HOSPITALITY & KITCHEN NEEDS PTY LTD (Migration)

[2020] AATA 4040

HOSPITALITY & KITCHEN NEEDS PTY LTD (Migration) [2020] AATA 4040 (25 September 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  HOSPITALITY & KITCHEN NEEDS PTY LTD

CASE NUMBER:  1728202

HOME AFFAIRS REFERENCE(S):          BCC2017/1644651

MEMBER:Sheridan Lee

DATE:25 September 2020

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal affirms the decision under review to refuse the nomination.

Statement made on 25 September 2020 at 5:35 pm

CATCHWORDS

MIGRATION – application for approval of nomination of position – temporary residence transition stream – full-time employment for two years – business running at significant and increasing loss – insufficient documentation of future projects – decision under review affirmed

LEGISLATION

Migration Regulations 1994 (Cth), r 5.19(3)(d)(i)

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 and Border Protection on 26 October 2017 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations).

2. The applicant applied to nominate Mr Xianyu Fu to work in the Occupation of Construction Project Manager for approval on 8 May 2017. The requirements for the approval of the nomination of a position in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination stream (r.5.19(3)) and a Direct Entry nomination stream (r.5.19(4)). If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).

3. In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Temporary Residence Transition nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(3)(d)(i) of the Regulations because they were not satisfied that the nominee would be employed on a full-time basis in the position for at least two years.

5. Mr Simon Wu appeared before the Tribunal on 21 July 2020 to give evidence and present arguments on behalf of the applicant. The applicant was represented in relation to the review by its registered migration agent.

6. For the following reasons, the Tribunal has decided to affirm the decision under review to refuse the nomination.

   CONSIDERATION OF CLAIMS AND EVIDENCE

7. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Temporary Residence Transition nomination stream set out in r.5.19(3), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

   Future employment of the visa holder: r.5.19(3)(d)

8. Regulation 5.19(3)(d) only applies to certain nominees (those described in r.5.19(3)(c)(i)). For this class of person, the Regulations require that the nominee will be employed on a full-time basis for at least 2 years on terms that do not expressly preclude the possibility of an extension. In this case, the nomination identified a person who held a Subclass 457 visa in the standard business sponsorship stream and the regulation applies.

9. An employment contract between Hospitality & Kitchen Needs and Xianyu Fu, dated 1 May 2020, provides for an annual salary of $99,574 for full-time employment as a Construction Project Manager. A previous letter of offer to Mr Fu dated 25 June 2014, offered the position of Construction Project Manager for a period of 4 years on a salary of $79,976 per annum.

10. Company financials provided by the applicant report that the business is running at a significant and increasing loss:

    ·2017 reported a loss of $987,280

    ·2018 reported a loss of $1,047,677

    ·2019 reported a loss of $1,109,942

11. At the hearing, the Tribunal raised concern with the applicant in respect of its financial capacity to sustain the position for a minimum of two years on a salary of $99,574. In response, Mr Wu conceded that the business is not profitable but it is surviving. Mr Wu predicted that the construction aspect of the business will move into profitability in the future.

12. Mr Wu gave evidence that the company hired Mr Fu in 2014 when the company first moved into the project management space. Because project management is the new focus of the business, and they have learnt from past mistakes, Mr Wu was confident things would improve. He explained that the company has signed new projects, developed a customer database and received a $400,000 loan from the Director.

13. In post-hearing submissions, the applicant supplied additional evidence to support the contention that company finances are improving. This included a quote for fitout works at Australian Professional Skills Institute on Edward Street, East Perth, to the value $200,198.90. However, the quote is undated and unsigned and no contract was provided. An additional quote dated 17 July 2020 was issued to ‘Nirav’ for fitout of a Boost Juice to the value of $166,730. The second quote was also not signed and no contracts were provided.

14. The applicant supplied a letter from Taskon dated 30 July 2020 outlining that the commercial construction company has engaged Hospitality and Kitchen Needs as one of its main sub-contractors since 2017, especially for projects that include commercial kitchen construction. The letter outlines that ‘due to our expansion, we have more projects signed to HKN to provide us the sub-contracting services’. The letter than provides a list of four upcoming projects, three of which are listed as ‘tendering’.

15. Finally, the applicant supplied a letter from its accountant, Beaumaris Business Solutions, dated 30 July 2020, predicting that the business will operate at a profit from 2021. While the letter attaches calculations, it does not specify how the new measures will positively impact finances or on what basis it predicts increased sales.

16. The Tribunal remains unconvinced that the company can become profitable in the short term. Of note, no Business Activity Statements (BAS) the 2020 or current financial year or signed contracts for future projects were provided to support forward estimates. The Tribunal notes that the nominee has been employed by the applicant in the Construction Project Manager position since 2014 and there has been no improvement in company finances, despite the focus on construction since that time.

17. At the hearing, the Tribunal questioned the applicant in respect of its taxation compliance history, noting that all of the BAS from July 2017 onwards were lodged with the Australian Taxation Office (ATO) on 30 April 2020. The Tribunal questioned whether the company had been fined by the ATO for late lodgement. The applicant agreed to seek further advice from its accountant, however no further information was provided with post-hearing submissions on this point. The Tribunal further notes, that it is unclear if the applicant has paid the nominee appropriately to date.

18. Notice of Assessments issued by the ATO for Xianyu Fu for the year ended:

    ·30 June 2017 reported his taxable income as $72,707.

    ·30 June 2018 reported his taxable income as $75,805.

    ·30 June 2019 reported his taxable income as $54,374.

19. While evidence of unpaid leave was provided for the years 2014 and 2015, no evidence of leave taken in the 2019 financial year was supplied to the Tribunal which would account for the drop in pay. When the Tribunal raised the possible underpayment in 2019, the applicant agreed to provide further information post-hearing, however this issue was not addressed in submissions.

20. The potential non-compliance with taxation and employment obligations adds to the Tribunal’s concerns regarding the capacity of the applicant to sustain the position going forward. It is unclear if the applicant has met its obligations to date. The applicant did not allay these concerns. As such, the Tribunal is not satisfied that the nominee will be employed on a full-time basis for at least 2 years.

21. Given the above findings, the requirement in r.5.19(3)(d) is not met.

22. For the above reasons the Tribunal is not satisfied that the applicant meets the requirements of r.5.19(3). The applicant has not sought to satisfy the criteria in Direct Entry nomination stream, and as such has not met the requirements in r.5.19(4). Accordingly, the nomination of the position cannot be approved. Therefore, the Tribunal must affirm the decision under review.

    DECISION

23. The Tribunal affirms the decision under review to refuse the nomination.

    Sheridan Lee
    Member

    
    

    ATTACHMENT  -  EXTRACTS FROM THE MIGRATION REGULATIONS 1994

    5.19Approval of nominated positions (employer nomination)

    …

    (2)The application must:

    (a)be made in accordance with approved form 1395…; and

    (aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; and

    (b)be accompanied by the fee mentioned in regulation 5.37.

    Temporary Residence Transition nomination

    (3)The Minister must, in writing, approve a nomination if:

    (a)the application for approval:

    (i)       is made in accordance with subregulation (2); and

    (ii)      identifies a person who holds a Subclass 457 … visa granted on the basis that the person satisfied the criterion in subclause 457.223(4) of Schedule 2; and

    (iii)     identifies an occupation, in relation to the position, that:

    (A)is listed in ANZSCO; and

    (B)has the same 4-digit occupation unit group code as the occupation carried  out by the holder of the Subclass 457 … visa; and

    (b)the nominator:

    (i)       is, or was, the standard business sponsor who last identified the holder of the Subclass 457 … visa in a nomination made under section 140GB of the Act or under regulation 1.20G or 1.20GA as in force immediately before 14 September 2009; and

    (ii)      is actively and lawfully operating a business in Australia; and

    (iii)     did not, as that standard business sponsor, meet regulation 1.20DA, or paragraph 2.59(h) or 2.68(i), in the most recent approval as a standard business sponsor; and

    (c)either:

    (i)       both of the following apply:

    (A)in the period of 3 years immediately before the nominator made the application, the holder of the Subclass 457 …visa identified in subparagraph (a) (ii) has:    

    (I)held one or more Subclass 457 visas for a total period of at least 2 years; and

    (II)been employed in the position in respect of which the person holds the Subclass 457 … visa for a total period of at least 2 years (not including any period of unpaid leave);

    (B)the employment in the position has been full-time, and undertaken in Australia; or

    (ii)      all of the following apply:

    (A)the person holds the Subclass 457 … visa on the basis that the person was identified in a nomination of an occupation mentioned in sub-subparagraph 2.72(10)(d)(iii)(B) or sub-subparagraph 2.72(10)(e)(iii)(B);

    (B)the nominator nominated the occupation;

    (C)the person has been employed, in the occupation in respect of which the person holds the Subclass 457 … visa, for a total period of at least 2 years in the period of 3 years immediately before the nominator made the application; and

    (d)for a person to whom subparagraph (c)(i) applies:

    (i)       the person will be employed on a full-time basis in the position for at least 2 years; and

    (ii)      the terms and conditions of the person’s employment will not include an express exclusion of the possibility of extending the period of employment; and

    (e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:

    (i)are provided; or

    (ii)would be provided;

    to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and

    (f)either:

    (i)       the nominator:

    (A)fulfilled any commitments the nominator made relating to meeting the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; and

    (B)complied with the applicable obligations under Division 2.19 relating to the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; or

    (ii)      it is reasonable to disregard subparagraph (i); and

    Note Different training requirements apply depending on whether the application for approval as a standard business sponsor was made before 14 September 2009 or on or after that date.

    (g)either:

    (i)       there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or

    (ii)      it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and

    (h)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations.