events, as well as payments in relation to the distribution of DVDs to overseas buyers. The DVDs were produced by the applicant with content from past events.

3. Austrade originally rejected the applicant’s application for a grant but later varied the original rejection decision by disallowing certain items of expenditure for lack of substantiation, and then apportioning the remaining expenses by 33% (the reviewable decision). Austrade considered some activities to have been “eligible promotional activities” undertaken for an “approved promotional purpose” for the purposes of the Act, but it found that most of the applicant’s marketing activities and expenses were undertaken for preaching Christianity and not for an “approved promotional purpose” under s 37 of the Act.

4. It was not submitted by Austrade that the amounts allowed by it in the reviewable decision, which have been paid, were excessive. Indeed, Austrade’s statement of facts issues and contentions suggests only that the reviewable decision should be affirmed.

5. For the reasons that follow, we have decided to vary the reviewable decision and allow a further payment to the applicant of $1,904, that is, the grant allowed is increased from $32,081 to $33,985 for the financial year ended 30 June 2020.

6. As stated above, Austrade urged us to affirm the reviewable decision, which allowed the grant application in part. This was on the basis that Austrade considered the applicant’s marketing activities and expenses were not done in the promotion of any “eligible promotional activity” in Australia to foreigners. Austrade’s computation of the grant sum allowed was on the basis that the applicant had an “eligible product” only, namely, the DVDs. Broadly, Austrade allowed 33% of the travel expenses claimed by the applicant in relation to the DVDs, however, certain items of the applicant’s claim were nevertheless excluded by Austrade.

7. The applicant sought reimbursement of an amount equivalent to 66% of the travel expenses claimed in relation to trips to China by persons associated with the applicant, which it suggests is a more reasonable allowance. One of the disallowed expense items which the applicant claimed related to the wages of Ms Chao Cheng, to which we will come shortly.

8. We will discuss first whether the 33% allowance made by Austrade in respect of travel expenses should be increased, and then we will discuss the disputed exclusions from the expenses claimed by the applicant.

9. We heard the oral evidence of Pastor David Chen who is a member of the executive of the applicant and of Ms Chao Cheng who worked for the applicant during the relevant grant year.

10. For the purposes of the reviewable decision, Austrade accepted that a DVD made in 2017 at Margaret Court arena in Melbourne was an “eligible product” and that, to the extent to which the DVD was promoted overseas, the cost of the overseas promotion was allowable. The applicant contended that the purpose of the DVDs was to promote future Australian events like the event held in 2017, although the applicant argued that COVID-19 interfered with events in the 2019/2020 year and the 2020/2021 year as well.

11. As to the suggestion by the applicant that the relevant events were “eligible events” for the purposes of the Act, Austrade asserted in the reviewable decision that the applicant is not an “events promoter”, and that there were no events planned or promoted in 2020 because of COVID-19. Austrade submitted that the promotion of a past event is not for an “approved promotional purpose”. In any event, Austrade added that bringing and attracting attendees to an event will not derive significant net benefit to the applicant since no entry fees were charged nor was there any evidence of any sponsorship or advertising agreements. Moreover, even if the applicant charged entry fees to cover the cost of the hall hire and other overheads such as publicity there is no net financial benefit.

12. We are satisfied that Austrade is correct and that the applicant did not conduct an “eligible event” for the purposes of the Act. In this regard, we note that s 25A(1) of the Act relevantly provides as follows in relation to the meaning of “eligible event”:

    25A  Eligible events

    (1)Subject to subsection (2), an event is an eligible event if:

    (a)the event is held in Australia; and

    (b)there is an events promoter for the event; and

    (c)the events promoter is not, in the opinion of the CEO of Austrade, closely related to the event holder; and

    (d)the event is not an event of a kind prescribed by the regulations for the purposes of this paragraph.

    Note 1:       For event, event holder and events promoter see section 107.

    Note 2:       Decisions whether events promoters are not closely related to event holders are subject to guidelines determined by the Minister under section 101.

    …

13. Section 107 of the Act defines “event”, “event holder” and “event promoter”, as follows:

    107 Definitions

    (1)In this Act, unless the contrary intention appears:

    event includes a conference, a meeting, a convention, an exhibition and a sporting, cultural or entertainment event.

    event holder, in relation to an event, means the person holding the event.

    events promoter, for an event, means a person that markets the event, under a written contract between the person and the event holder, to persons outside Australia.

14. The applicant described itself as an “event holder”. As an “event holder”, the applicant cannot bring itself within s 25A of the Act which is concerned with an “events promoter”, given that the applicant purported to promote its own event. That is, there was no “events promoter” that had entered a written contract with the applicant regarding the events.

15. Accordingly, we agree with Austrade’s submission that travel for the purpose of promoting any (future) events held by the applicant in Australia is not recoverable under a grant as an “eligible activity” for an “approved promotional purpose” being an organised event or conference for the purposes of s 37 of the Act. We also concur with the views of Austrade that, self-evidently, there cannot be any intention to promote an event after its occurrence. Furthermore, in our view, the Act does not permit claiming expenses in relation to the promotion of the concept of an event, as the applicant claimed it was doing when confronted with the fact that the only event that the applicant held in the grant year was on 7 July 2019. Clearly, the Act requires some specificity as to the event.

16. As noted above, Austrade conceded that the DVDs, being either the recording of the 2017 Melbourne event and or another recording referred to as the ‘Love Our Nation’ DVD, is an “eligible product”. Given that, in part, the sale of the two DVDs was a purpose of the overseas travel of Paster Chen, the question is whether we consider the proportion of the travel expenses allowed by Austrade (33%) should be increased to the 66% claimed by the applicant (or some other percentage).

17. The evidence of Pastor Chen as to his overseas activities, including his trip reports, does not persuade us that 66% of his time was devoted to the sale of the DVDs. Rather, it seems to us that that was no more than incidental to Pastor Chen’s main purpose of making contacts and expanding his networks in China and elsewhere with a view to the promotion of possible future events in Australia. We have gleaned this from the fact that the notes in Pastor Chen’s trip reports predominantly reference the giving away of event brochures and, to a much lesser extent, the distribution and sale of DVDs. We therefore adopt the 33% allowance made by Austrade in relation to the travel expenses under s 33 of the Act.

18. We now turn to items excluded by Austrade from claims made by the applicant on the basis that they should be disallowed as not being relevantly associated and or not substantiated.

19. With effect from 1 August 2018, Ms Chao Cheng, now a permanent resident of Australia and a Chinese citizen, was employed as the applicant’s Marketing Manager pursuant to a Marketing Manager Employment Contract (see pages 93-95 of the T-documents). Her duties were to promote the ‘Love our Nation’ DVD, to organise promotional events at trade shows and other venues, to hire and train a team of marketing associates, to identify opportunities in existing marketing campaigns and develop a promotion strategy to grow the business and, in addition, to communicate with senior management about Chinese marketing and promotion.

20. Ms Cheng was entitled to a base salary of RMB4,000 per month plus expenses. Austrade enquired whether Ms Cheng was a Chinese or an Australian citizen when it observed that payments were made to her. Ms Cheng spent the period from 11 September 2019 until 23 December 2019 in China. Since December 2019, she has remained in Australia although her contract specified the location of work was in China. It was because of COVID-19 that she had to remain in Australia and by arrangement with Pastor Chen. There was also a payment to Bupa for health insurance for her for the next twelve months from April 2020.

21. Ms Cheng said that she was not a permanent resident of Australia until 2022. Mr Leerdman for Austrade submitted that because Ms Cheng was not yet a permanent resident of Australia during the grant year, the contract could not have lawful effect. We are not satisfied based on the limited evidence before us that that submission is correct. There was an actual payment during the grant year of RMB48,000 in a lump sum, apparently the equivalent of AUD11,429 (see T-documents, page 91). Ms Cheng was asked to work here after December 2019 and did so. She received her proper annual wages in a lump sum. Importantly, the applicant paid those wages in accordance with its contractual obligation. She apparently spent at least six months in Australia and there is nothing to suggest that her work was different from the contractual terms which expressly required her to undertake marketing of the DVD to persons overseas.

22. The contractual terms as to her job description seem to be similar to the work actually done by Pastor Chen, including as regards the DVD promotion. We are satisfied that the expenditure claimed by the applicant was incurred, in part, for the purpose of remunerating Ms Cheng for marketing work relating to the distribution and sale of the DVDs. That is, it paid out an amount equivalent to AUD11,429 for the purposes set out in her employment contract as a Marketing Manager. The arrangement and payment were made in the light of the pandemic, and there was no evidence before us that the payment was illegal.

23. By analogy with the position of Pastor Chen’s travel expenses, it seems to us that the grant monies should be increased by one-half of 33% of $11,429, that is, an additional amount of $1,904. We have applied the 33% apportionment to this expense as well as the applicable statutory formula.

24. One other amount disallowed by Austrade relates to money paid into Pastor Chen’s bank account to which Austrade referred in paragraphs 22-24 of its submissions dated 2 December 2022. Austrade says that the claim for reimbursement of the amounts in question has not been substantiated. The applicant’s submissions of 13 January 2023 refer to the amounts as a repayment of a loan by Pastor Chen and a separate reimbursement of $3,571.43 to Pastor Chen. Those suggestions do not amount to proper substantiation.

25. We were also not satisfied that other amounts were eligible expenses where they ostensibly related to the promotion of events, including the expenses claimed in relation to booths at a trade fair in China and design and printing fees relating to promotional brochures and books. None of these expenses were associated with the distribution or sale of the DVDs. It follows that the applicant did not satisfactorily prove to us that it incurred those amounts for an “approved promotional purpose” in the grant year as the materials, at their highest, related to the concept of a future, unspecified event. To that extent, we effectively affirm the reviewable decision in disallowing those claims.

26. In the result, therefore, we vary the reviewable decision as indicated above, only to the extent of allowing a further payment to the applicant of $1,904. The grant allowed to the applicant for the year ended 30 June 2020 is, therefore, a total of $33,985.

I certify that the preceding 26 (twenty-six) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM KC & Ms G Lazanas, Senior Member

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Associate

Dated: 26 May 2023

Dates of hearing:	26 September 2022 & 7 November 2022
Date final submissions received:	31 January 2023
Advocate for the Applicant:	Ms H Ho
Solicitor for the Respondent:	Ms L Leerdam