He (Migration)

[2019] AATA 5065

He (Migration) [2019] AATA 5065 (28 October 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Wenjing He
Mr Haoheng Li
Miss Lok lo Li
Miss Letong Li

CASE NUMBER:  1804585

DIBP REFERENCE(S):  BCC2016/603288 BCC2017/1523163 BCC2018/1319039

MEMBER:Karen McNamara

DATE:28 October 2019

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 visa applicant meets the following criteria for a Subclass 890 (Business Owner) visa:

·cl.890.211 of Schedule 2 to the Regulations.

Statement made on 28 October 2019 at 12:36pm

CATCHWORDS

MIGRATION – Business Skills (Residence) (Class DF) – Subclass 890 (Business Owner) –ownership interest – lack of wages from business – husband supplements business –  growing business – direct and continuous involvement – qualifying business –  ownership interest 50% –  decision under review remitted

LEGISLATION

Migration Act 1958 (Cth), ss 65, 134(10)
Migration Regulations 1994 (Cth), Schedule 2 cls 890.211, 890.221, rr 1.03, 1.11

CASES

Lobo v MIMA [2002] FCAFC168 

Shahpari v Minister for Border Protection [2016] FCCA 513

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

2. The applicants applied for the visas on 10 February 2016. The delegate refused to grant the visas on the basis that the first named applicant Ms Wenjing He (the applicant),did not satisfy the requirements of cl.890.211 of Schedule 2 to the Migration Regulations (the Regulations) because the delegate was not satisfied that the applicant had satisfactorily demonstrated her continuous involvement in managing the business from day-to-day or significant involvement in decision-making affecting the overall direction and performance of the business as required by 1.11(1)(b) of the definition of main business.

3. The applicants applied for review of that decision and a copy of the delegate's decision record was provided to the Tribunal.

4. Ms Wenjing He appeared before the Tribunal on 10 September 2019 to give evidence and present arguments. The Tribunal also received oral evidence from the second named applicant Mr Haoheng Li. The Tribunal hearing was conducted with the assistance of an interpreter in the Cantonese and English languages.

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

6. Whilst the Tribunal notes that numerous evidence and submissions were lodged by or on behalf of the applicant.  While the Tribunal has considered all of same, only that which was considered material to its decision has been expressly referred to herein.

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

   ISSUE

8. The issue in the present case is whether the applicant meets the time of decision requirements in cl. 890.221 which requires the applicant to continue to satisfy the criteria in cl.890.211 by having an ‘ownership interest’ in one or more actively operating ‘main businesses’ in Australia.

   RELEVANT LAW

9. At the time the visa application was lodged, the Business Skills (Residence) Class DF visa 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.

10. Clause 890.211(1) requires that the applicant has had, and continues to have, an 'ownership interest' in one or more actively operating main businesses in Australia for at least 2 years immediately before the application is made.

11. Regulation 1.03 provides that the term ownership interest has the meaning given to it in s.134(10) of the Act. That subsection provides that an 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.

12. The term main business is defined in r.1.11 of the Regulations as follows:

    (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.

13. The term qualifying business is defined in r.1.03 of the Regulations as 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.

    CONSIDERATION OF CLAIMS AND EVIDENCE

    Background

14. The applicant has provided to the Tribunal a copy of the delegate’s decision record. It records that the applicant applied for the Subclass 890 visa on the basis of claims related to one nominated main business, T & Y Capital Holdings Pty Ltd (the main business). The applicant provided evidence of a 50% ownership interest in the main business.

15. The applicant claimed to have registered the business “on or about 15 January 2013 ”. ASIC records confirm that the business was registered on 15 January 2013. The applicant claimed that she held 50% shares and her husband Mr Haoheng Li held 50% and that she is responsible for operating the business. The applicant states that the business became active in the beginning of October 2013 when she entered into a verbal agreement with a company (Winteam Pty Ltd) to supply labour hire to Hans Smallgoods in Queensland. This agreement was terminated in December 2014 and the applicant then secured a verbal agreement with another business (Mitchelle Star Trading Pty Ltd) to supply labour hire to Hans Smallgoods Queensland. 

16. In January 2015 the applicant expanded the supply of labour hire to Primo in South Australia. On 30 June 2015 the applicant’s subcontractor contracts were terminated and the applicant diversified the business operations to the provision of business and accounting consultancy services. The applicant claims that during the transition period she remained actively involved in the business through accounts receivable collections and management of the new services. During the transition stage the applicant leased commercial offices in Eastwood NSW and commenced operating from these premises on 30 November 2015.

17. The delegate noted that whilst the applicant claimed to supply labour hire to Winteam Pty Ltd and Mitchelle Star Trading Pty Ltd no documentary evidence had been supplied to support this claim. Similarly in regard to the applicant’s claims that the business diversified in July 2015 to provide business and accounting consultancy service, no evidence was provided to support this claim.

18. The delegate noted in their decision “Based on the information provided I am not satisfied that the applicant maintained direct and continuous involvement in the management and decision making activities of T&Y Capital Holdings Pty Ltd. Consequently the nominated business does not meet the definition of a main business under Regulation 1.11 at the time of decision. As the nominated business does not meet the definition of main business at the time of decision, the applicant therefore does not meet clause 890.221 because she does not continue to meet the requirements of clause 890.211”.

19. On 21 February 2018, the applicant lodged an application for review of the delegate’s decision with the Tribunal.

    Documentation lodged prior to the hearing

20. On the 2 August 2019 the Tribunal wrote to the applicant inviting her to provide information.

21. On  19 August 2019 the applicant’s representative provided a range of documents including:

    ·Statement from Ms Wenjing He re: daily management of her business

    ·Office photos of T & Y Capital Holdings Pty Ltd

    ·Business card for Ms Wenjing He

    ·Letter of clarification from external accountant for the FY 2019.

    ·Letter of clarification from external accountant Re: communications with Ms Wenjing He

    ·Letter of clarification from external accountant for FY2014 and FY 2015 ( Labour Hire Business)

    ·Employment contracts  Ming Chen, Joey Zeng (Qiaoyi) and Jinny Lee (Jin Hui)

    ·Type of work undertaken for clients and tax invoices for services rendered 2015 to present.

    ·Evidence of day-to-day management of the business including correspondence prepared, signed and approved by Ms Wenjing He, utility bills and office supplies requisitions and invoices.

    ·Commercial property lease agreements from 30 November 2015 until current and correspondence relating to new lease

    ·Employee PAYG’s 2015 to 2019

    ·Payroll Tax Assessment Notice, Queensland Government  11 December 2014

    ·ANZ bank statements showing payment of wages to employees including 18 October 2013 to November 2013, 19 March 2014

    ·Queensland Workers Compensation Certificate of Currency 1 July 2014 to 30 June 2015

    ·Tax invoices to Winteam and Mitchelle Star Trading

    ·Employee PAYG summaries 2015 to 2019 financial years

    ·Correspondence re: refund from Workcover SA

    ·BAS returns for the period January  2014 to March 2019

    ·Payslips 2014 to 2015 for Labour hire process workers

    ·Account receivable records from 2014 checked and approved by Ms Wenjing He

    ·Company tax returns from 2015 to 2018

    ·Company financial statements 2018 and 2019

    Hearing

22. At the hearing the Tribunal explained to the applicant the requirements of the relevant law. It discussed with the applicant the nature of her business, the history of her involvement in the business, the financial aspects of the business and various other relevant matters pertaining to the management and operations of the business.

23. The applicant told the Tribunal that when she came to Australia in 2013 she decided to start a business.  The applicant told the Tribunal that her intent of starting a business was to obtain a visa and that she talked to friends to obtain an understanding of the type of business that would be appropriate. She spoke with a friend of her husband a  “Tommy” , who introduced her to a Mr Liang who was running a business called Winteam Pty Ltd who supplied labour services to smallgoods producers. Mr Liang agreed to let her act as a subcontractor and supply workers. The applicant then established her business and employed some staff who undertook marketing and supervisory roles and sourced workers.

24. The agreement with Winteam Pty Ltd ceased in December 2014. The applicant subsequently entered into an informal arrangement with Mitchelle Star Trading Pty Ltd to continue the provision of labour hire to Hans Smallgoods.

25. In June 2015, the agreement with Mitchelle Star Trading Pty Ltd to provide labour hire ceased as a result of small goods manufacturers terminating Labour Hire agreements and directly hiring staff. At this stage the applicant sought advice from her accountant and then  decided that in order to continue the business, she would diversify operations and provide business and accounting consultancy services. The applicant told the Tribunal that her accountant suggested that business opportunities existed in the provision of business advice and assistance to Chinese business people, immigrating to Australia who are looking at starting up an Australian based business. 

26. The Tribunal asked the applicant aspects of the consultancy business including what services the business provides, who the clients are, who sets the schedule of fees for services provided and how the business sources clients.

27. The applicant told the Tribunal that initially the consultancy business provided book keeping services as the applicant has a background in accountancy and has employed two accountants. The business has expanded its services to focus on the provision of advice to new Immigrants wanting to establish a business in Australia. Applicable fees are charged in accordance with market rate and the experience of the consulting staff and range between $100 to $200 per hour plus GST. The applicant advertises her services within the Sydney Chinese community and relies on referrals from existing customers.

28. The Tribunal asked the applicant what specifically her role is with the business and put to the applicant that it had concerns about her lack of wages from the business, specifically that her PAYG summary for the 2018 financial year indicated that she was not receiving a fulltime wage from the business. For example the applicant’s PAYG for the 2018 financial year showed she received $10,000 in salary. The applicant told the Tribunal that she is the proprietor and owner and that her husband supplements her income as the business is still growing. The applicant told the Tribunal that she attends the office every day, holds meetings with staff, allocates tasks, and assigns clients to staff.  The applicant liaises with clients, is responsible for the financial management of the business, pays invoices etc. and interviews clients attending the office.

29. When asked what the business’s objectives were and how she communicated this to her staff, the applicant told the Tribunal that the business’s objective is to provide more services to the Chinese community and to make a profit. The applicant communicates this to her staff during meetings. Because it is a small business the meetings are not minuted and the staff communicate regularly during the day with her. The Tribunal asked the applicant about the business’s budget and whether she had a documented business plan. The applicant told the Tribunal that the budget was in her mind and that she had not documented a business plan. The Tribunal questioned the applicant’s capacity to provide sound business advice to clients when it appeared she did not apply basic business practices in her own business. The applicant told the Tribunal that she was still forming business ideas and knew what direction she wished to take the business but had not yet documented her ideas.

30. In regard to the budget and setting of targets the applicant claims that every year she makes an estimate based on the previous year’s financial situation and determines how many clients and services the business needs to make a profit.  The applicant acknowledged that the business is running at a loss and that she needs to cut expenditure and increase revenue through obtaining more clients. The applicant told the Tribunal that her business has not made a good profit and did not operate well, but she is learning and is confident that the business will do better in the future.

31. The Tribunal notes following the hearing, the applicant provided to the Tribunal on 17 September 2019, a copy of a Business Plan and budget. The applicant also provided extracts of the business’s job register which identifies the applicant’s clients, services rendered and fees for service.

32. The applicant told the Tribunal that the net value of her personal assets are $2million in property and approximately $120,000 to $230,000 in savings and a Director’s loan to the business of $330,000. Her husband runs a successful business in China and is the proprietor of a factory and runs a business investment company with partners renovating old factory premises then renting them.

33. The applicant’s husband, Mr Haoheng Li, told the Tribunal that he and his family had a good life in China and prior to coming to Australia lived in the USA, Britain, Japan and Europe but chose to live in Australia. He thanked the Australian Government for the chance to settle in Australia.
    
    

    Assessment of the Evidence

34. Clause 890.211(1) requires that the applicant has had, and continues to have, an 'ownership interest' in one or more actively operating main businesses in Australia for at least 2 years immediately before the visa application was made. Clause. 890.221 requires the applicant to continue to have an interest of that kind at the time of the Tribunal’s decision.

35. The Tribunal finds that the business relied on by the applicant to satisfy these requirements is T & Y Capital Holdings Pty Ltd. Accordingly, the Tribunal must consider the nature of the applicant’s interest in this business, whether the business was actively operating and whether it met the definition of ‘main business’ in the period commencing two years immediately prior to the date of application and as at the date of application. The Tribunal must also consider these issues as at the date of this decision and whether the applicant continues to satisfy cl.890.211 (1). In considering whether the applicant meets the requirements of cl.890.211 in respect of the nominated main business, the Tribunal finds that the relevant 2 year period immediately before making the application is 11 February 2014 to 10 February 2016 (the relevant period).

    Does the applicant have an ownership interest in the business: r.1.11(1)(a)

36. Regulation 1.03 provides that ‘ownership interest’ has the meaning given in s.134(10) and includes a shareholder in a company that carries on the business.

37. The Tribunal has sighted evidence from ASIC that shows that as of 15 January 2013 the business has a total of 100 shares and that the applicant holds 50%  shares, and therefore holds a 50% share in the business. The applicant’s husband Mr Haoheng Li holds a 50% share in the business.

38. The Tribunal finds at the time of application and for the two years immediately before, the applicant had an ownership interest of 50% in the business, the remaining 50% being held by her spouse Mr Li.  Therefore the applicant has an ‘ownership interest’ in the business, as defined in s.134(10)(a) and meets r.1.11(1)(a).

39. Accordingly, the Tribunal is satisfied that the applicant did have and does have an ownership interest in the nominated business at all relevant points in time.

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

1. In order to meet cl.890.211(1) the Tribunal must be satisfied that the relevant business or businesses were actively operating both at the time of making the visa application and during the two years immediately before. In order to meet cl.890.221 the applicant must continue to satisfy this requirement at the time of this decision.

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

3. The Tribunal has evidence before it to support that the business was actively operating at the time of visa application and in the two years prior to lodgement of the visa application and that the business is still actively operating. This evidence incudes:

   ·Evidence of day-to-day management of the business including correspondence prepared, signed and approved by Ms Wenjing He, internal emails, utility bills and office supplies requisitions and invoices.

   ·Employee PAYG’s 2015 to 2019

   ·Payroll Tax Assessment Notice, Queensland Government  11 December 2014

   ·Business bank statements showing revenue and payment of business expenses including staff salaries.

   ·Queensland Workers Compensation Certificate of Currency 1 July 2014 to 30 June 2015

   ·Correspondence regarding refund from Workcover SA

   ·Tax invoices issued to clients including Winteam and Mitchelle Star Trading

   ·Employee PAYG summaries 2015 to 2019 Financial years.

   ·BAS returns for the period January  2014 to March 2019

   ·Employee Payslips 2014 to 2015.

   ·Account receivable records from 2014 checked and approved by Ms Wenjing He

   ·Company tax returns from 2015 to 2018

   ·Company financial statements 2018 and 2019

   ·Company business plan and budget

   ·Extracts from job register detailing clients and work schedules.

4. Accordingly, the Tribunal is satisfied that the nominated business was actively operating at all relevant points in time.

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

5. 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. Clause 890.221 requires that the applicant continues to satisfy this requirement at the time of decision. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in paragraph 12 above and 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.

   Ownership Interest

6. 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:r.1.03.

7. The Tribunal finds based on the evidence before it that the applicant held a 50% share in the main business T & Y Capital Holdings Pty Ltd as at 15 January 2013.

8. Accordingly, the Tribunal is satisfied that the applicant did have and does have an ownership interest in the nominated business at all relevant points in time.

   Maintains a 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: r.1.11(1)(b).

9. Secondly, the applicant must maintain, or have 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. The Tribunal is of the view that this criterion contains two requirements. First the applicant maintained direct and continuous involvement in the management of the business from day to day. Secondly the applicant maintained direct and continuous involvement in making decisions that affected the overall direction and performance of the business.

10. In assessing whether the applicant satisfies the requirements of r.1.11(1)(b), the Tribunal has taken into account the judgement in Lobo v MIMA [2002] FCAFC168  which discusses an equivalent provision in relation to the former Subclass 845 visa.  The Court specified that there are a variety of ways in which a person might maintain direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance.  A person involved in the ‘management of the business’ does not necessarily have to manage the whole of the business. The Tribunal must have regard to all the circumstances and requirements of the individual business.

11. The Tribunal has considered the nature and size of the business. On the basis of the written and oral evidence provided by the applicant, the Tribunal acknowledges that the business when established in 2013, provided labour hire services. In 2015 due to changes to labour hire agreements, the applicant diversified and changed the nature of the business to a business and accounting consultancy service.  The Tribunal understands that the business provides business consultation predominately to Chinese clients in the Eastwood area of Sydney. The business also provides accounting and book keeping services. On the basis of written evidence before the Tribunal the applicant employs four staff.

12. During the transition period the applicant claimed she maintained direct and continuous involvement in the management of the business on a daily basis by ensuring all outstanding accounts receivable were collected and systems and processes associated with the consultancy aspects of the business were in place. The applicant made decisions in regard to the new direction of the business and has continued to be the primary decision maker in respect to the overall management and direction of the business.

13. The Tribunal has taken into account the evidence before it, in relation to the visa application. The Tribunal accepts that the applicant has maintained direct and continuous involvement in the business and makes decisions affecting the overall direction and performance of the business.

14. On the evidence before it, the Tribunal is satisfied at the time of application and time of decision, that the applicant 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 as required by r.1.11(1)(b).

    Value of Ownership interest

15. 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; or

    ·if the business 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; or

    ·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.

16. Evidence before the Tribunal indicates that the applicant has had and continues to have an ownership interest in the business.  The value of the applicant’s ownership interest is 50% and the total value of the ownership interests of the applicant and the applicant’s spouse, in the main business, continues to be 100% of the total value of the business.

    Qualifying business

17. 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: r.1.03.

18. The Tribunal is satisfied that T&Y Capital Holdings Pty Ltd operates for the purpose of making a profit through the provision of goods and services to the public and is not operated for the purpose of speculative or passive investment. Therefore the Tribunal is satisfied that T&Y Capital Holdings Pty Ltd is a qualifying business for the purpose of r.1.11(1)(d).

19. Accordingly, the Tribunal is satisfied that the nominated business meets the definition of main business at all relevant points in time. Therefore the Tribunal is satisfied that cl.890.211(1) is met.

20. Given the findings above the Tribunal is satisfied that cl.890.211(1) is met and as such the Tribunal has also considered cl.890.211(2).

    Australian Business Number and Business Activity Statements

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

    ·An Australian Business Number has been obtained, and

    ·All Business Activity Statements required by the Australian Taxation Office (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.

22. ASIC records show that the business has obtained an Australian Business Number, that being ABN  97 161 941 055  (7 March 2013) and that the applicant has provided to the Tribunal BAS returns for the period April 2014 to March 2019.

23. Therefore the Tribunal is satisfied that cl.890.211(2) is met and as such the Tribunal finds the applicant meets cl 890.211.

    Conclusion

24. Given the findings above, the Tribunal is satisfied that the applicant continues to have an ownership interest in one or more actively operating main businesses in Australia at the time of the Tribunal’s decision. Therefore at the time of decision the first named applicant continues to satisfy cl.890.211 for the purposes of cl.890.221.

25. Mr Haoheng Li, Miss Lok lo Li and Miss Letong Li applied on the basis of being a member of the family unit of the first named applicant. The applications by Mr Haoheng Li, Miss Lok lo Li and Miss Letong Li will be determined by reference to the outcome of Ms Wenjing He’s application on remittal to the Department for consideration.

26. Given this finding, the appropriate course is to remit the application to the Department to consider remaining criteria for grant of the visa. 

    DECISION

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

    • cl. 890.211 of Schedule 2 of the Regulations

    Karen McNamara
    Member