Levy, Yehuda (Migration)

Levy, Yehuda (Migration) [2017] AATA 548 (19 April 2017)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT:  Levy, Yehuda
CASE NUMBER:  1603458
DIBP REFERENCE(S):  BCC2015/3769787
MEMBER:Miriam Holmes
DATE:19 April 2017
PLACE OF DECISION:  Melbourne
DECISION:The Tribunal affirms the decision not to approve the applicant as a standard business sponsor.
Statement made on 19 April 2017 at 2:51pm
CATCHWORDS
Migration – Standard business sponsor – Training benchmarks – Kosher food restaurant business – Training benchmark B – Training provided by Kosher Australia – Monthly membership accreditation fee – No clear training program – Not an accredited or registered education provider – Component of fee attributable to training unclear – Discrepancies in financial statements

LEGISLATION
Migration Act 1958, s 140E
Migration Regulations 1994, Schedule 2, r 2.59(d), r 2.60S, r 2.61, IMMI 13/030

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Immigration on 25 February 2016 not to approve the applicant as a standard business sponsor.
The applicant applied for approval as a standard business sponsor under s.140E of the Migration Act 1958 (the Act) and r.2.61 of the Regulations on 9 December 2015. The delegate decided not to approve the application on the basis that the applicant did not satisfy r.2.59(d) of the Migration Regulations 1994 (the Regulations) because the delegate was not satisfied that the applicant met the training benchmarks.
The applicant appeared before the Tribunal on 28 March 2017 to give evidence and present arguments. The Tribunal deferred making a decision until after 12 April 2017 for the applicant to provide additional information.
The applicant was represented in relation to the review by its registered migration agent, Mr Hammond.
For the following reasons, the Tribunal has decided to affirm the decision under review not to approve the applicant as a standard business sponsor.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the applicant meets the requirements for approval of as a standard business sponsor in accordance with the criteria in r.2.59 and the additional criteria in r.2.60S, which must be satisfied regardless of when the application for approval was made. For the application to be approved, all the requirements must be met: s.140E(1).
For the reasons set out below the Tribunal is not satisfied that the applicant meets the requirements in r.2.59(d).
Lawfully operating business
Regulation 2.59(c) requires that the applicant is lawfully operating a business either in or outside Australia.
Mr Levy is a sole proprietor. In 2009 he commenced operating a take away establishment which had a small seating area. In late 2015, approximately 18 months ago, Mr Levy relocated his business to a bigger premise and commenced operating at the larger site. The business is a kosher food restaurant business, which sells primarily kosher pizza but also kosher dairy products. The business operates 6 days per week. The operating hours are 12 – 9.30pm on Sunday to Thursday and Saturday night. The business currently operates with 4 staff and Mr Levy. There are 2 full time kitchen staff and 1 full time front of house staff and a part time person who assists both in the kitchen and front of house. There have been four staff and Mr Levy for approximately 18 months, when he moved the business to the new premises. Mr Levy has applied for the approval for a position for the nominated occupation of café or restaurant manager. The business is accredited by Kosher Australia Pty Ltd.
The business is registered for GST purposes. Mr Levy also provided to the Tribunal recent lodged BAS statements showing sales of $94,571 in the September 2016 quarter and $98,743 in the December 2016 quarter. The applicant also provided financial statements for 2016 financial year. Mr Levy stated that the financial statements are true and correct. The 2016 financial statements show annual sales for 2016 at $258,500, being a substantial increase in sales from the 2015 financial year of $176,170.
The Tribunal is satisfied that the applicant is lawfully operating a business in Australia and the requirement in r.2.59(c) is met.
Training benchmarks
Regulations 2.59(d) and (e) contain alternative criteria relating to training requirements an applicant must satisfy if the applicant is lawfully operating a business in Australia depending on how long the applicant has been trading.
The Tribunal is satisfied that the applicant has traded in Australia for 12 months or more, and therefore the applicant must meet the benchmarks for the training of Australian citizens and Australian permanent residents specified in a written instrument: r.2.59(d). The relevant instrument is IMMI 13/030.
The relevant instrument sets out two alternative training benchmarks, training benchmark A and training benchmark B. The instrument sates as follows:
The business is required to show that the training that has been, and continues to be, provided to employees who are Australian citizens and Australian permanent residents is related to the purpose of the business.
The training benchmarks for an established business are:
A) Recent expenditure, by the business, to the equivalent of at least 2% of the payroll of
the business, in payments allocated to an industry training fund that operates in the same
industry as the business.
OR
B) Recent expenditure, by the business, to the equivalent of at least 1% of the payroll of the business, in the provision of training to employees of the business.
There is no evidence that Training Benchmark A applies and therefore the Tribunal is not satisfied that the applicant meets Training Benchmark A.
In this case, the applicant is seeking to meet training benchmark B.
At the hearing, the Tribunal discussed the applicant’s recent payroll. The Tribunal noted the purpose of this requirement is for the sponsoring business to show that the training that has been, and continues to be, provided to employees who are Australian citizens and Australian permanent residents is related to the purpose of the business. Consequently, the Tribunal did not assess the payroll and training expenditure as at the date of the sponsorship application, but considered a more recent period.
The representative indicated that the Tribunal should rely on the payroll as set out in the 2015/2016 financial statements. The Tribunal notes that in the 2016 financial statement that the 2016 annual payroll was $50,016 including salaries of $44,108 and superannuation of $5,908. The Tribunal finds that 1% of $50,016 is $50.01.
The Tribunal has some reservations about the the annual salary amount listed in the 2015/2016 financial statement noting that it is a very low amount for three full time staff and a part time staff member (even for part of the period). This amount was not corroborated by any other documents such as bank records, PAYG statements or lodged BAS statements. The Tribunal did consider the BAS statements lodged for 2015 financial year; however the wages disclosed only amounted in total to $28,019, not including superannuation and was substantially less than the amount listed for the 2016 financial year.
The Tribunal also notes that there has been an increase in the recent salary payments as reflected in the BAS statements for the 2017 financial year, indicating that wages of $47,406 had been paid between July 2016 and December 2016. If this amount was annualised it would be equivalent to $94,812 (not including superannuation) in the 2017 financial year. The Tribunal considered that the estimated annual payroll for 2017 is $94,812 (not including superannuation) or more and 1% of $94,812 is $94.81.
The Tribunal discussed with the applicant the status of the employees employed by the business. In response the applicant gave evidence that the full time staff were Australian citizens or permanent residents. The applicant was uncertain of the status of the part time employee.
Mr Levy gave evidence that the training for staff is provided by Kosher Australia. Kosher Australia is the authority in the Jewish community. They have certified the business. Mr Levy stated that he pays a monthly fee to Kosher Australia and this monthly fee was $375 in 2015 and in 2016 financial year was $412.50 per month ($4950 per annum). Mr Levy stated this monthly fee was a membership fee and included accreditation, training, quality assurance checks by Kosher Australia Pty Ltd. He also received a newsletter from Kosher Australia Pty Ltd. He stated that the training was to ensure the staff adhered to the Jewish kosher requirements regarding the preparation, cooking and serving of food. For example staff were taught about washing leaves, for example lettuce leaves and removing bugs, who can turn on the oven, who can light the fire, how to prepare the dough. There are strict rules that need to be followed to ensure the food was kosher. Mr Levy stated that it was a niche market the business operated in the Jewish community.
Mr Levy stated that Kosher Australia visits the premises quite often and that Mr Levy also undertakes training. He said on some days Kosher Australia will attend the business premises three times per day and at other times they will come once every 2 days. He stated that they attended to ensure the food met the kosher requirements. The Tribunal queried if there had many changes in the staffing at the business and Mr Levy replied that the part time position has had a few different persons. Mr Levy stated that when a new person starts in the business the kosher people train the person. Mr Levy also explained that every time they introduce a new menu item then it needs to be checked by Kosher Australia and they need to advise on the kosher aspects of the preparation and cooking of the new menu item.
At the hearing, the Tribunal raised its concern that the monthly fee to Kosher Australia could be attributable to training, as it appeared this fee included fees for other matters such as accreditation and quality assurance checking. Mr Levy responded that Kosher Australia Pty Ltd do train them. He also commented that they do not just provide food at the business premises but do provide food at festivals and do a lot of functions outside the shop. Mr Levy stated that there were three persons who worked for Kosher Australia that did attend the premises and they go to all the kosher shops to teach the proper kosher methods to be followed.
The applicant provided during the course of the sponsorship application process and the review process two letters dated 11 January 2016 and 3 March 2017 from Kosher Australia. These letters state that the business, now known as Shemesh Pizza has been trading under their supervision and accreditation since 17 June 2009 and this has continued through 2014, 2015, 2016 and is ongoing. They note that that in order to maintain accreditation with Kosher Australia the business employees must have onsite ongoing training in preparation and cooking of kosher food. They notes that training includes; checking of vegetables, fruit and herbs for insect infestation; checking eggs for blood spots; verifying kosher cheese and fish deliveries arriving with correct kosher seals; separation or challah from bread production and general kosher requirements.
The Tribunal asked the applicant about how he would describe the Kosher Australia training under the legislative instrument – was it on the job training or some other form of training. Mr Levy responded that it was to teach the staff how to do things in accordance with Jewish principles to ensure the food is kosher. The representative submitted that the Kosher Australia training was training by an external provider. The Tribunal queried whether Kosher Australia had any training accreditation and the representative responded that accreditation was not required and that it was not a requirement that the external provider was a registered training organisation or accredited under the AQF system.
The Tribunal also considered whether the fees paid to Kosher Australia could be assessed as expenditure for training of employees of the business.
The Tribunal has described above the training that Kosher Australia states that it provides in the letters dated 11 January 2016 and 3 March 2017. The letters refer to the business being accredited by Kosher Australia and note that without the training arrangement the business would not be able to trade as a kosher outlet under their supervision. The letters also set out the commercial aspects of the Kosher trade, noting that according to a survey 48% of all Jews are either strictly kosher or will select kosher if given the option and Kosher caterers and restaurants prepare upwards of 500,000 meals annually.
The Tribunal had regard to the applicant’s evidence, noted above, that the fees paid to Kosher Australia was a membership fee and included accreditation, training, quality assurance checks by Kosher Australia Pty Ltd. He also received a newsletter from Kosher Australia Pty Ltd.
The Tribunal notes that the sponsorship application listed training expenses as $1000. In contrast the 2015 financial reports listed training costs at $5,018. Mr Levy could not explain what the $1000 figure in the sponsorship application form represented. In relation to the $5018 figure Mr Levy stated that sometimes he pays the fees yearly or makes partial payments and he is not consistent in his payments to Kosher Australia. He said Kosher Australia will give him 30 or 60 days to pay. The Tribunal also referred to the 2016 financial statement which listed staff training at $44.43. Mr Levy stated that his accountant put the financial statement together and he does not know how this figure was determined. He stated it may be a format issue with the financial statements. He said the figure should be $375 plus GST. He does not know where the 2016 training amount came from. It is possibly because he has not paid Kosher Australia on time or consistently. After the hearing, the Tribunal received a letter dated 6 April 2017 from JMP Accountants stating that a bookkeeping error had been identified by Mr Levy and the amount of $5,536.10 should have been allocated to Staff Training (as was done in 2015) rather than listed as the amount for permits and licences. It is unclear to the Tribunal what training was undertaken that incurred costs of $5,536.10 in 2016 financial year, noting that Kosher Australia in its correspondence stated that it charged $4950 for the 2016 financial year. Mr Levy did not describe to the Tribunal that any other training had been undertaken in the 2016 financial year.
The Tribunal notes that the Department policy set out in PAM3 states that fees paid for membership of professional associations are generally not acceptable, however if the evidence clearly shows that a specific percentage of the membership fee entitles the member to attend professional development seminars conducted by the organisation, that percentage of the fee (only) may be counted towards training benchmark B. The Tribunal raised this at the hearing and the applicant was given an opportunity to address this in submissions in writing to the Tribunal.
Mr Hammond submitted that the applicant has spent more than 1% on training. That the quality assurance component can be considered in part to be training.
The Tribunal deferred making a decision until 12 April 2017 for the applicant to provide further information and submissions. The Tribunal received a letter dated 6 April 2017 from the accounting firm and no other letters.
The Tribunal is not satisfied on the evidence presented that the applicant meets the requirements in Training Benchmark B. The Tribunal finds that the applicant pays a monthly fee to Kosher Australia. This monthly fee encompasses a membership accreditation fee to be paid to Kosher Australia so the business can be accredited by Kosher Australia and includes other benefits related to aspects of the accreditation including a newsletter and quality assurance checking. The applicant and Kosher Australia state that it also encompasses fees for the training of employees in the accredited business. The Tribunal is not satisfied that the expenditure in paying accreditation related fees to Kosher Australia constitutes expenditure in the provision of training to employees of the business as envisaged in the relevant instrument. The relevant instrument describes the type of training and the Tribunal is not satisfied that the “training” by Kosher Australia falls within the types of training expenditure that can be considered in meeting Benchmark B. There is no clear training program, Kosher Australia is not an accredited or registered education provider, there is no training plan with training or education outcomes, there is no regular training schedule, there is no particular course ( for example a Certificate II or other AQF course) with any registration as a course within the education framework or course description. Further, the Tribunal cannot ascertain from the information provided whether there is any particular component of the fee that is attributed to training. The visits by the persons from Kosher Australia as described by the applicant appeared to be more in the nature of quality assurance checks to protect the accreditation by Kosher Australia than a training program. The Tribunal does not consider the visits to the premises by Kosher Australia constitute on the job training as described in the relevant instrument. The Tribunal considers the fee paid to Kosher Australia was in the nature of an accreditation fee to maintain the accreditation with Kosher Australia for commercial purposes for the business to operate, not expenditure for training.
Furthermore, the Tribunal has some reservations about the amount attributed to staff training in the financial records given the discrepancy between the amounts in the Kosher Australia letters and the amounts set out in the 2015 and 2016 financial statements and the amount of $1000 listed in the sponsorship application and the late explanation of a bookkeeping error identified by the applicant. Therefore the Tribunal was not satisfied on the information provided of the amount of expenditure by the applicant on training.
Therefore, the Tribunal is not satisfied that the applicant meets the requirements of the training benchmarks in IMMI 13/030. This means the Tribunal is not satisfied that the Tribunal is not satisfied that the applicant meets the benchmarks for the training of Australian citizens and Australian permanent residents specified in an instrument in writing for the purposes of r.2.59(d).
As the applicant is required to meet r.2.59(d) and given the above findings, the requirements in r.2.59(d) are not met.
For the reasons given above, the Tribunal is not satisfied that the applicant meets the applicable criteria prescribed in the Regulations to be approved as a standard business sponsor. Accordingly, the Tribunal must affirm the decision under review.
DECISION
The Tribunal affirms the decision not to approve the applicant as a standard business sponsor.
Miriam Holmes
Senior Member

ATTACHMENT - Extracts from the Migration Regulations 1994
2.59    Criteria for approval as a standard business sponsor
For subsection 140E (1) of the Act, the criterion that must be satisfied for the Minister to approve an application by a person (the applicant) for approval as a standard business sponsor is that the Minister is satisfied that:
(a)the applicant has applied for approval as a standard business sponsor in accordance with the process set out in regulation 2.61; and
(b)the applicant is not a standard business sponsor; and
(c)the applicant is lawfully operating a business (whether in or outside Australia); and
(d)if the applicant is lawfully operating a business in Australia, and has traded in Australia for 12 months or more — the applicant meets the benchmarks for the training of Australian citizens and Australian permanent residents specified in an instrument in writing made for this paragraph; and
(e)if the applicant is lawfully operating a business in Australia, and has traded in Australia for less than 12 months — the applicant has an auditable plan to meet the benchmarks specified in the instrument, in writing, made for paragraph (d); and
(f)if the applicant is lawfully operating a business in Australia:
(i) the applicant has attested, in writing, that the applicant has a strong record of, or a demonstrated commitment to, employing local labour; and
(ii) the applicant has declared, in writing, that the applicant will not engage in discriminatory recruitment practices; and
(g)either:
(i)     there is no adverse information known to Immigration about the applicant or a person associated with the applicant; or
(ii)    it is reasonable to disregard any adverse information known to Immigration about the applicant or a person associated with the applicant; and.
(h)if the applicant is lawfully operating a business outside Australia and does not lawfully operate a business in Australia – the applicant is seeking to be approved as a standard business sponsor in relation to a holder of, or an applicant or proposed applicant (the visa applicant) for a [Subclass 457 visa], and the applicant intends for the visa holder or visa applicant to:
(i)     establish, or assist in establishing, on behalf of the applicant, a business operation in Australia with overseas connections; or
(ii)    fulfil, or assist in fulfilling, a contractual obligation of the applicant.
(i)the applicant has provided to the Minister the number of persons who the applicant proposes to nominate during the period of the applicant’s approval as a standard business sponsor, and:
(i)     the proposed number is reasonable, having regard to the information provided to the Minister; or
(ii)    if the Minister proposes another number of persons as part of considering the application — the applicant has agreed, in writing, to nominate no more than the other number of persons during the period of the applicant’s approval as a standard business sponsor; and
(j)if the applicant has previously been a standard business sponsor:
(i)     the applicant:
(A)fulfilled any commitments the applicant made relating to meeting the applicant’s training requirements during the period of the applicant’s most recent approval as a standard business sponsor; and
(B)complied with the applicable obligations under Division 2.19 relating to the applicant’s training requirements during the period of the applicant’s most recent approval as a standard business sponsor; or
(ii)    it is reasonable to disregard subparagraph (i).
[Note …]
2.60S Additional criteria for all classes of sponsor — transfer, recovery and payment of costs
(1)For subsection 140E(1) of the Act, the criteria in this regulation are in addition to the criteria in regulations 2.59 to 2.60M.
(2)The criteria that must be satisfied for the Minister to approve an application by a person (the applicant) for approval as a sponsor mentioned in any of regulations 2.59 to 2.60M include a criterion that the Minister is satisfied that:
(a)the applicant has not taken any action, and has not sought to take any action, that would result in the transfer to another person of some or all of the costs, including migration agent costs, associated with the applicant becoming an approved sponsor; and
(b)the applicant has not taken any action, and has not sought to take any action, that would result in another person paying to a person some or all of the costs, including migration agent costs, associated with the applicant becoming an approved sponsor; and
(c)the applicant has not taken any action, and has not sought to take any action, that would result in the transfer to another person of some or all of the costs, including migration agent costs, that relate specifically to the recruitment of a non-citizen for the purposes of a nomination under subsection 140GB(1) of the Act; and
(d)the applicant has not taken any action, and has not sought to take any action, that would result in another person paying to a person some or all of the costs, including migration agent costs, that relate specifically to the recruitment of a non-citizen for the purposes of a nomination under subsection 140GB(1) of the Act; and
(e)…
(f)....
(3)The criteria that must be satisfied for the Minister to approve an application by a person (the applicant) for approval as a sponsor mentioned in any of regulations 2.59 to 2.60M include a criterion that the Minister is satisfied that:
(a)the applicant has not recovered from another person some or all of the costs, including migration agent costs:
(i)     associated with the person becoming an approved sponsor; or
(ii)    that relate specifically to the recruitment of a non-citizen for the purposes of a nomination under subsection 140GB(1) of the Act; and
(b)the applicant has not sought to recover from another person some or all of the costs, including migration agent costs:
(i)     associated with the person becoming an approved sponsor; or
(ii)    that relate specifically to the recruitment of a non-citizen for the purposes of a nomination under subsection 140GB(1) of the Act; and
(c)…
(d)…
(4)However, the Minister may disregard a criterion referred to in subregulation (2) or (3) if the Minister considers it reasonable to do so.

[2017] AATA 548

19 April 2017

Key Legal Topics

Areas of Law

Immigration

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction

Procedural Fairness