Karla Beate Johnson (Migration)

[2021] AATA 1896

Karla Beate Johnson (Migration) [2021] AATA 1896 (4 June 2021)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Karla Beate Johnson

CASE NUMBER:  1824454

HOME AFFAIRS REFERENCE(S):          BCC2016/4349227

MEMBER:Mark Bishop

DATE:4 June 2021

PLACE OF DECISION:  Melbourne

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

Statement made on 04 June 2021 at 11:29am

CATCHWORDS
MIGRATION – application for approval of nomination of position – direct entry stream – financial capacity to pay full-time salary for 2 years – taxation losses for last two financial years – negotiations with ATO to reduce liabilities – other income source – decision under review affirmed

LEGISLATION
Migration Regulations 1994 (Cth), r 5.19(4)(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 Home Affairs on 13 August 2018 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 for approval on 23 December 2016. 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 Direct Entry nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(4)(d)(i) of the Regulations because on the basis of the evidence currently before the delegate, the business had not shown financial capacity to be able to pay the full-time salary for the nominated position for at least two years. Therefore, the business had not demonstrated that the appointment will provide the employee with full-time employment for at least two years.

5. The applicant appeared before the Tribunal on 4 June 2021 to give evidence and present arguments. This review application was heard at the same time as related case number 1829188. The nominator in the review application appeared before the Tribunal. The nominee in related case number 1829188 appeared before the Tribunal at the same time. During the hearing the Tribunal explained to the nominee that the success or otherwise of his application was dependant upon the success or otherwise of the nominator application. The nominee and MA advised they understood that position.

6. The applicant was represented in relation to the review by its registered migration agent.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

8. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Direct Entry nomination stream set out in r.5.19(4), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

   Term of employment of the visa holder: r.5.19(4)(d)

9. Regulation 5.19(4)(d) requires the nominee to be employed in the nominated position for at least 2 years full time, and the terms and conditions of that employment do not expressly exclude the possibility of an extension. 

10. The delegate made the following findings:

    ·I find that the evidence provided does not demonstrate that the nominee will be employed on a full-time basis in the position for at least two years.

    ·The nominating business is registered under ABN 25 219 738 730. The business has submitted an ABN Lookup search extract for ABN 25 219 738 730 indicating the nominator is an Individual/Sole Trader with an ‘Active’ status from 11 May 2000 and registration for GST from 1 January 2003. On the nomination application, the nominator indicates that the business was established or commenced trading in Australia on 1 January 2003 and employs one Australian employee and one foreign employee.

    ·The business has submitted an individual tax return in the name of Karla Beate Johnson for the financial year ended 30 June 2014 indicating business income of $139,220.00 and expenses totalling $139,791.00 leaving a loss of $571.00. Expenditure includes salary and wages of $50,019.00.

    ·The business has submitted an individual tax return in the name of Karla Beate Johnson for the financial year ended 30 June 2015 indicating business income of $160,176.00 and

    ·The business has submitted an individual tax return in the name of Karla Beate Johnson

    ·for the financial year ended 30 June 2015 indicating business income of $160,176.00 and expenses totalling $156,626.00 leaving a net profit before tax of $3,550.00. Expenditure includes salary and wages of $62,551.00.

    ·The business has submitted four quarterly Business Activity Statements (BAS) for the financial year ended 30 June 2016 showing total sales for the year of $213,501.00, indicating some growth in sales for the 2016 year compared to the previous 2015 financial year. The business has submitted four quarterly BAS for the financial year ended 30 June 2017 showing total sales for the year of $162,517.00, indicating reduced sales for the 2017 year compared to the previous 2016 financial year. Based on sales figures I find the information in the BAS does not indicate a steady growth in sales by the business in the four years to 30 June 2017.

    ·Whilst I have considered the BAS in my assessment of this regulation, since the BAS do not factor in other expenses the business will have incurred as operating costs I find the sales figures alone are not indicative of the financial position of the business and hence the BAS do not demonstrate financial viability of the business for the following two years.

    ·The business has not provided individual tax returns including income and expenses for the 2016 and 2017 years, or the BAS for the quarters to date.

    ·The business has submitted an employment contract dated 10 November 2016 and signed by the Owner/Director, Karla Johnson and the nominee, Henrique de Siqueira on 1November 2016 which states that the full-time position of Hairdresser shall commence upon approval of the nominee’s subclass 187 visa and shall continue for a period of at least two years from the date of such approval.

    ·The business has submitted a letter dated 18 January 2018 and signed by the Owner/Director, Karla Johnson indicating that the business has "enjoyed a vast improvement" since employing the nominee. The letter does not provide the date on which the nominee commenced employment with the business and does not provide specific information demonstrating a vast improvement in the financial status of the business. The business has also provided an appointment schedule from 1 February to 9 May 2018 indicating that the nominee was employed by the business at 1 February 2018, however this information is inconclusive.

    ·The information in the letter of 18 January 2018 and in the appointment schedule, does not support the financial viability of the business for the next two years and I give them little weight.

    ·In the nomination application the business has advised that the employee will be employed on a full-time basis in the nominated position as a Hairdresser with a base salary of $45,527.00 per annum.

    ·In consideration the financial information provided in the tax returns (to 30 June 2015) the BAS (to 30 June 2017), I find the business has not demonstrated that they are in a financial position sufficient to increase their wage expenditure by $45,527.00 per annum (plus superannuation) to ensure the obligations of this nomination can be met.

    ·Regulation 5.19(4)(d)(i) requires that the nominee will be employed on a full-time basis in the position for at least two years. On the basis of the evidence currently before me, the business has not shown financial capacity to be able to pay the full-time salary for the nominated position for at least two years.

    ·Therefore, the business has not demonstrated that the appointment will provide the employee with full-time employment for at least two years.

11. The nominator provided the following information to the Tribunal:

    ·Tax return for FY2019 showing a net income loss for the business of $18,355 inclusive of payment of wages of $59,280. This document showed carry forward losses as follows of $148,018 in the FY2009 until FY2017 with a net income or loss per return of $18589

    ·Tax return for FY2020 showing a net income loss for the business of $10659 plus interest charged by the ATO of $1769 giving a total income loss of $12428 inclusive of wages of $55673. This document showed carry forward losses of $166607 and a tax free pension of $24328

    ·Payroll slips in the name of the nominee in the period 2016 until 2021 showing payment of wages and superannuation

    ·BAS for 2019 until 2020 confirming turnover of $147052 for the FY2020

    ·A letter from McAullay Accountants dated 9 March 2021 that advised the business activity had resulted in taxation losses for the two prior financial years and the nominator had access to funds from personal non-business sources which are used to supplement any funding requirements to allow the business to continue operating.

    ·A signed employment contract setting out remuneration and superannuation payments dated 10 March 2021

    ·A written submission that addressed a request for information dated 25 February seeking detail concerning r.5.19(2) and (4). The Tribunal has reviewed all this material. It is separately identified in Casemate.

12. The nominator did not provide audited returns for the employing entity. The nominator’s accountant advised the Tribunal in writing that “formal financial statements for the business are not prepared…” The accountant advised the Tribunal in writing “we have been provided with information and data by Ms Johnson to be able to prepare this letter”

13. In evidence to the Tribunal the nominator and nominee advised the nominee came to Australia from Brazil approximately 7 years ago and had been employed as a hairdresser in the nominators’ salon for almost 5 years. He was currently working 4 days per week and paid well above the award rate of $23 per hour at a figure of $30 per hour. He was likely to work 5 days per week as the business became more stable. The nominator agreed the financial statements showed a lengthy period of poor performance and poor business returns. The nominator explained this did not matter greatly to her as she was in receipt of a war widow’s pension and this pension covered nearly all of her living costs and her consumption tastes were modest. The nominator agreed the carry forward losses forward significant and she advised she was currently in negotiations with the ATO about a scheme to reduce outstanding liabilities.

14. Whilst the Tribunal accepts the nominee makes a significant contribution to the hair salon it is not contested that the hair salon has made large losses and carries forward large debts. It is comforting that the nominator is in receipt of a government pension, but that income source is a separate matter to the income and profitability of the business enterprise. Absent that income of the nominator the hair salon based upon current financials does not make a net profit. Losses in previous years have been significant.

15. The Tribunal finds that the evidence provided does not demonstrate that the nominee will be employed on a full-time basis in the position for at least two years.

16. Accordingly, the requirement in r.5.19(4)(d) is not met.

    CONCLUDING PARAGRAPHS

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

    DECISION

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

    Mark Bishop
    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.

    …

    Direct Entry nomination

    (4)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 need for the nominator to employ a paid employee to work in the position under the nominator’s direct control; and

    (b)the nominator:

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

    (ii)      directly operates the business; and

    (c)for a nominator whose business activities include activities relating to the hiring of labour to other unrelated businesses — the position is within the business activities of the nominator and not for hire to other unrelated businesses; and

    (d)both of the following apply:

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

    (ii)      the terms and conditions of the employee’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)       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

    (g)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; and

    (h)either:

    (i)       both of the following apply:

    (A)the tasks to be performed in the position will be performed in Australia and correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

    (AAA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;

    (B)either:

    (I)the nominator’s business has operated for at least 12 months, and the nominator meets the requirements for the training of Australian citizens and Australian permanent residents that are specified by the Minister in an instrument in writing for this sub-sub-subparagraph; or

    (II)the nominator’s business has operated for less than 12 months, and the nominator has an auditable plan for meeting the requirements specified in the instrument mentioned in sub-sub-subparagraph (I); or

    (ii)      all of the following apply:

    (A)the position is located in regional Australia;

    (B)there is a genuine need for the nominator to employ a paid employee to work in the position under the nominator’s direct control;

    (C)the position cannot be filled by an Australian citizen or an Australian permanent resident who is living in the same local area as that place;

    (D)the tasks to be performed in the position correspond to the tasks of an occupation specified by the Minister in an instrument in writing for this sub-subparagraph;

    (DA)the occupation is applicable to the person identified under subparagraph (a)(ii) in accordance with the specification of the occupation;

    (E)the business operated by the nominator is located at that place;

    (F)a body that is:

    (I)specified by the Minister in an instrument in writing for this sub-subparagraph; and

    (II)located in the same State or Territory as the location of the position;

    has advised the Minister about the matters mentioned in paragraph (e) and sub-subparagraphs (B) and (C).