Li (Migration)

Li (Migration) [2022] AATA 1770 (20 June 2022)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:
Ms Ming Li

Ms Wangjun Zhou
REPRESENTATIVE:  Ms Jennifer Fong (MARN: 0955711)
CASE NUMBER:  1722809
HOME AFFAIRS REFERENCE(S): BCC2016/2276454 BCC2017/3824663
MEMBER:Deputy President J.L Redfern PSM
DATE:20 June 2022
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 892 (State/Territory Sponsored Business Owner) visa:
·cls 892.211, 892.212(a) and (b), 892.213, 892.214, 892.215(a), 892.221 and 892.222 of Schedule 2 to the Regulations.

Statement made on 20/06/2022 at 1:59pm
CATCHWORDS:
MIGRATION – State/Territory sponsored business owner (subclass 892) – annual turnover –– whether money received held as agent for principal and therefore not revenue – whether business still operating at time of decision
LEGISLATION
Migration Regulations 1994, regs 892.21, 892.212(a), 892.212(b), 892.213, 892.214, 892.215(a), 892.221, 892.222
SECONDARY MATERIALS
Procedural Instructions Sch 2 Visa – State Territory Sponsored Business Owner
STATEMENT OF DECISION AND REASONS
BACKGROUND

This is an application for review of a decision made by a delegate of the Minister for Immigration and Border Protection on 14 September 2017 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s 65 of the Migration Act 1958 (Cth) (the Act).
The applicants applied for the visas on 6 July 2016. The first named applicant, Ms Ming Li, is the primary applicant for the visa and the parent of the second named applicant, Ms Wangjun Zhou, who is claimed to be a member of her family unit.
At the time of application, Class DF contained four subclasses: Subclass 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Sponsored Business Owner) and Subclass 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Sponsored Business Owner) visas, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.
To meet the criteria for the Subclass 892 ‘business owner’ visa an applicant must have had, and continue to have, an ownership interest in one or more actively operating main businesses in Australia for at least two years before the application is made. Ms Li nominated one main business, being Blue Sky Study Tour Pty Ltd (Blue Sky), which operates tour packages in Australia directed towards Chinese tourists and focusing on study tours. The delegate refused to grant the visas on the basis that he was not satisfied Ms Li met the requirements of cl 892.213 of Schedule 2 to the Regulations. Relevantly, the delegate was not satisfied that Blue Sky had an annual turnover of AUD200,000 in the 12 months immediately before the application was made because he was of the opinion that Blue Sky acted as an agent by providing services on behalf of independent third parties.
The applicants travelled to China in November 2019 and, because of travel restrictions arising from the covid-19 pandemic, were unable to return to Australia to participate in a hearing. The applicants requested a number of adjournments but on 3 May 2022 the hearing of the matter proceeded by MS Teams using the video and audio-conferencing platforms. Ms Li appeared through the MS Teams audio platform at her request because she was unable to enable the video conferencing facility, and her representative, the interpreter and a witness participated through the MS Teams video facility. A further witness also participated through the MS Teams audio platform.
The applicants were represented by registered migration agent, Ms Jennifer Fong. Detailed submissions were provided by Ms Fong both prior to and following the first hearing. The proceedings were adjourned to take evidence from the accountant for Blue Sky, Mr Peter Zhu, and one of its employees, Ms Yuexian Yu (Cindy Yu). The hearing resumed on 3 June 2022. The hearings were conducted with the assistance of an interpreter in the Mandarin and English languages. I was considerably assisted by Ms Fong providing paginated evidence and submissions directed to the issues in dispute prior to the hearing. This material was provided in accordance with the President’s Direction, COVID-19 Special Measures Practice Direction: Migration and Refugee Division,[1] which allowed the various witnesses giving evidence remotely to be questioned by reference to documents that could be clearly identified.
[1] Dated 27 April 2020
For the following reasons, I have decided that the matter should be remitted for reconsideration. In summary, I have come to a different view about the annual turnover of Blue Sky and, in particular, the nature of the income recorded in its accounts. In other words, I do not accept that the revenue generated comprised monies held on behalf of independent entities. I am also satisfied that the applicants meet other relevant criteria as specified in the decision.
LEGISLATIVE FRAMEWORK AND MATTERS IN DISPUTE
The Subclass 892 Business Skills (Residence) visa allows a non-citizen who has owned and managed a business for at least two years to stay in Australia indefinitely where the business owner is sponsored by a regional authority in the state or territory where the business is conducted and where the owner meets the other requirements set out in Part 892 of Schedule 2 to the Regulations, such as residency, assets ownership and business turnover requirements.
At the time of the application, the Department issued a Procedures Advice Manual 3 (PAM3) Sch 2 Visa – State Territory Sponsored Business Owner in relation to the Subclass 892 visa, which provides instructions to decision makers about how to assess the criteria for the visa. This procedures manual is useful because it provides clear guidance and commentary about how to assess the criteria set out in what is, on its face, a scheme with several specific technical requirements. This procedures manual has been updated from time to time, having been reissued on 1 July 2020 as a ‘procedural instruction’. This procedural instruction is relevant to this matter because the delegate relied on guidance in the version of the procedural instruction available to him at the time of assessment to form a view about whether Ms Li met the requirements for the visa.
The primary criteria for the visa must be satisfied by at least one member of the family unit, which in this case is Ms Li. The other applicant is a family member, and she must meet the secondary criteria which provides, among other things, that she is a member of the family unit of a person who satisfies the primary criteria. The requirements for when a person will be a ‘member of the family unit’ for the purposes of this visa is set out in cl 892.3 of the Regulations.
Part 892 sets out time of application criteria, relevantly in cl 892.21 of the Regulations, and criteria that must be satisfied at the time of the decision, in cl 892.22 of the Regulations. There are five criteria that need to be established at the time of the application, some of which must continue to be satisfied at the time of the decision. These criteria are set out in cl 892.221 of the Regulations. I have not considered the time of decision criteria set out in cls 892.223 and 892.224 in relation to public interest criteria regarding Ming Li and Wangjun Zhou. Clause 892.222, namely continuing sponsorship by a regional authority, is not in dispute as there is evidence of the authorisation and no evidence to the contrary.[2] I also note that the time of application criteria set out in cls 892.216, 892.216A and 892.217 do not apply because Ming Li was not the holder of a Skilled – Independent (Provisional) (Class UX) visa at the relevant time.
[2] In this case the Department of Economic Development, Jobs, Transport and Resources, Victoria, the authorisation being recorded in Form 949, valid for visa applications before 12 July 2016 (Refer Department file part 1).
In this case, the delegate found that Ms Li did not meet time of application criteria relating to the annual turnover of the main business nominated. The President’s Direction, Conducting Migration and Refugee Reviews, directs that in reviewing a decision, Tribunal members should generally restrict their review to the issues in respect of which the delegate for the Department made its adverse decision.[3] Given the time that has passed since the applicants lodged their application for a Subclass 892 visa, I considered it appropriate to consider both time of application and time of decision criteria in the event that I was satisfied Ms Li met the time of application criteria about annual turnover. Ms Li and her representative provided submissions and evidence addressing other criteria. I also note that while the delegate did not make findings in relation to the other requirements for the visa, it is apparent that these criteria were largely uncontentious. Ms Li provided extensive evidence to support her application. In addition, handwritten notes made by the delegate referring to the evidence, as recorded in the Department file, suggest that he was satisfied Ms Li had satisfied certain criteria.
[3] President’s Direction, Conducting Migration and Refugee Reviews, 1 August 2018, 8.2.
The relevant criteria in cl 892 are summarised below. I have identified those matters that are satisfied and those which are contentious and require determination.
The first requirement is that the applicant must have had an ownership interest in one or more actively operating main businesses in Australia for at least two years before the application is made (cl 892.211(1)). Each business must meet certain taxation requirements as set out in cl 892.211(2) of the Regulations, namely, the business must have an Australian Business Number (ABN) and all business activity statements required to be lodged for the two-year period must have been submitted to the Australian Taxation Office (the ATO) and must be included in the application.
I am satisfied Ms Li meets these criteria. The main business nominated by Ms Li is a study tourism business operated by Blue Sky. The business commenced on 9 August 2013. Ms Li owns 1100 of the 1101 ordinary issued shares in Blue Sky (Wangjun Zhou owns the remaining one share). The shares are fully paid and, while it is recorded in the most recent company searches that these shares are not beneficially held, I accept the explanation provided by Mr Peter Zhu that this is in error, which is also evidenced by original incorporation documents, copies of which were subsequently provided. Ms Li and Wangjun Zhou are, and have been since the incorporation, directors of Blue Sky. Ms Li is said to be the managing director of Blue Sky and the evidence provided to the Department and the Tribunal is consistent with this.
There is evidence that this business operated from a small office in La Trobe Street, Melbourne from at least January 2014. At the time of the application, Ms Li submitted business activity statements for the period 1 July 2014 to 30 June 2016. It appears that these statements were lodged with the ATO and there is no evidence to suggest otherwise. These business activity statements revealed that Blue Sky had generated sales in the period in the vicinity of $608,846. Ms Li also provided evidence that the business was operating under an Australian registered business name. She provided financial statements for the years ended 30 June 2015 and 30 June 2016. These financial statements record income of approximately $308,000 and $315,000 for the 2015 and 2016 financial years respectively. Blue Sky made a profit of $18,679 and $1,929 for 2015 and 2016. Ms Li also provided employment details for Blue Sky employees from January 2014, including longstanding employee, Ms Cindy Yu, who commenced working at Blue Sky in January 2014 and has been continuously employed since that time on a part-time basis.[4]
[4] Refer Employment Agreement dated 13 January 2014 between Blue Sky Study Tour Pty Ltd and Cindy Yu, record of file part 1 pp 180–192.
Clause 892.221(a) of the Regulations provides that an applicant must continue to satisfy the criteria in cl 892.211 of the Regulations at the time of decision. Accordingly, I must be satisfied the main business, being the tourism business operated by Blue Sky, is actively operating in Australia at the time of my decision. Given that this business relies on tourism from China into Australia, the question of whether Ms Li continues to meet this criterion was contentious and was the focus of further documentary and oral evidence at the resumed hearing. My findings in relation to this criterion are considered in detail later in these reasons.
The second requirement is set out in cl 892.212 of the Regulations and the criteria provides that the applicant must meet certain requirements relating to employment or their assets. This provision does not need to be met if the appropriate regional authority has determined that there are exceptional circumstances. Otherwise, at least two of the following three criteria must be met:
·Australian employment (cl 892.212(a)): in the 12 months ending immediately before the visa application was made, the main business(es) in Australia of the applicant, the applicant’s spouse or de facto partner, or the applicant and spouse or de facto partner together employed at least one full-time employee over that 12-month period (or employed a number of employees for a total number of hours equivalent to that which would have been worked by one full-time employee) who is not the applicant or a member of their family unit and who is an Australian citizen, Australian permanent resident or New Zealand passport holder;
·Business and personal assets (cl 892.212(b)): at the time of visa application and throughout the period of 12 months immediately before the time of application, the net value of the business and personal assets in Australia of the applicant, or the applicant’s spouse or de facto partner or their assets combined had a net value of at least AUD250,000. Further, these assets must have been lawfully acquired;
·Assets in main business (cl 892.212(c)): at the time of visa application and in the 12 months immediately before the time of application, the total value of the net assets in the main business(es) in Australia of the applicant, or the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together is at least AUD75,000. Further, these assets must have been lawfully acquired.
There is no evidence before the Tribunal that the appropriate regional authority has determined that there are exceptional circumstances in this case nor is there a submission to this effect. Accordingly, I must consider whether the substantive requirements of this criteria are met.
Ms Li claims to meet the criteria set out in cl 892.212(a) and (b) of Schedule 2 to the Regulations. I am satisfied Ms Li meets subclause (a), having regard to the evidence provided that Blue Sky employed one full-time employee being Ziyu Liu, and two part-time employees, being Du Ying and Cindy Yu, in the 12 months ending immediately prior to the application. These employees were Australian citizens. The evidence supporting this claim is contained in the Department file and was provided by Ms Li at the time of the application.[5] I am also satisfied that Ms Li meets subclause (b) because there is evidence that she had total net business and personal assets of at least $250,000 as at July 2016.[6]
[5] Submissions Jennifer Fong dated 22 April 2022, record of Department file 1 pp 142–289.
[6] Submissions Jennifer Fong dated 22 April 2022, record of Department file 1 pp 279–308 and notes of delegate summarising evidence provided at pp 3–4.
Clause 892.221(b) of Schedule 2 to the Regulations requires that an applicant must continue to meet cl 892.212(b) at the time of decision. The financial statements for Blue Sky for the financial year ended 30 June 2021 record net assets of $126,930, which takes into account current liabilities in the vicinity of approximately $85,000 for advance payments and rent payable in respect of tours scheduled but unable to proceed. The accounts also record loans from directors (being Ms Li and Ms Zhou) of $18,523. For the reasons later outlined, these current liabilities are also relevant to the question of whether the income recorded by Blue Sky in its financial statements for 2015 and 2016 can properly be characterised as revenue for the purposes of the annual turnover requirements for the visa. Ms Li provided details in relation to real property jointly owned by her and Wangjun Zhou (being properties owned in Bourke Street, Melbourne and Haig Street, Southbank) together with details of her share of the business assets for Blue Sky as set out in the draft balance sheet as of 30 April 2022. Based on this evidence, it is submitted that Ms Li’s business assets in Blue Sky total $157,607 and that Ms Li’s share in the real estate owned is at least valued at $234,723.[7] I accept these submissions and the evidence provided and I am therefore satisfied that Ms Li continues to meet the criterion in cl 892.212(b).
[7] Refer submissions, together with evidence attached, provided to the Tribunal by email dated 9 June 2022.
The third requirement is set out in cl 892.213 of Schedule 2 to the Regulations, which provides that an applicant must meet the requirements of subclauses (2) or (3). Subclause (2) provides that the main business or businesses must meet an annual turnover of at least AUD200,000 in the 12 months immediately before the application was lodged. If an applicant does not meet this, cl 892.213 of the Regulations will be satisfied if the applicant meets the criteria in cl 892.212 of the Regulations and the applicant resides and operates the main business in an area specified in an instrument in writing made by the Minister and the appropriate regional authority has determined there are exceptional circumstances. According to the procedural instruction, this alternate criterion was introduced to provide further flexibility for applicants who have not met the revenue requirement and have businesses in regional areas that are specified by legislative instrument. There is no evidence that the alternative criterion applies in this case.
The delegate was not satisfied Ms Li met this criterion. This issue was the subject of submissions and evidence at both hearings. My consideration and findings in relation to this matter are set out later in my reasons.
The fourth requirement set out in cl 892.214 of the Regulations provides that neither the applicant nor his or her spouse or de facto partner must have a history of involvement in business activities that are of a nature that is not generally acceptable in Australia. Clause 892.221(a) of the Regulations provides that the applicant must continue to meet the criterion in cl 892.214 at the time of decision. While it is difficult to establish a negative, this is said to be met because there is no evidence to the contrary. I accept this contention and find that Ms Li satisfied cl 892.214 of the Regulations at the relevant time and continues to satisfy this criterion at the time of this decision.
The fifth requirement is set out in cl 892.215 of the Regulations. This criterion relates to residence in the two years immediately prior to the visa application. It is contended that Ms Li meets this criterion as she was living in Australia as the holder of one of the visas referred to in paragraph 1104B of Schedule 1 to the Regulations, being a Subclass 163 visa, from at least 2012. This is not in dispute and as such I am satisfied that this requirement is met.

In summary, I am satisfied Ms Li meets the requirements set out in cls 892.211, 892.212(a) and (b), 892.214 and 892.215 of Schedule 2 to the Regulations. She is not required to meet cls 892.216, 892.216A or 892.217. The criterion in cl 892.221 of the Regulations must be satisfied at the time of the decision. Relevantly, cl 892.221 of the Regulations provides that the applicant must continue to satisfy cls 892.211 and 892.214 of Schedule 2 to the Regulations and, if cl 892.212(b) of Schedule 2 to the Regulations applies, Ms Li must continue to meet those requirements. I am satisfied that she meets and has continued to meet cls 892.212(b) and 892.214 as at the time of my decision. I am also satisfied that Ms Li meets cl 892.222 and as noted above, I have not assessed cls 892.223 and 892.224.
The difficulty in this case is that Ms Li has resided outside Australia since November 2019 and Blue Sky has been impacted by the covid-19 pandemic. While some information was provided about the current operations of Blue Sky prior to the first hearing, the question of whether Blue Sky was actively operating in Australia was not entirely clear from the available evidence.
A further issue that was unclear was whether Ms Zhou met the requirements for a secondary applicant. This was the subject of submissions at the resumed hearing.
ISSUES FOR DETERMINATION
Having regard to the evidence provided and submissions made by the applicant and my findings as outlined above, the issues in this case are:
a)Issue 1: Did Ms Ming Li meet cl 892.213(2) of Schedule 2 to the Regulations, namely did Blue Sky have an annual turnover of at least AUD200,000 in the 12 months before the application?
b)Issue 2: Does Ms Ming Li meet cl 892.221(a) of Schedule 2 to the Regulations? Relevantly, has the Blue Sky business continued to actively operate in Australia from the time of the application to the time of my decision and has Ms Li continued to have an ownership interest in the business?
c)Issue 3: Is Ms Wangjun Zhou a member of the family unit of Ms Ming Li for the purposes of cl 892.3 of Schedule 2 to the Regulations?
CONSIDERATION OF CLAIMS AND EVIDENCE
Issue 1: Did Blue Sky have an annual turnover of at least AUD200,000 in the 12 months before the application?
The critical issue for determination as to whether Ms Li met the requirements of cl 892.213 at the time of application is whether the turnover of Blue Sky was at least AUD200,000 in the 12 months prior to the application, namely from July 2015.
Ms Li provided financial statements for Blue Sky which showed income of $308,085 as of 30 June 2015. Expenses incurred, which included consultants’ fees, rent and expenses for tour accommodation, activity and class rental, were over $60,000. Total expenses, which comprised wages, superannuation and subcontractors’ fees, were $289,406 as of 30 June 2015. According to the financial statements, Blue Sky made a total profit of $18,679 for this financial year. Income for the financial year ended 30 June 2016 was $315,811. Expenses incurred, including consultants’ fees, rent and expenses for tour accommodation, transportation, activity and class rental were over $118,000. Total expenses, which comprised wages, superannuation and subcontractors’ fees, were $313,882 as of 30 June 2016. Blue Sky made a modest profit of $1,929 for this financial year. Ms Li also provided business activity statements for the 12 months prior to the application, which recorded sales for goods and services of just over $300,000.
Prima facie this material is cogent evidence that supports Ms Li’s contention that annual turnover for the Blue Sky business exceeded $200,000 in the 12 months prior to the application.
In a request for further information received by Ms Li on 11 August 2017, the delegate raised concerns about whether the income recorded as revenue was correctly characterised as turnover for the purposes of cl 892.213, stating as follows:
Based on the evidence available and your statement outlining the operations of Blue Sky Study Tour Pty Ltd, it is apparent that you provide goods and services on behalf of other independent entities. Whilst I acknowledge your business actively promotes opportunities such as study tours, winery tours, visa associated services etc., the legal title of those specific activities lie with the independent entity who provides the service (e.g. Do360, HIMA Group, Migration Partners etc.).
Therefore, I am of the opinion Blue Sky Study Tour Pty Ltd operates as an agent on behalf of other entities. In such cases, Policy states that only the amount of commission or service revenue (that is, as opposed to the sale value or invoice value) is counted towards the turnover of the business.
In response to this request for information, Ms Li provided a submission stating that Blue Sky did not provide goods and services on behalf of independent entities but had developed its own tour schedules, organised its own tour activities and incurred the costs for those tours. A letter was provided by Lyxus Partners, taxation, audit and superannuation specialists, dated 29 August 2017. According to the letter, signed by partner Mr Kevin Lui, the firm had completed a review of the revenue accounts for Blue Sky for the period 1 April 2014 to 31 March 2016. The review was said to be an ‘independent review’ because Lyxus Partners were not the accountants for Blue Sky. According to Kevin Lui, the income recorded as sales in the Blue Sky financial statements was justified because, based on his enquiries, Blue Sky’s operation involved direct consultation with clients, customer design of tours, arranging booking and providing premium services to Chinese tourists and students. Mr Lui further opined that from his analysis he was satisfied that all customers were dealing directly with Blue Sky, all contractors and suppliers, such as English teachers, coach companies and host families, were providing services as part of the Blue Sky tour operation and they received payment directly from Blue Sky.
Notwithstanding these representations from Ms Li and Mr Lui, the delegate found that the criteria in cl 892.213 had not been met. The delegate accepted that Blue Sky was a Melbourne-based tour operator but found that the services provided to Chinese tourists and students were provided through third-party service providers.
Relevantly, the delegate made the following findings:
Based on evidence presented, I am of the opinion that Blue Sky Study Tour Pty Ltd for the most part acts as an agent by providing services on behalf of other independent entities. This view has been formed after applying the advice outlined in the Department’s procedures advice manual.
The delegate then referred to the procedures advice manual guidance in relation to agents and legal title in its entirety. The delegate noted that the applicant was provided with an opportunity to comment on his preliminary findings and was asked to provide an updated set of financial statements which breaks down the business commission or service revenue from its gross sales. The delegate acknowledged the letter from Lyxus Partners but stated that he remained of the view that Blue Sky acted as an agent by providing services on behalf of other independent entities. He was therefore not satisfied that the turnover was at least AUD200,000 in the 12 months immediately before the application was made.
According to the current procedural instruction relating to business visas the following guidance is noted:
Revenue excludes amounts collected on behalf of third parties such as… amounts collected by an agent on behalf of a principal such as might be collected by… commission agents, travel agents…
It is further noted:
Agents provide goods and services on behalf of an independent entity. The goods/services remain the property of the principal entity and the agent normally receives a commission or fee for any sales or services provided.
…
If a business operates as a commission agent, service agent or export agent who is engaged in the provision of services instead of sale of goods to the public, only the amount of the service revenue (that is, as opposed to the sale value or invoice value) is to be counted towards the turnover of the business.
The procedural instruction provides useful guidance to decision makers about how to interpret and apply the law, but it does not on its own have any legally binding force and to the extent any procedural instruction is inconsistent with the law, this guidance should not be followed. In this case, the procedural instruction is consistent with the law and simply recognises that amounts received by an agent on behalf of a principal which are payable to a third party on the principal’s account should not be characterised as income or revenue for the purposes of cl 892.213. Whether an entity is an ‘agent’ will depend on the nature of the relationship between the parties and will often be governed by an agency agreement, although not all such relationships are express or formalised in writing.
Ms Li contends that Blue Sky does not act as an agent but rather as a principal. While Blue Sky enters into arrangements with agencies in China who promote the business to Chinese students and tourists, it receives a lump sum in payment to cover all costs of the study tours, with the exception of airfares. Blue Sky has direct liability to third-party suppliers, and this is evidenced by the homestay agreements with families who have provided accommodation to the students, the contracts between Blue Sky and the English teachers who have provided the classes and the contracts between Blue Sky and tour operators in Australia, who provide activities and accommodation. According to Ms Li and her accountant Mr Zhu, Blue Sky has direct liability for these expenses, which have been recorded in its financial statements as amounts paid or payable directly to third parties. Any tour income received is for the tour packages provided by Blue Sky and is thus properly characterised as income and therefore revenue. These amounts received by Blue Sky are not held on trust or paid to third parties as an agent for the trading partners in China or as an agent for the clients. Blue Sky does not act on the basis of a commission and in fact pays commission to agents in China for their services in promoting the Blue Sky business.
I accept this contention and do not agree with the delegate’s findings. Having regard to the documents and oral evidence provided by Ms Li, Cindy Yu and Mr Peter Zhu, I find that Blue Sky operates a tourism business focusing on clients from China and, in particular, students. It has operated this business since early 2014. Blue Sky sources clients from agents based in China. The financial information provided is to the effect that clients pay money to the agents for the tours and these monies comprised a lump sum representing payment to cover expenses for the tours, such as accommodation, internal transfers, food and study-related activities. According to evidence provided at the time of the application, it is evident that Blue Sky directly sourced the suppliers for these services and entered into binding arrangements with them through homestay agreements, contracts with teachers providing the educational component of the tours and lease agreements in respect of the premises from which the study tours were conducted. An example of a study tour agreement entered into by Blue Sky prior to the application is an agreement dated 18 January 2016 with Xinjiang Meiseng Consulting Services Pty Ltd (Xinjiang Meiseng), referred to as the ‘Agent’. Under this agreement Xinjiang Meiseng agreed, among other things, to recruit students for a study tour program to be provided by Blue Sky. Blue Sky agreed to provide appropriate accommodation, academic programs and teaching staff for the student tour group for a fee. This does not suggest that Blue Sky is acting as an agent for a third party or that monies are being paid to Blue Sky as an agent with Xinjiang Meiseng as principal. In fact, the reverse appears to be the case. The contract specifically provides that the quotation of $47,800 includes accommodation for the students, three meals a day, all transfers to and from the campus, an excursion and tour and delivery of an academic program involving qualified teachers. In my view, any money received by reason of such an arrangement is properly described as revenue.
This business model has continued, as evidenced by a contract entered into by Blue Sky on 5 August 2021 with a company called Decode Group Pty Ltd (Decode), whereby Blue Sky agreed to provide Decode with an academic program and accommodation for members or associates of Decode for a fee. The contract is in similar terms to the contract entered into with Xinjiang Meiseng in 2016 and includes a quotation for a study program, tour activities and proposed accommodation. It is clear from the terms of the contract that there were mutual obligations between the parties, and that this is not an agency agreement for the provision of services by Blue Sky. As already noted, the fact that Blue Sky has recorded in its 2021 financial statements current liabilities of approximately $85,000 to cover liabilities incurred for tours which are yet to be scheduled also supports the contention that Blue Sky is not operating as an agent but rather on its own account in relation to the operation of its tourism business in Australia.
I am therefore satisfied that the money received by Blue Sky in the 12 months prior to the application was revenue or turnover for the purposes of the requirements set out in cl 892.213. This revenue exceeded AUD200,000 and as such, I am satisfied that Ms Li met the requirements in cl 892.213 as at the time of the application.
Issue 2: Is Blue Sky actively operating in Australia at the time of the decision and has Ms Li continued to have an ownership interest in the business?
In order to meet cl 892.221(a) the applicant must continue to satisfy the requirement that the main business is actively operating in Australia at the time of my decision. I am so satisfied.
I have been provided with the financial statements for Blue Sky for the financial year ended 30 June 2021 which show the company generated tour income of $68,000 in the financial year ended 2020 and income through government subsidies of $47,650 in 2021. It paid wages of $24,690 in the 2021 financial year and recorded current liabilities of approximately $85,000 to cover liabilities incurred for tours. Blue Sky also provided financial statements for the financial years ended 30 June 2017, 30 June 2018, 30 June 2019 and 30 June 2020. Each of these financial statements evidences continuous trading by Blue Sky. Ms Li gave evidence that she had continued to operate during the covid-19 pandemic even though it was very difficult in the 2021 financial year. She continued to negotiate tours, as evidenced by the contract Blue Sky entered into in August 2021, and Ms Cindy Yu continued to work in the business, principally from the premises in La Trobe Street. Ms Cindy Yu gave evidence about her continued role and said that she paid accounts, managed the Blue Sky finances and books and worked with Ms Li. Ms Li also said that she communicated with Ms Yu and the Blue Sky accountant on a regular basis.
Accordingly, I am satisfied that Blue Sky was actively operating in Australia at the time of the application and in the two years prior to the application. I am also satisfied that it has continued to actively operate since this time and is actively operating its tourism business in Australia at the time of my decision. I am also satisfied, based on the written submissions and oral evidence of Ms Li in the hearing, that she has maintained direct and continuous involvement in the day-to-day management of the business and in making decisions affecting the overall direction and performance of the business.
As such, I am satisfied that Ms Li meets the requirements of cl 892.221(a) of Schedule 2 to the Regulations.
Issue 3: Is Wangjun Zhou a member of the family unit of Ming Li?
Clause 892.3 sets out the criteria that must be established by a secondary applicant at the time of application and time of decision. The applicant must be a member of a family unit of and have made a combined application with a person who satisfies the primary criteria.
Regulation 1.12 establishes when a person will be a ‘member of a family unit’. Regulation 1.12(5) relevantly provides that a person is a member of the family unit of an applicant for a visa described in column 1 of an item in the table set out within the subregulation (referred to as the ‘new visa’ and, in this case, being the visa the subject of review) if, at the time of the application the person is included in the application for the new visa and held a visa, (referred to as the ‘old visa’), as described in column 2 of the table. In other words, if a person was a member of a family unit in respect of the old visa (which generally comprises temporary or provisional visas) they would also be a member of the family unit in respect of the new visa, invariably being the permanent or revised or updated visa.
I am satisfied that Wangjun Zhou satisfies this requirement of the secondary criteria but whether she satisfies cl 892.311 at the time of the application and cl 892.321 at the time of the decision will depend on whether Ms Li satisfies the primary criteria.
CONCLUSIONS
Given the findings above, I am satisfied that Ms Li meets the requirements of cls 892.211, 892.212(a) and (b), 892.213, 892.214 and 892.215(a), being all relevant time of application requirements under Part 892.21. I am also satisfied that Ms Li meets the requirements of cls 892.221 and 892.222.
I am also satisfied that Ms Zhou is a member of the family unit of Ms Li for the purposes of cl 892.311 but note that whether she will meet the criterion in cl 892.321 will depend on whether Ms Li meets the balance of the primary criteria at the time of decision, principally being the public interest criteria set out in Schedule 4 to the Regulations.
Accordingly, the appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.
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 892 (State/Territory Sponsored Business Owner) visa:
·cls 892.211, 892.212(a) and (b), 892.213, 892.214, 892.215(a), 892.221 and 892.222 of Schedule 2 to the Regulations.
J.L Redfern PSM
Deputy President

ATTACHMENT – LEGISLATION
Migration Regulations 1994
1.03Definitions
In these Regulations, unless the contrary intention appears:
…
ownership interest has the meaning given to it in subsection 134(10) of the Act.
…
qualifying business means 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.
…
1.11Main business
(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.
1.11A Ownership for the purposes of certain Parts of Schedule 2
(1)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an applicant, or the applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).
(2)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:
(a)a trust instrument; or
(b)a contract; or
(c)any other document capable of being used to enforce the rights of the applicant, or the applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;
stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.
(3)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.
(4)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the applicant, or the applicant’s spouse or de facto partner, has beneficial ownership:
(a)is a dependent child of the applicant; and
(b)made a combined application with the applicant; and
(c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.
Migration Act 1958
134Cancellation of business visas
….
(10)In this section:
….
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.

[2022] AATA 1770

20 June 2022

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