JIN (Migration)

[2019] AATA 3763

JIN (Migration) [2019] AATA 3763 (14 June 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Yuexin JIN
Ms Xiaoqin LIU
Mr Yi JIN

CASE NUMBER:  1611685

DIBP REFERENCE(S):  BCC2015/2226609, BCC2015/2226829, BCC2015/2226830, BCC2016/2707375

MEMBER:Katie Malyon

DATE:14 June 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 applicant meets the following criteria for a Subclass 890 Business Owner visa:

· cl.890.213 of Schedule 2 of the Regulations.

Statement made on 14 June 2019 at 5:20 pm

CATCHWORDS

MIGRATION – Business Skills (Residence) (Class DF) – Subclass 890 (Business Owner) – financial capacity – claimed turnover – BAS provided – evidence provided upon review – decision under review remitted

LEGISLATION

Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), Schedule 2 cl 860.213

Any references appearing in square brackets indicate that information has been omitted from this decision pursuant to section 378 of the Migration Act 1958 and replaced with generic information.

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 12 July 2016 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 visa on 4 August 2015. The delegate refused to grant the visa on the basis that, the first named applicant - Chinese national Mr Yuexin Jin – did not demonstrate that the turnover of the applicants’ main business, or businesses, in the 12 months immediately before to the visa application was at least AUD $300,000 as required by cl.890.213 of Schedule 2 of the Migration Regulations 1994 (the Regulations).  A copy of the delegate’s decision was provided to the Tribunal.

3. Mr Jin appeared before the Tribunal on 30 May 2019 to give evidence and present arguments.  The Tribunal also received independent oral evidence from Mrs Ying Xin Cheng.  Mrs Cheung’s wholesale and retail business Tobacco Station formerly supplied Mr Jin’s convenience store with tobacco products in the relevant 12 months period.  She sold her business on 1 August 2017 and the new owner continues to supply the applicants’ business with tobacco products.  The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.  Only Mr Jin used the interpreter.  The applicants were represented in relation to the review by their registered migration agent, who also attended the hearing.

4. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.  The Tribunal acknowledges that it has significantly more information than that which was available to the Department at the time of the delegate’s decision. 

   ISSUE

5. The issue in the present case is whether the applicants meet the requirements in cl.890.213 of Schedule 2 to the Regulations. Essentially, this requires Mr Jin to demonstrate that the turnover of his main business, or businesses, in the 12 months immediately before lodgement of the visa application on 4 August 2015 was at least $300,000.

   RELEVANT LAW

6. At the time the visa application was lodged, the Business Skills (Residence) Class DF visa contained 4 subclasses: Subclass 890 (Business Owner); Subclass 891 (Investor); Subclass 892 (State/Territory Sponsored Business Owner); and, Subclass 893 (State/Territory Sponsored Investor).  The applicants have made claims in relation to Subclass 890 only.

7. The criteria for a Subclass 890 visa are set out in Part 890 of Schedule 2 to the Regulations. At least one member of the family unit must satisfy the primary criteria. The primary criteria require the following criteria to be satisfied at time of application:

   ·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 is made and, in respect of each such business, an Australian Business Number (ABN) has been obtained and all Business Activity Statements (BAS) required by the Australian Taxation Office (ATO) for the 2 years prior to lodgement of the visa application had been submitted to the ATO and have been included in the visa application: cl.890.211;

   ·the net value of the assets of the applicant, of his or her spouse or of the applicant and the spouse together in the ‘main business’ or main businesses in Australia is, and has been throughout the 12 months immediately before the application is made, at least $100,000: cl.890.212;

   ·in the 12 months immediately before the application is made, the main business or main businesses had a turnover of at least $300,000: cl.890.213 (emphasis added);

   ·throughout the 12 months immediately before the application is made, the main business/es not only provided an employee or employees with a total number of hours of employment at least equivalent to the total number of hours that would have been worked by 2 full-time employees over that 12 month period but also provided those hours of employment to an employee or employees who were Australian citizens, Australian permanent residents or New Zealand passport holders and who were not the applicant or a member of the applicant’s family unit: cl.890.214;

   ·the net value of the business and personal assets in Australia of the applicant, his or her spouse or, of the applicant and the spouse together, is and has been throughout the 12 months immediately before the application is made at least $250,000; cl.890.215;

   ·neither the applicant, nor his/her spouse, has a history of involvement in business activities that are of a nature that is not generally acceptable in Australia: cl.890.216; and,

   ·the applicant has been in Australia as the holder of one of the visas mentioned in para 1104B(3)(d) of Schedule 1 of the Regulations for a total of at least one year in the 2 years immediately before the application is made: cl.890.217.

8. At the time of decision, the applicant must continue to satisfy the primary criteria in clauses 890.211, 890.215 and 890.216: cl.890.221 of Schedule 2 to the Regulations.

9. 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.

10. 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;

    (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;

    (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, in the business is or was at least 10% 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.

11. 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

12. Mr Jin applied for grant of a Subclass 890 visa on the basis of claims related to only one main business, Jin Jie Ao Pty Ltd (the Company).  The Company operates a convenience store on Liverpool Road in South Strathfield.  Based on ASIC records lodged with the Department, Mr Jin is the sole shareholder and Director of  the Company,

13. The delegate decided that, based on evidence provided, in the 12 months immediately before the application was made on 4 August 2015, the Company did not have an annual turnover of at least $300,000 as required by cl.890.213 of Schedule 2 to the Regulations.

14. As noted in the delegate’s decision, in his Subclass 890 visa application, Mr Jin claimed turnover of $338,347 and $383,106 for the periods ending 30 June 2014 and 30 June 2015 respectively.  The delegate acknowledged that BAS provided support Mr Jin’s claims in relation to claimed turnover of the business.  However, having regard to the income shown in the Company’s bank statements lodged with the Department and the absence of any evidence of cash expenses, the delegate was not satisfied that cash expenses would equal the turnover discrepancy of $117,614 for the period 1 July 2014 to 30 June 2015.  The delegate does acknowledge it is reasonable to assume that the applicants would have some business expenses paid for in cash from cash income but, absent evidence of such payments, the delegate was not satisfied that cash expenses would equal the turnover discrepancy claimed in the 12 months prior to 30 June 2015.    

    Documentation lodged prior to the hearing

15. Prior to the hearing, Mr Jin’s representative provided a range of documents including, relevantly:

    1)a signed statement from Mr Jin dated 21 May 2019 confirming that he usually orders some $150,000 each year of tobacco products from Tobacco Station.  All tobacco products are paid for in cash.  He normally writes down his order on a piece of paper, takes a photo of the order and sends it via WeChat to Tobacco Station in the morning. 

    Prior to lodgement of the Subclass 890 visa application, the owner of Tobacco Station was Mrs Cheng.  She would prepare his tobacco order after receiving the order and deliver the goods to his shop in the afternoon, or on the following day.  Payment for products delivered was in cash according to the invoice from Tobacco Station issued by Mrs Cheng. 

    Orders are made once a week, but sometimes twice a week.  Mrs Cheng sold her business around the middle of 2017.  He now orders tobacco from the company which purchased Tobacco Station from Mrs Chang.  The name of the supplier he now buys from is Ke Heng Pty Ltd ABN 94 618 696 094 (Ke Heng) and the owner is Mr HaoBing Ye;

    2)sample photos of tobacco orders sent on 6 May 2019, 13 May 2019 and 20 May 2019 to Mr Ye using WeChat;

    3)a signed letter from CPA and registered ASIC auditor Mr Peter Tsang dated 20 May 2019.  Mr Tsang confirms that he completed an audit of the Company for the financial year ended 30 June 2015.  He also states that:

    “During the audit process, we were aware that, the total sales including GST amount was $416,695 ($383,106 + GST $33,589), hence, the net turnover was $383,106.  The client has deposited part of the money ($262,453) into the bank, and used cash of $154,042 direct (sic) purchased goods and paid expenses without deposit (sic) to the bank.

    It is very common practice that the small cash business owner uses the sales money (cash) to purchase goods directly before banking”; and,

    4)BAS from 1 July 2014 to 30 September 2018 as lodged with the ATO using the Tax Agent Portal confirming the date of lodgement. 

16. In his covering letter, the representative notes that Mr Jin is able to provide some 60 original invoices from 1 June 2014 to 30 June 2015 printed from the cash register of the tobacco supplier.  He notes that they are ‘narrow slips and much like supermarket dockets … but are hardly legible’.  The representative states that he will bring the invoices to the hearing: in total, they account for ‘some $120,000 purchases’ but they are not complete as some of them are missing.   

    Hearing

17. At the commencement of the hearing, the applicants’ representative provided the Tribunal with the original invoices/cash receipts issued by Tobacco Station ABN 20 802 591 342 in the period 1 June 2014 to 31 December 2014 confirming payments in cash by the Company to its supplier for itemised tobacco products.  The invoices/receipts have been issued on thermal paper and, given the passage of time, the Tribunal notes that some details printed on some of the invoices/receipts have faded and are illegible.  The Tribunal notes that, for each month other than the month of October 2014, the documents provided indicate that the Company takes delivery of and makes cash payment for between 3 - 10 orders per month for its tobacco products.  The representative states that only one invoice is available for the month of October 2014, that is, the invoice dated 31/10/2014 for $1,882.73: all other invoices for the month of October 2014 are missing.   

18. The representative also indicated that he would be able to provide the Tribunal with the original receipts for tobacco purchases from Tobacco Station in Ashfield for the period 1 January 2015 to 30 June 2015 later in the day as Mr Jin and his wife have had to look through many boxes of documents to find them.  Asked about BAS from 1 October 2018 to 31 March 2019 as lodged with the ATO using the Tax Agent Portal, the representative indicated that he had asked Mr Jin’s CPA to provide documentation as requested by the Tribunal in its hearing invitation and undertook to provide these BAS within 24 hours.

19. Mr Jin told the Tribunal about the customers that he and his staff serve at his convenience store.  He said the store is located right next door to a club/hotel - the Crossways Hotel - which has a bistro restaurant out the back.  Many people go there to eat, drink, and play poker machines but they do not sell cigarettes there.  In addition, about 3 shops away on the other side of his business is a TAB and he sells a lot of cigarettes to people who go to the TAB to make bets.  Further, there is a large apartment complex just over the road and a nearby Chinese/Malaysian restaurant called Golden Cornet which offers customers both eat in and takeaway options.  Furthermore, a lot of the children from the local South Strathfield primary school come to buy mostly drinks and snacks.  So far, he has not had any security issues as all of the customers are good. 

20. In addition, Mr Jin said that there are not any competitor convenience stores nearby that offer general groceries and tobacco products as he does.  His store opens 7 days a week from 8:00 am - 8:30 pm but remains open until 9:00 pm on Friday and Saturdays.  About 50% of the store’s income comes from cigarette sales.  The Tribunal noted this is somewhat above the 33% identified by PwC in its 2005 study of Sales of Cigarettes and Tobacco Products by Type of Retail Business.[1]  Mr Jin indicated that the store’s location next door to the Crossways Hotel and with a TAB just 3 shops away, neither of which has a cigarette vending machine, means that his business sells lots of cigarettes to people attending these venues.  All cigarette products are sold in packets only: he does not sell rollies (that is, roll your own cigarettes).  On average, the store now turns over between $1,000 to $1,500 per day, of which about half is in cash and the other half by way of card. Increasingly, customers use cards.  [Information deleted].  [Information deleted].

    [1] >

    Asked about ordering tobacco products, both now and in the past, Mr Jin said things have not changed.  He writes out his order on a sheet of paper, takes a photograph of that and sends it to his supplier Tobacco Station.  Originally, he purchased from Tobacco Station in Ashfield when it was owned by Mrs Cheng but, after she sold the business, he now buys from the company that she sold her business to, that is, Ke Heng.  The supplier is still based at the same address at 232 Liverpool Road in Ashfield. 

21. Mr Jin showed the Tribunal a copy of an order placed by him with Ke Heng using his mobile phone social media app WeChat.  He also showed the Tribunal on his mobile phone an invoice/receipt dated 27 May 2019 at 11:41 am issued by Tobacco Station Ke Heng Pty Ltd ABN 94 618 696 094 for an order of a range of tobacco products for $2,854.74 and which indicates that payment has been made in cash.  The Tribunal notes that the invoice/receipt from Ke Heng is in similar format to the thermal invoices/ receipts from Tobacco Station dating from 1 July 2014 to 30 June 2015.  [Information deleted].  [Information deleted].

22. Asked to explain the seasonal variation in tobacco purchases as indicated on the copy invoices/receipts provided to the Tribunal, Mr Jin said that people go out a lot more once daylight saving starts and in the lead up to the Christmas New Year festive season as well as Chinese New Year.  Once it starts to get cold again, people do not go out so much and the need to supply cigarettes to customers really drops off.  He added that, as most people attending either the nearby hotel or TAB smoke on the street, they choose not to go to the TAB or the hotel so much in winter. 

23. The Tribunal took independent evidence from Mrs Cheng.  She said ran her Tobacco Station business ABN 20 802 591 342 with her partner from 2001 until 1 August 2017 at the same address in Ashfield before she sold the business to Mr Ye.  Mrs Cheng told the Tribunal that her business was part of the TSG franchise group - Tobacco Station Group (TSG) - which has franchisee operations right across Australia.[2]  Asked about orders from convenience stores such as that operated by Mr Jin, Mrs Cheng said that customers would send through their orders and delivery would be made usually on the same day.  In the case of Mr Jin’s store, she would typically receive an order in the morning and then deliver to him in the afternoon on her way home as she lives in nearby Strathfield.  Consistent with the franchise arrangement with TSG, receipts are issued for all purchases.  Apart from cigarette lighters, all products supplied by Tobacco Station are packaged cigarettes of different brands. 

    Documentation lodged after the hearing

    [2] >

    Later on the same day as the hearing, Mr Jin’s representative provided the Tribunal with the following documentation:

    ·BAS from 1 October 2018 to 31 March 2019 as lodged with the ATO using the Tax Agent Portal and confirming the date of lodgement,  Together with the BAS for the period 1 July to 30 September 2018 provided to the Tribunal before the hearing, this confirms sales are on track to reach $489,000 for FY 2018/19.  This equates to around $1,300 per day;

    ·original invoices/cash receipts issued by Tobacco Station ABN 20 802 591 342 in the period 1 January 2015 to 30 June 2015 (when the business was operated by Mrs Cheng and her partner) confirming payments in cash for itemised tobacco products.  Like the other invoices referred to above at para [17], these have been issued on thermal paper and, given the passage of time, some details printed on the invoices/receipts have faded; and,   

    ·printouts of tax invoices and cash receipts issued by Ke Heng’s Tobacco Station ABN 94 618 696 094 for cigarette orders placed on 6 May 2019 ($2,276.55), 13 May 2019 ($4,523.50), 20 May 2019 ($5,258.60) and 27 May 2019 ($3,035.90): that is, a total of $15,094.55 for the month of May 2019. 

1. The representative has provided a tabulated summary of all invoices provided.  As noted above, all invoices for the month of October 2014 are missing apart from the invoice dated 31/10/2014 for $1,882.73.  Based on the average tobacco purchase for 6 of the 7 months of 2014 (that is, June - Sept 2014 and Nov – Dec 2014), the representative submits that the average purchase per month is $12,116.13.  On this basis, the representative submits that the purchases for October 2014 should be taken by the Tribunal to be $12,116.13.

   Consideration of the evidence and findings

2. The Tribunal found both Mr Jin and Mrs Cheng to be credible witnesses.  As noted above, the delegate accepted that Mr Jin’s business reported turnover of $383,106 for 12 months to 30 June 2015 and that this is supported by BAS provided.  However, absent evidence of cash payments, the delegate was not satisfied that, having regard to the income shown in the Company’s many bank statements, cash expenses would equal the turnover discrepancy of $117,614 in the 12 months to 30 June 2015.  Relevantly, the delegate expressly acknowledged that it is reasonable to assume that the applicants would have some business expenses paid for in cash.

3. The applicants have now provided evidence of cash payments by the Company to its tobacco supplier Tobacco Station.  The Tribunal notes that for the month of June 2014, the applicants have provided evidence of cash payments totalling $9,245.10.  For the month of May 2019, total cash purchases are $15,094.55  

4. By way of summary, in the period 1 July 2014 to 30 June 2015 the invoices/receipts provided confirm cash payments that have been made as set out in the third column of the Table below.  Cash payments claimed by the representative to have been made are set out in the fourth column.  The difference in figures set out in the third column and the fourth column is explained by: first, the claimed absence of some receipts for the month of October 2014; and second, as noted above, the print quality on the thermal invoices is extremely variable and, as a result, legibility of some of the data recorded is adversely affected.  The Tribunal acknowledges that the representative’s calculations differ somewhat from its own calculations: however, the differences are not such that they adversely impact Mr Jin.

   
   
   

Period	No. of invoices	Amount paid	Amount submitted as paid
July 2014	6	$10,361.80	$10,912.43
Aug 2014	6	$8,814.75	$8,814.76
Sept 2014	10	$15,562.15	$16,235.44
Oct 2014	1	$1,882.73	$12,116.73
Nov 2014	9	$18,277.00	$18,276.81
Dec 2014	5	$12,172.90	$12,063.14
Jan 2015	8	$12,209.60	$12,061.95
Feb 2015	7	$7,771.85	$7,897.10
Mar 2015	5	$9,326.75	$9,326.75
April 2015	6	$6,350.32	$8,127.55
May 2015	3	$5,440.15	$5,440.15
June 2015	4	$6,735.05	$6,735.05
Total	$114,905.05	$128,007.86

1. The Tribunal accepts that, based on evidence provided, the applicants have demonstrated that they have had business expenses which have been paid for in cash from cash income totalling at least $114,905.05.  The delegate identified turnover discrepancy of $117,614 in documentation provided to the Department.  The Tribunal accepts that, on average, the Company makes cash payments for 5 invoices per month for tobacco products.  It also notes the representative’s statement that only one invoice has been located by the applicants for the month of October 2014 and accepts the applicants’ advice that other invoices for October 2014 have been misplaced. 

2. Having regard to Mr Jin’s explanation regarding the increase in cigarette sales with the onset of warmer months and the introduction of daylight saving in the lead up to the festive season, the Tribunal is of the opinion that it is highly unlikely that Mr Jin would have placed only one tobacco order with Tobacco Station in October 2014.  The Tribunal also notes that Mr Jin did not refer, in his explanation for the surge in cigarette sales and orders in the period from September to January, to the Melbourne Cup held on the first Tuesday in November.  The Tribunal accepts that this is, indeed, the race that stops the nation and that the local TAB (3 doors away from Mr Jin’s store) would have its busiest day of the year on Melbourne Cup Day[3] such that cigarette sales would be likely spike each year in the first week of November.  In the circumstances, the Tribunal accepts that cash purchases of cigarettes by the Company would also routinely increase in October of each year.  As such, it appears to the Tribunal that the September 2014 cash purchases ($16,235.44) may be more indicative of purchases in October 2014, rather than the averaged amount suggested by the representative of $12,116.73.  

   [3] >

   The Tribunal also notes that the representative has provided a recent signed letter from the Company’s CPA and registered ASIC auditor Mr Peter Tsang.  Mr Tsang confirms that he completed an audit of the Company for the financial year ended 30 June 2015 and that, during the audit process, he was aware that the total sales including GST amount was $416,695 ($383,106 + GST $33,589).  Consistent with immigration policy, GST should not be counted when arriving at a turnover figure: only the amount that has been received and is lawfully receivable by the enterprise on its own account is considered to be revenue.  Mr Tsang concludes that, hence, the net turnover of the Company in the year ended 30 June 2015 was $383,106.  He notes Mr Jin deposited part of the money ($262,453) into the bank and used cash of $154,042 to directly purchase goods and pay expenses without depositing the money to the bank.  Mr Tsang observes that it is very common practice that small cash business owners use the sales money (cash) to purchase goods directly before banking.

3. Based on the pattern of confirmed orders for tobacco products in the period 1 July 2014 to 30 June 2015, the Tribunal accepts it is likely that 5 - 6 orders would have been placed in the month of October 2014. For the reasons outlined above, the Tribunal considers the cash purchases of tobacco products would have actually been higher than that suggested by the representative: however, it accepts the representative’s figure for the purposes of assessing whether Mr Jin meets the requirements of cl.890.213 of Schedule 2 to the Regulations.

4. The Tribunal also accepts, as did the delegate, that some goods other than cigarettes may have been purchased on an urgent basis using cash. No evidence of any such purchases has been provided to the Tribunal. For the purposes of assessing whether Mr Jin meets cl.890.213 of Schedule 2 to the Regulations, it has not been necessary for the Tribunal to consider the nature of such additional cash purchases of which the Tribunal has no evidence.

5. Having regard to evidence provided, the Tribunal accepts that Mr Jin deposited $262,453 into the Company’s bank account and, as set out in the Table above at para [29], used cash of at least $114,905.05 to purchase tobacco products in the period 1 July 2014 – 30 June 2015.  The Tribunal also accepts, for the reasons outlined above at para [31], that it highly likely tobacco purchases paid for by way of cash were at least another $15,000 higher in the month of October 2014: this would see cash expenses increase to approximately $132,000 for the 12 month period 1 July 2014 – 30 June 2015: however, as noted above, the Tribunal does not have verifiable evidence of all purchases for October 2014.  In the circumstances, the Tribunal accepts that, based on evidence provided, the turnover of the Company in the 12 months to 30 June 2015 was bank deposits of $262,453 and cash of $114,905.05, that is, a total of $377,358.  Accordingly, the Tribunal accepts that the Company’s turnover in the 12 months to 30 June 2015 was more than $300,000. 

   Conclusion

6. In light of the above, the Tribunal finds that cl.890.213 of Schedule 2 of the Regulations is met by Mr Jin. Given this finding, the appropriate course is to remit the application to the Department to consider remaining criteria for grant of the visa.

   DECISION

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

   ·

   cl. 890.213 of Schedule 2 of the Regulations.

   
   
   

   Katie Malyon

   
   Member
   

%20-%20Attachment%202.pdf