Gu (Migration)

[2024] AATA 3188

Gu (Migration) [2024] AATA 3188 (8 August 2024)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs Yiru Gu
Mr Luohu Qi
Ms Jiahui Qi

REPRESENTATIVE:  Mr Hai Dong Shao (MARN: 1802126)

CASE NUMBER:  2210350

HOME AFFAIRS REFERENCE(S):          BCC2020/1019572

MEMBER:Susan Hoffman

DATE:8 August 2024

PLACE OF DECISION:  Perth

DECISION:The Tribunal remits the applications for Business Skills (Permanent) (Class EC) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 888 (Business Innovation and Investment (Permanent) visa:

· cl 888.222 of Schedule 2 to the Regulations.

Statement made on 08 August 2024 at 10:50am

CATCHWORDS
MIGRATION – Business Skills (Permanent) (Class EC) visa – Subclass 888 (Business Innovation and Investment (Permanent)) – ‘main business’ – wholesale trade – exporting Australian wines, wool, water and other Victorian products – ownership interest – direct and continuous involvement in the management of the business – value of the ownership interest – qualifying business – continuing operation – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), ss 65, 134
Migration Regulations 1994 (Cth), rr 1.03, 1.11; Schedule 2, cl 888.222

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 28 June 2022 to refuse to grant the visa applicant a Business Skills (Permanent) Subclass 888 visa under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The visa applicants applied for the visa on 5 March 2020 in the Business Innovation stream. The delegate refused to grant the visa on the basis that the delegate was not satisfied that the main business nominated by the primary applicant (the applicant) continued to operate as a main business after 5 March 2020.

3. Two of the three applicants – the primary applicant Mrs Gu, and Mr Qi - appeared before the Tribunal on 18 July 2024 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

4. The applicants were represented in relation to the review.

5. Submissions were received by the AAT on or about 22 November 2022 and 11 July 2024, which the Tribunal has taken into account. A further submission of more than 480 pages was made after the hearing.

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

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue in the present case is whether the applicant satisfied the criteria set out in clause 888.222 in Schedule 2 of the Migration Regulations 1994. It reads as follows:

   Cl 888.222

   (1)  The applicant (the current applicant): 

   (a)  had an ownership interest in at least one actively operating main business in Australia during the 2 years immediately before the application was made; and

   (b)  continues to have the ownership interest in the actively operating main business.

   (2)  If the current applicant acquired the ownership interest from another person who was an applicant for, or held, a Business Skills (Permanent) (Class EC) visa or a Business Skills (Residence) (Class DF) visa at the time of the acquisition, the current applicant must have held the ownership interest with that person as a joint interest for at least one year before the before the current applicant's application was made.

2. As the visa application was made on 5 March 2020, the two years immediately before are the years between 5 March 2018 to 4 March 2020.

Did the applicant have an ownership interest in at least one actively operating main business in Australia during the two years immediately before the application was made?

1. The Tribunal observes that the delegate was satisfied that the applicant had demonstrated continuous ownership in at least one actively operating main business in Australia during the two years immediately before the visa application was made on 5 March 2020, and that cl 888.221(1)(a) was met.

2. The applicant had nominated one main business, Tiger International Trading Pty Ltd (Tiger), and claimed she had 100% ownership of this business since 15 May 2017.

3. The applicant provided documents to the Department based on records from the Australian Securities and Investment Commission (ASIC) dated 16 January 2020, according to which Tiger had issued 100 ordinary shares to the applicant and they had not been transferred to another person.

4. The applicant submitted an ASIC extract dated 10 July 2024, according to which she remains the sole shareholder of 100 ordinary shares.

5. The Tribunal is satisfied that the applicant had an ownership interest in the nominated main business during the two years immediately before the application was made and continues to do so.

6. The delegate recorded that no evidence had been provided to the Department to demonstrate that the nominated main business continued to operate in a repetitive, continuous and permanent nature after the application was lodged on 5 March 2020. The Tribunal observes that on 17 February 2022, the delegate requested that the applicant provide relevant evidence within 28 days. On 16 March 2022, the applicant asked for an extension of 28 days to provide the requested evidence. This request was granted.

7. By 3 May 2022, none of the evidence requested on 17 February 2022 had been provided. A copy of the request to provide information which was sent on 17 February 2022 was sent to the applicant again, giving her another 28 days to respond. As at the time of the delegate’s decision – 28 June 2022 – the applicant had not provided the requested evidence or otherwise made contact with the Department.  

Did the business relied on satisfy the definition of “main business”?

1. The business or businesses relied on by the applicant to satisfy cl 188.225(1) must also have been an established ‘main business’ for the relevant 2 fiscal years identified above. The term ‘main business’ is defined in reg 1.11 of the Regulations, appended to this Statement.

2. There are four elements to the definition of main business, 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: reg 1.03. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met: reg 1.11A.

4. The Tribunal has already found that the applicant had an ownership interest in the business during the relevant years. The first element is satisfied (r1.11(1)(a)).

5. 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.

6. In her application form, the applicant stated the industry type for Tiger was wholesale trade and the major business activity was exporting Australian wines, wool, water and other Victorian products.

7. The applicant provided the Department with copies of BAS returns which recorded sales and payments from which PAYG tax was withheld, as follows:

   Quarter ended  Sales incl GST  Payments from which PAYG withheld

   31 March 2018  39,417  nil

   30 June 2018  61,834  12,000

   30 September 2018               72,210  nil

   31 December 2018                56,826  nil

   31 March 2019  51,962  nil

   30 June 2019  30,262  20,000

   30 September 2019               98,678  nil

   31 December 2019                121,954  nil

8. A copy of the Directors Loan ledger account was provided which showed that the business owed the applicant $225,400 as at 4 January 2019 and 4 January 2020.

9. Financial statements were provided for years ended 4 January 2019 and 4 January 2020. These recorded trading income of $230,287 and $302,759 respectively. They showed that the amounts of $12,000 and $20,000 recorded in the BAS returns were paid as directors fees.

10. The profit and loss statement record business expenses such as accountancy, advertising and promotion, bank fees, electricity, fees and charges, filing fees, interest, motor vehicle expenses, postage, superannuation, telephone, water and workcover.

11. The applicant also provided documents relating to sales of goods, some of which are listed here:

    ·     Contract dated 31 October 2017 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 2,424 bottles of wine worth $24,987.60 including GST.

·     Contract and invoice dated 2 November 2017 between Tiger (the seller) and Suzhou South Asia International Exhibition Centre Co Ltd (the buyer) to purchase 2,424 bottles of wine worth $27,259.20 (GST not payable).

·     Other documents pertaining to this sale, such as packing list, certificates of analysis of the wine sold and an invoice from Great Global Agents Pty Ltd for shipping costs of $84.55.

·     ANZ bank statement for the period 16 December 2017 to 17 January 2018 recording a deposit of $27,259.20.

·     ANZ lodgement receipt dated 8 November 2017 that recorded a payment of $2,993.80 from Tiger to Lake Cooper Vineyard Pty Ltd.

·     ANZ lodgement receipt dated 7 November 2017 that recorded a payment of $9,500.00 from Tiger to Lake Cooper Vineyard Pty Ltd.

·     ANZ lodgement receipt dated 22 December 2017 that recorded a payment of $12,493.80 from Tiger to Lake Cooper Vineyard Pty Ltd.

·     Sales contract dated 8 March 2018 from Aussie Origin Pty Ltd (the seller) to Tiger (the buyer) for Tontine wool quilts and pillows worth $36,132.75 including GST.

·     Various ANZ lodgement receipts for payments from Tiger to Aussie Origin dated March 2018 in relation to the purchase.

·     Contract and invoice dated 8 March 2018 between Tiger (the seller) and Suzhou Yangchenghu Town Law Clothing Factory (the buyer) to purchase the wool quilts and pillows for $39,417 (GST not payable).

·     Invoice dated 26 March 2018 from Win Sail Pty Ltd to Tiger for $144 for freight and insurance, and related documents.

·     Contract dated 12 April 2018 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 5,616 bottles of wine worth $56,680.80 including GST, and related paperwork.

·     Contract and invoice dated 26 April 2018 between Tiger (the seller) and Shanghai Yuxiu International Trade Co Ltd (the buyer) to purchase 5,616 bottles of wine worth $61,833.60 (GST not payable) and related paperwork.

·     Contract dated 26 July 2018 between Boundary Bend Olives Pty Ltd (the seller) and Tiger (the buyer) to purchase 1,440 bottles of olive oil worth $33,307, to be shipped from Melbourne to Shanghai, and related paperwork.

·     Sales contract dated 3 September 2018 between Tiger (the seller) and Zhejiang Yingfeng Supply Chain Management Co Ltd (the buyer) for the olive oil, for $43,963.20, and related paperwork.

·     Correspondence between the applicant and staff at Boundary Bend Olives concerning the sale, payment and when invoices will be issued.

·     Contract dated 14 December 2018 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 2,688 bottles of wine worth $28,976.64 including GST, and related paperwork.

·     Contract and invoice dated 18 December 2018 between Tiger (the seller) and Shanghai Yuxiu International Trade Co Ltd (the buyer) to purchase 2,688 bottles of wine worth $34,245.12 (GST not payable) and related paperwork.

·     Sales contract dated 28 November 2018 from Aussie Origin Pty Ltd (the seller) to Tiger (the buyer) for Tontine wool quilts and pillows worth $20,669.25 including GST, and related documents.

·     Contract and invoice dated 20 December 2018 between Tiger (the seller) and Yang Xiao Yu (the buyer) to purchase the wool quilts and pillows for $22,581 (GST not payable), and related documents.

·     Contract dated 2 August 2018 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 1,920 bottles of wine worth $25,893.12 including GST, and related paperwork.

·     Contract and invoice dated 22 August 2018 between Tiger (the seller) and Shanghai Yuxiu International Trade Co Ltd (the buyer) to purchase 1,920 bottles of wine worth $28,247.04 (GST not payable) and related paperwork.

·     Contract dated 15 March 2019 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 2,496 bottles of wine worth $44,668.80 including GST, and related paperwork.

·     Contract and invoice dated 23 March 2019 between Tiger (the seller) and Shanghai Yuxiu International Trade Co Ltd (the buyer) to purchase 2,496 bottles of wine worth $51,936 (GST not payable) and related paperwork.

·     Contract dated 28 May 2019 between Boundary Bend Olives Pty Ltd (the seller) and Tiger (the buyer) to purchase 3,168 bottles of olive oil worth $29,293.28 to be shipped from Melbourne to Shanghai, and related paperwork.

·     Sales contract dated 1 July 2019 between Tiger (the seller) and Zhejiang Yingfeng Supply Chain Management Co Ltd (the buyer) for the olive oil, for $38,217.60, and related paperwork.

·     Contract dated 13 November 2019 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 2,496 bottles of wine worth $33,907.20 excluding GST, and related paperwork.

·     Contract and invoice dated 20 November 2019 between Tiger (the seller) and Shanghai Yuxiu International Trade Co Ltd (the buyer) to purchase 2,496 bottles of wine worth $44,079.36 (GST not payable) and related paperwork.

·     Contract dated 10 December 2019 between Lake Cooper Vineyard Pty Ltd (the seller) and Tiger (the buyer) to purchase 4,032 bottles of wine worth $40,064.64 including GST, and related paperwork.

·     Contract and invoice dated 12 December 2019 between Tiger (the seller) and Shanghai Yuxiu International Trade Co Ltd (the buyer) to purchase 2,496 bottles of wine worth $47,349.12 (GST not payable) and related paperwork.

·     Contract dated 29 October 2019 between Boundary Bend Olives Pty Ltd (the seller) and Tiger (the buyer) to purchase 2,592 bottles of olive oil worth $16,225.92 to be shipped from Melbourne to Shanghai, and related paperwork.

·     Sales contract dated 25 November 2019 between Tiger (the seller) and Suzhou Jianmao Century Import & Export Trading Co Ltd (the buyer) for the olive oil, for $21,098.88, and related paperwork.

·     Sales contract dated 21 August 2019 from Aussie Origin Pty Ltd (the seller) to Tiger (the buyer) for Tontine wool quilts worth $15,515.50 including GST, and related documents.

·     Contract and invoice dated 20 December 2018 between Tiger (the seller) and Suzhou Yaunlian Real Estate Co Ltd (the buyer) to purchase the wool quilts for $16,926 (GST not payable), and related documents.

·     An order dated 16 October 2019 placed by Tiger to purchase bottled water from Aquaworks Pty Ltd for $6,272.

·     Sales contract dated 30 October 2019 between Tiger (the seller) and Suzhou Jianmao Century Import & Export Trading Co Ltd (the buyer) for the water, for $9,408, and related paperwork.           

1. The Tribunal observes that based on various emails, the applicant was directly involved in the purchases and sales of the goods just recorded.

1. In light of the above, the Tribunal is satisfied that the applicant demonstrated that she maintained direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business, thereby satisfying r 1.11(1)(b) in relation to the two years prior to the visa application being  made.

2. 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 businesses is not operated by a publicly listed company and the annual turnover of the business is at least AUD400 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 AUD400 000, the value of the ownership interest must be at least 51% of the total value of the business.

3. The business was not operated by a publicly listed company. As the applicant’s shareholding has been 100% during the relevant years, the Tribunal is satisfied that the ownership percentage threshold is met (r1.11(1)(c)).

4. Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise that 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 is not operated primarily or substantially for the purpose of speculative or passive investment: reg 1.03.

5. As the business involves exporting a range of goods to customers in China, the Tribunal is satisfied that the business was operated for profit through the provision of goods and/or services, and was a qualifying business, thereby satisfying r.1.11(1)(d).

6. Accordingly, the Tribunal is satisfied that the nominated business met the definition of a main business.

7. The Tribunal is satisfied that the applicant did have an ownership interest in at least one actively operating main business in Australia during the two years immediately before the application was made. Therefore cl 888.222(1)(a) is met.

Does the applicant continue to have an ownership interest in the actively operating main business?

1. The Tribunal has already found that the applicant continues to have an ownership interest in the nominated main business. The issue is whether that business continued to be an actively operating main business from when the visa application was made until time of decision, as required by 888.222(1)(b)

1. Although the applicant did not respond to the delegate’s request for documentation to demonstrate that the business was actively operating from 16 January 2020 to early 2022, she did provide the following information to the AAT.

   ·     Paperwork to do with a contract dated 30 April 2020 to supply 576 bottles of wine worth $6,364.80. The buyer was Wuzhong District City Wanhe Retail Store.

·     Paperwork to do with a contract dated 25 August 2020 to supply 1,344 bottles of wine worth $13,104. The buyer was Wuzhong District City Wanhe Retail Store.

·     Paperwork to do with a contract made 30 June 2020 to supply 1,248 bottles of wine worth $22,039.68. The buyer was Yuanhe Brother Hotel, Xiangcheng District, Suzhou.

·     An invoice dated 31 March 2021 recording a sale by Tiger to JuYi International Trading (Shanghai) Co Ltd to supply 900 bottles of brandy and whiskey worth $27,885.

·     Paperwork to do with a contract dated 22 February 2022 to supply a quantity of Australian olive oil, worth $5,203.80, to a customer in China.

1. At the hearing the applicant said that in 2020, the COVID-19 restrictions impacted the business negatively and they were not prepared for it. She had good business connections in China and the business was more about exporting red wine. In 2021, through business and commerce chat groups, she was introduced to Ms Ashley Zhang from Australia GNT Fine Wines and Sprits Pty Ltd. The business then engaged in liquor exports. It continued exporting red wine and did two exports of olive oil.

2. In 2022, the applicant was in China. The business was still facing challenges to do with COVID-19. They signed a contract to supply red wine and Tontine’s wool quilts and pillows.

3. In 2023, the applicant and her husband returned to Australia and met with local suppliers. She had a customer in China who imported coal so they went to Newcastle to reach out to the coal business. They had a brief discussion with someone and were given a brochure. When they returned to China and spoke with the customer, it was apparent there would be no profit for them in buying and selling coal, so they did not proceed with that.

1. Also in 2023, the business purchased and exported more wool products.

2. In 2024, with restrictions on exporting wine from Australia to China lifting, the business has dozens orders ready to go. In China, she has located new buyers for Australian wine.

3. The applicant said that the effort she had put into the business means it has been continuously operating and she is confident for its future.

4. The applicant said that between 2020 to 2022 it was difficult for her to enter Australia because of COVID-19 restrictions. She managed her business remotely from China.

5. When asked about the suppliers in Australia, the applicant said she provided evidence of a new red wine supplier, a supplier of UGG boots, a supplier of body care products and a new supplier for olive oil products.

6. The applicant said that she corresponded with suppliers, and negotiated contracts with them, via WeChat. She said that the distribution chains in China are relatively stable, and her focus has been to strengthen the supplier/purchaser side of the business and to diversify the product range. Since 2023 in particular, when they could travel, she and her husband returned to Australia to visit suppliers. But she has still had to maintain her relationships with clients in China.

7. The Tribunal observed that the mark up on each purchase sale during the 2020-2022 period was not very high which suggested the business would have to rely on the volume of sales to generate a good profit. The applicant said that during the COVID period, they struggled to maintain the business. She said the mark up on wholesale goods is not as much as can be made on retail sales.

8. After the hearing the applicant submitted financial statements for the years ended 30 June 2020, 2021, 2022, 2023 and 2024. These recorded sales and nett profit as follows:

   Sales AUD  Net profit AUD

   2018-19  211,199   6,762

   2019-20  249,001  10,674

   2020-21   41,197   8,237

   2021-22   24,803  16,847

   2022-23   71,029   4,824

   2023-24   78,226  11,961

9. The applicant said that the business has continued to operate even though the volume of sales is not as they would like.

10. Also after the hearing the applicant supplied samples of WeChat exchanges between her and customers and suppliers, which were translated.  She said, and the Tribunal accepts, that there were too many WeChat messages to provide all of them. She submitted copies of exchanges that occurred every month between January 2020 and July 2024. The WeChat messages were largely about stock, payments and delivery dates. They demonstrate to the Tribunal’s satisfaction that the business was being conducted in a repetitive and continuous manner. The applicant also supplied records of exchanges she had with a customer about coal.

11. The Tribunal enquired about two almost identical reference letters from suppliers Lake Cooper Vineyard Pty Ltd and Sir Mitchell Pty Ltd. Neither letter clarified who wrote the letter on behalf of the company.

12. The applicant said that gave each of those companies a template to use to prepare their reference letters. The applicant said that she did not have any links to either business before making contact with them for business purposes, Because the applicant is Chinese, each of the businesses arranged for a Mandarin-speaking employee to liaise with her.

13. After the hearing, the applicant submitted revised reference letters from Sir Mitchell Pty Ltd and Lake Cooper Vineyard Pty Ltd which identified the authors of the letters and were accompanied with what appear to be brochures that demonstrate that these are legitimate and well-established businesses. Each of the revised reference letters was more specific about the relationship with the applicant, and less generic. The Tribunal is satisfied that there is nothing of concern regarding these letters.

14. The Tribunal also asked about the sales that were made while the applicant was overseas. She submitted photos of what she described as the office she has established for Tiger in Suzhou, China, and other photos showing her meeting and visiting clients in China and suppliers or potential suppliers in Australia.

15. The applicant said that she was currently managing the company remotely, and that both the supply and sales sides can be managed remotely via WeChat, phone and with electronic signatures.

16. The Tribunal asked the applicant why she did not respond to the Department’s 2022 requests for documents. She said that at that time, there was a lockdown in China because of COVID-19 and people were not permitted to leave their homes.  Businesses were instructed not to open. Also, some months before she had given birth to a baby. She said her baby was born on 29 June 2021.

17. The applicant said that the only source of the additional information was with her lawyer in Melbourne. She said that maybe there was a lockdown in Melbourne at that time. The Tribunal has ascertained that the Melbourne lockdowns ended in late 2021.

18. The Tribunal concludes from her response that there was a lot going on during 2022 for the applicant between caring for her young children, dealing with COVID-19 restrictions in China and managing the business. Even though she did not respond to the Department’s requests for information during 2022, she has provided the Tribunal with detailed supporting evidence as set out above.

19. The applicant made a closing submission at the hearing. She said that over the past few years, the business environment in China was not good and many businesses failed. Her business did its best to serve old and new customers. She said that maintaining the clients in China is the most important thing. If the business has suppliers but no customers, the business cannot continue.

20. The applicant said that business is on the path to recovery and she and her husband need to do much travel within China to develop new customers and to maintain the relationship with current customers. She said that once they have a certain numbers of customers and the customer base is more stable, then they will explore additional suppliers in Australia. The goal is to bring good Australian products to China and to make a profit in doing so. She wants to contribute to the Australian market.

21. The representative spoke about the significance of COVID and that the deteriorating relationship between Australia and China which affected Australian sales into China, including wine.

22. The Tribunal formed the view that the applicant was an honest witness. Her post-hearing submissions were helpful in addressing some of the concerns raised by the Tribunal during the hearing.

23. The Tribunal has also formed the view that the applicant has managed to continue operating her business during a particularly challenging period which goes to her competence and persistence.

24. The Tribunal is satisfied that the applicant continues to have an ownership interest in the actively operating main business, and has done since lodging her visa application as well during years prior to that. It finds that cl 888.222(1)(b) is met.

Did the applicant acquire the ownership interest in the actively operating main business from another person?

1. Tiger International Trading Pty Ltd was registered as a company from 15 May 2017. The only shareholder since that time has been the applicant. The Tribunal is satisfied that she did not acquire the ownership interest in Tiger from another person, in which case cl 888.222(2) does not apply.

CONCLUDING PARAGRAPH

1. Given the above findings, the Tribunal is satisfied that cl 888.222 is met.

2. The appropriate course therefore is to remit the applications for the visa to the Minister to consider the remaining criteria for a Subclass 888 (Business Innovation and Investment (Permanent)) visa in relation to the primary applicant.

3. As the second and third named applicants applied on the basis that they are members of the family unit of the applicant, their applications will be determined by reference to the outcome of her application on remittal to the Department for reconsideration.

DECISION

1. The Tribunal remits the applications for Business Skills (Permanent) (Class EC) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 888 (Business Innovation and Investment (Permanent) visa:

   · cl 888.222 of Schedule 2 to the Regulations.

Susan Hoffman
Member