Li (Migration)
[2020] AATA 5241
•17 August 2020
Li (Migration) [2020] AATA 5241 (17 August 2020)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT: Ms Xiaoru Li
Mr Xujie Guo
CASE NUMBER: 1927998
HOME AFFAIRS REFERENCE(S): BCC2017/3297658 BCC2017/3412752
MEMBER:P Ranson
DATE:17 August 2020
PLACE OF DECISION: Brisbane
DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction the first named visa Applicant meets the following criteria for a Subclass 890 (Business Owner) visa:
· cl.890.211 and cl.890.212 of Schedule 2 to the Regulations.
Statement made on 17 September 2020 at 9:46am
CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) visa – net business assets of the Applicant have been lawfully acquired – Applicant’s share of the net business assets exceeds the threshold – decision under review remitted
LEGISLATION
Migration Act 1958, ss 65, 134
Migration Regulations 1994, r 1.11, Schedule 2, cls 890.211, 890.212
STATEMENT OF DECISION AND REASONS
Table of Contents
APPLICATION FOR REVIEW
CONSIDERATION OF CLAIMS AND EVIDENCE
Ownership interest in main business
West End Massage & Beauty
QL Interior Lining Pty Ltd
Does the Applicant have an ownership interest in each business relied on at all relevant times?
Was each business relied on actively operating at all relevant times?
Does each business relied on satisfy the definition of ‘main business’, at all relevant points in time?
Australian Business Number and Business Activity Statements
Requirements relating to Applicant’s assets
decision
ATTACHMENT A - Legislation
Migration Regulations 1994
1.03 Definitions
1.11 Main business
1.11A Ownership for the purposes of certain Parts of Schedule 2
Migration Act 1958
134 Cancellation of business visas
ATTACHMENT B – Balance Sheets of ACN
APPLICATION FOR REVIEW
This is an application for review of a decision made by a delegate of the Minister for Immigration on 1 October 2019 to refuse to grant the visa Applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).
The Applicants applied for the visas on 8 September 2017. Certain criteria must be satisfied during the two years immediately before the application is made, that is, 8 September 2015 to 7 September 2017 (the Application Period).
At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The Applicants in this case are seeking to satisfy the criteria for the grant of Subclass 890 (Business Owner) visas, as set out in Part 890 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 890.2. The others need only to satisfy the secondary criteria set out in Subdivision 890.3.
The delegate in this case refused to grant the visas on the basis the first named visa Applicant, Ms Xiaoru Li, (the Applicant) did not satisfy the requirements of cl.890.212 of Schedule 2 to the Regulations because in their assessment, the net business assets did not reach the required threshold due to issues with a former director’s loan account. Mr Xujie Guo, (the Second Visa Applicant) is the son of the Applicant.
The review application was lodged on 3 October 2019. On 29 May 2020 the Tribunal wrote to the Applicant requesting further information, which was due by 12 June 2020 (the 29 May 2020 Letter). In that letter the Applicant was advised: ‘If we do not receive the information within the period allowed or as extended, we may make a decision on the review without taking any further action to obtain the information. You will also lose any entitlement you might otherwise have had under the Migration Act 1958 to appear before us to give evidence and present arguments.’
On 12 June 2020 the Applicant requested and was granted an extension of time until 19 June 2020 to respond to the 29 May 2020 Letter. The Applicant’s response to the 29 May 2020 Letter was received on 20 June 2020.
On 1 June 2020 the Tribunal wrote to the Applicant inviting her to a hearing on 30 June 2020 to give evidence and present arguments. When the response to the 29 May 2020 Letter was received late, on 22 June 2020 the Tribunal wrote to the Applicant advising: ‘On 20 June 2020, the Tribunal received information from you in response to our letter dated 12 June 2020. However, the information was received one day late from the date which was stipulated in our letter dated 12 June 2020. This means the hearing, which has been previously set down for 30 June 2020, will no longer take place and the Member will proceed to making a decision based on the information before the Tribunal.’
The Applicant is represented in relation to the review by Mrs Li Qin.[1] (the Representative). On 22 June 2020 the Representative wrote to the Tribunal in response to the letter advising of the loss of hearing and requested its reinstatement. As the Tribunal has no discretion to reinstate the hearing the matter could be taken no further.
[1] Migration Agent Registration Number: 1278075
For the following reasons, the Tribunal has concluded the matter should be remitted for reconsideration.
CONSIDERATION OF CLAIMS AND EVIDENCE
The issue in this case is whether the loan from the business to the former director, Ms Xin Liu, can be included in the calculation of net business assets and if so, what is the correct value of the Applicant’s net business assets. In accordance with the President’s Direction[2], the Tribunal will address those elements of the criteria on which the delegate made an adverse finding, being the satisfaction of cl 890.212. In addition, the Tribunal has also considered cl 890.211.
[2] Presidents Direction for Conducting Migration and Refugee Reviews dated 1 August 2018
Ownership interest in main business
Clause 890.211(1) requires the Applicant had an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the visa application was made and continued to have that interest at the time the visa application was made. The Applicant must continue to satisfy this requirement at the time of this decision[3]. No more than two businesses can be nominated for this purpose[4] and one or both businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion[5].
West End Massage & Beauty
[3] cl.890.221(a)
[4] r.1.11(2)
[5] Yang v Minister for Immigration and Border Protection [2014] FCCA 1576
The business relied on by the Applicant to satisfy these requirements is a massage therapy and beauty salon (the Business) operated by A.C.N. 162 531 151 Pty. Ltd. (ACN) trading as West End Massage & Beauty[6]. ACN also traded as West End Beauty and Health[7].
[6] West End Massage & Beauty was a business name registered with ASIC from 25 February 2013 until cancellation on 11 July 2019.
[7] West End Beauty and Health was a business name registered with ASIC from 5 April 2013 until cancelled on 16 August 2018.
Accordingly, the Tribunal must consider the nature of the Applicant’s interest in this business, whether the business was actively operating and whether it met the definition of ‘main business’ during the Application Period and as at the date of application.
QL Interior Lining Pty Ltd
The Representative made a submission to the Tribunal dated 30 June 2020 (the 30 June 2020 Representative’s Submission), which states on page 7: ‘From 1st of July 2019, since the lease of the operational premise for West End Massage and Beauty has expired, and the review applicant was not able to find a [sic – an] ideal place to operate the business immediately, as such, A.C.N. 162 531 151 Pty. Ltd. invested in QL INTERIOR LINING PTY LTD, trading as Successo Cabinets. A.C.N. 162 531 151 Pty. Ltd. holds 30% shares of the business, as the review applicant has 100% of the company A.C.N. 162 531 151 Pty. Ltd., as such, she has 30% of QL INTERIOR LINING PTY LTD indirectly.’
The Representative’s 30 June 2020 Submission included a Current & Historical Company Extract for QL Interior Lining Pty Ltd ACN 604 656 957 (QL) obtained on 30 June 2020 from the Australian Securities & Investments Commission (ASIC). It shows QL was registered in Queensland on 10 March 2015 and on 9 September 2016 ASIC Form 6010 Application for Voluntary Deregistration of a Company was lodged. It seems deregistration did not proceed as the company changed its share structure on 15 November 2016 and has continued thereafter.
The 30% interest acquired in the QL by ACN occurred in two tranches as follows:
Date ASIC Notified Earliest Date of Change Number of shares acquired Balance held Document No. 4 December 2019 2 December 2019 1 1 9EAA25678 22 June 2020 1 July 2019 2 3 7EAX74323
The Tribunal notes the acquisition of one share said to be on 2 December 2019 (notified on 4 December 2019) postdates the acquisition of two shares said to be on 1 July 2019 (notified on 22 June 2020). Whatever the case, the acquisition of the interest in QL by ACN is well after the date of application and so QL will not be considered as a main business for the purpose of this decision because this case will only deal with the circumstances up to and including the time of application.
Does the Applicant have an ownership interest in each business relied on at all relevant times?
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[8]. Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations, set out in the attachment to this decision[9].
[8] r.1.03 of the Regulations and s.134(10) of the Act
[9] r.1.11A(1)
In order to meet cl.890.211(1) the Tribunal must be satisfied the Applicant had an interest of this kind in the relevant business or businesses both at the time of making the application and during the Application Period.
The Applicant provided a search of the ASIC records of ACN dated 30 June 2020, which reveals ACN was registered in Queensland (Qld) on 22 February 2013, the Applicant was appointed a director 25 May 2015, and remains so today, and the company was established with 100 ordinary shares.
The Tribunal obtained copies of documents lodged with ASIC, which reveal the Applicant acquired her shares in ACN as follows:
Date ASIC Notified Earliest Date of Change Number of shares acquired Balance held Document No. 12 June 2015 25 May 2015 55 55 7E7030575 24 July 2019 23 July 2019 45 100 7EAN73504
The application included a copy of a signed share sale agreement dated 4 May 2015 wherein the Applicant acquired 55% of the shares in ACN for $29,700. This is consistent with the findings in paragraph [21].
The Tribunal finds the Applicant had an ownership interest in ACN of 55% from 25 May 2015 to 23 July 2019 and from then a 100% interest, because of the shares acquired as set out in paragraph [21]. Accordingly, the Tribunal is satisfied the Applicant did have an ownership interest in the Business as operated by ACN throughout the Application Period and as at the date of application.
Was each business relied on actively operating at all relevant times?
In order to meet cl.890.211(1) the Tribunal must be satisfied the relevant business or businesses were actively operating both at the time of making the visa application and during the Application Period.
The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period[10].
[10] Shahpari v Minister for Border Protection [2016] FCCA 513 at [71]
The Tribunal notes from the ASIC search provided by the Applicant, the principal place of business for ACN was Shop 1, 220 Melbourne Street, West End Qld 4101 (the West End Premises) from 22 February 2013 to 28 November 2018 and then the address became 197 Shafston Avenue Kangaroo Point Qld 4169 (the Kangaroo Point Premises). The Representative’s Submission of 30 June 2020 states the lease of the West End Premises expired on or about 1 July 2019, see paragraph [14], and there is no explanation as to why the principal place of business was changed to the Kangaroo Point Premises on 28 November 2018 or why those premises were not suitable to continue the operation of the Business. Whatever the reason for the change of business premises, it occurred after the date of the application and so is not relevant to this decision.
The application included a copy of a signed premises lease dated 2 February 2012 (the Premises Lease) showing the tenant as Yongxin Ma. The lease term is three years from 1 February 2012 to 31 January 2015 with one only option period of three years. Yongxin Ma was a director of ACN from 22 February 2013 to 7 October 2014. The premises are described as Shop 1, Cnr Browning and Melbourne Streets, West End, which the Tribunal accepts is the West End Premises.
The Tribunal understands the building is known as ‘West End Central’ in the suburb of South Brisbane, not West End. The use of the premises is described as ‘massage and therapy’. Further, the original application included an email sent on 21 January 2017 by the Applicant to a person the Tribunal understands to be the landlord in which she states the lease of the West End Premises: ‘will finish at early 2018’. This is consistent with the expected end of the option period, that is, 31 January 2018.
There is no evidence before the Tribunal to indicate the Premises Lease was ever assigned or otherwise transferred to either ACN or the Applicant, whether the option period was taken up and on what basis ACN continued to occupy the West End Premises after 31 January 2018 if in fact it did.
The application also included a copy of a request to register a lease[11] however it makes no reference to the parties to the lease other than stating the Applicant is AMP Capital Investors Limited ABN 59 001 777 591 and no reference to the address of the premises or anything else to identify it as relating to the West End Premises. Accordingly, the Tribunal places no weight on it for the purpose of this decision.
[11] Document ID 714933791 dated 13 February 2013.
The Tribunal accepts the West End Premises were used by ACN from which to operate the Business because Yongxin Ma was a director and shareholder of ACN, albeit prior to the Application Period and prior to the Applicant first becoming a shareholder and director of ACN.
The Applicant provided a copy of the financial statements for ACN for the year ended 30 June 2017 which include comparatives for the year ended 30 June 2016, which covers the period from 1 July 2015 to 30 June 2017.
Those financial statements reveal the following:
2017 2016 Sales 315,943 302,257 Cost of sales 5,176 17,153 Gross profit 310,767 285,104 Other income 0 115 Total income 310,767 285,219 Expenses 299,625 284,341 Profit before tax 11,142 878 Income tax expense 3,064 202 Profit after tax $8,078 $676
During the 2016 and 2017 financial years, ACN had combined sales of $618,200 and generated combined net profit after tax of $8,794. Whilst the fate of the West End Premises at the conclusion of the lease around 1 July 2019, or 31 January 2018, and the Kangaroo Point Premises from 28 November 2018 is not known, during the 2017 financial year the company incurred gross wages of $158,480 at a time when it was occupying the West End Premises.
Included in the original application was an email exchange on 9 March 2016 between ‘[email protected]’ and ‘westendmassagebeauty@***.com’, which is taken to be the Applicant. The e-mail refers to cancelling a promotion. The Tribunal conducted a search of Groupon, which describes itself as a global e-commerce marketplace connecting subscribers with local merchants by offering activities, travel, goods and services in 15 countries. That search revealed the listing for the Business remains live on the Groupon website with the notation ‘This place is closed’[12]. Nonetheless, it is clear to the Tribunal the Business was listed with Groupon at some time during the Application Period.
[12] >
Reverting to the test of ‘actively operating’, the Tribunal considers whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period.
The Tribunal finds ACN was actively operating the Business during the Application Period and at the time of application because it had retail business premises offering its services to arm’s length customers from whom it made sales and generated after tax profits during the 2016 and 2017 financial years.
Accordingly, the Tribunal is satisfied the Business was actively operating during the Application Period and at the time of application.
Does each business relied on satisfy the definition of ‘main business’, at all relevant points in time?
In order to satisfy the requirements of cl.890.211(1), the business relied on by the Applicant must meet the definition of ‘main business’, at the time of application and during the Application Period. Clause 890.221 requires the Applicant continues to satisfy this requirement at the time of decision however that will not be tested in this decision. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.
Firstly, the Applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in s.134(10) of the Act[13]. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met[14]. These provisions are set out in full in the attachment to this decision.
[13] r.1.03
[14] r.1.11A
Secondly, the Applicant must maintain or have 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.
Thirdly, 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 must meet certain thresholds:
(a)if the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;
(b)if the businesses are not operated by a publicly listed company and the annual turnover of the business is at least A$400,000, the value of the ownership interest must be at least 30% of the total value of the business;
(c)If the business is not operated by a publicly listed company and the annual turnover of the business is less than A$400,000; the value of the ownership interest must be at least 51% of the total value of the business.
Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise 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 is not operated primarily or substantially for the purpose of speculative or passive investment[15].
[15] r.1.03
The Tribunal finds the first and third elements of the definition of main business are satisfied because the turnover of ACN is less than A$400,000 p.a. so the interest required to be held by the Applicant is 51%. The Tribunal has previously established the Applicant, as a shareholder in ACN, held an 55% interest in the Business from 25 May 2015 to 23 July 2019 and after that a 100% interest, see paragraph [21].
The second element requires the Applicant to have been continuously involved in the day to day management of the business and in making decisions affecting the overall direction and performance of the business. The definition of the word ‘involvement’ is ‘actively participating in’.[16]
[16] Macquarie dictionary
The Representative’s Submission of 30 June 2020 set out the duties of the Applicant, which are summarised below and categorised as between day to day management and overall direction and performance of the business:
Oversee all areas of salon daily operations
Day-to-day management
Oversee customer service
Day-to-day management
Recruit staff and monitor performance and productivity
Day-to-day management
Promote marketing specials
Day-to-day management
Identify growth opportunities
Overall direction and performance
Develop and implement growth strategies
Overall direction and performance
Create and manage budgets
Overall direction and performance
General reporting
Overall direction and performance
The Tribunal notes none of the above duties involves providing services directly to customers, that is, beauty and therapy treatments. All the above are managerial in nature and so are consistent with the Applicant being continuously involved in the day to day management (emphasis added) of the business and in making decisions affecting the overall direction and performance of the business.
As can be seen from the above table, four of the eight duties identified by the Applicant involve day-to-day management with the remainder involving overall direction and performance of the business. The Tribunal considers the four day-to-day management duties of the Applicant in the Business can only be competently performed on-site given the it is a single site, massage and beauty salon, because they require a physical presence on site, that is, at the West End Premises.
The Business made substantial sales and was profitable during the 2016 and 2017 financial years, see paragraph [33]. The Tribunal finds the financial results for 2016 and 2017 can be attributed to the Applicant because she was the sole director of ACN during the Application Period and at the time of application.
The Tribunal checked the movement records for the Applicant during the Application Period and found she had been offshore for a total of 175 days, which equates to 24% of her time. In considering the requirement for the Applicant to be continuously involved in the day-to-day management of the Business, the Tribunal is unconcerned about these absences from Australia as there were five separate absences rather than one continuous absence, some were as short as 17 days and the longest was 41 days, which is reasonable allowance for holidays or business related travel. Further, the Applicant would have been able to carry out the overall direction and performance duties remotely whilst offshore.
The Tribunal has already found ACN was actively operating the Business during the Application Period (see paragraph 37) because it had arm’s length customers, made sales and generated after tax profits. The Tribunal finds the Business was a qualifying business because it provided health and beauty services to the public and there is no evidence it had been operated primarily or substantially for the purpose of speculative or passive investment such as property rental.
Accordingly, the Tribunal is satisfied the Business does meet the definition of main business at the time of application and during the Application Period.
Given the findings above, the Tribunal is satisfied cl.890.211(1) is met. The Tribunal has also considered cl.890.211(2).
Australian Business Number and Business Activity Statements
Clause 890.211(2) must be satisfied as at the time of visa application. It requires for each business to which cl.890.211(1) applies:
(a)an Australian Business Number (ABN) has been obtained, and
(b)all Business Activity Statements required by the Australian Taxation Office (ATO) for the two years immediately before the visa application was made have been submitted to the ATO and have been included in the application.
The Business, that is, a massage therapy and beauty salon, is relied on by the Applicant to satisfy these requirements. The Tribunal checked the Australian Business Register (ABR) on 19 August 2020 and confirmed the ABN for ACN is 20 162 531 151, which remains current as does the Goods & Services Tax (GST) registration both of which apply from 25 February 2013.
BAS for ACN were submitted by the Applicant and it is evident to the Tribunal they were downloaded from the ATO confirming they had been lodged with the ATO. The total sales for the 2016 year of $302,257 and for the 2017 year of $315,943, see paragraph [57], agree with the amounts shown on the financial statements set out above at paragraph [33]. No export sales are reported in the BAS, which is consistent with the nature of the Business.
The sales, as shown on the BAS, are as follows:
Quarter ended
Amount (excl. GST)
30 September 2015
72,933
31 December 2015
74,879
31 March 2016
60,845
30 June 2016
93,600
Total (2016 year)
$302,257
30 September 2016
71,637
31 December 2016
88,955
31 March 2017
65,830
30 June 2017
89,521
Total (2017 year)
$315,943
The Tribunal finds all Business Activity Statements required by the ATO for the two years immediately before the visa application were submitted to the ATO and were included in the application because they are included in the department’s file provided to the Tribunal and there is no evidence before the Tribunal to indicate they were not included in the application.
Given the findings above, the Tribunal is satisfied cl.890.211(2) is met. The Tribunal has also considered cl.890.212, being the criterion on which the visa application was refused.
Requirements relating to Applicant’s assets
Clause 890.212 requires the Applicant to meet certain requirements relating to their assets. At the time of visa application and during the Application Period, the 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 spouse or de facto partner together have a net value of at least A$100,000. Further, these assets must have been lawfully acquired. Accordingly, the Tribunal has considered whether the substantive requirements of this criterion are met.
The Applicant has submitted the requirements concerning net assets in the main business are met by her interest in ACN. She provided a copy of the financial statements for ACN, prepared by Q&T Accountants, for the year ended 30 June 2017 with comparative figures for the year ended 30 June 2016. The reported business net assets as at 30 June 2016 and 30 June 2017 are reproduced at ATTACHMENT B – Balance Sheets of ACN.
Clause 890.212(b) anticipates the financial statements provided to test this criterion will be for the year ended on the application date (8 September 2017 in this case) with comparative figures. Under departmental policy, ‘immediately before the application is made’ means the three-month period immediately before the visa application was made. As there are no financial statements before the Tribunal, which are any more current than 30 June 2017, it has made its decision accepting departmental policy in this case.
Departmental policy regarding net business assets seeks to establish the Applicant has a record of financial commitment to business through personal financial involvement and exposure to risk by investing a substantial amount of money sourced from their own funds. Whilst departmental policy is not the law or the regulations, it can be a useful guide in determining net business assets, unless the circumstances of the case dictate otherwise.
The Tribunal adopts a conservative approach to the valuation of privately held entities. Related party loans are generally disregarded unless they are documented on commercial terms, including security, in a legally binding loan agreement.
According to departmental policy, the steps to determine net business assets are:
(a)From the reported financial statements, establish the net assets, which equals net equity, then
(b)Add back any unsecured related party loans, then
(c)Calculate the proportionate share of the adjusted net assets, then
(d)Add the balance of any loans advanced to the business by the Applicant (or deduct funds loaned to the Applicant by the business) net of any loans the Applicant may have taken out to finance their investment in the business.
The reported net assets of ACN before adjustment for related party loans are $55,202 as at 30 June 2016 and $63,280 as at 30 June 2017. Other than the related party loans, that is, the loans to and from the Applicant and Liu Xin, the Tribunal is satisfied the items on the balance sheets can be taken at face value as they are considered normal for the type of business conducted by ACN.
Adjusting the reported net business assets for unsecured related party loans results in the following net asset position for the Applicant:
2016 2017 Reported net assets 55,202 63,280 Add back director loans: Liu Xin 90 (38,549) Xiaory Li 110,000 72,500 Adjusted net assets $165,292 $97,231 Applicant’s share (55%) 90,911 53,477 Add: Director loan from Applicant 110,000 72,500 Applicant’s net business assets 200,911 125,977
The adjusted net assets shown above of $165,292 as at 30 June 2016 and $97,231 as at 30 June 2017 represent the ‘hard’ assets of the Business less its external liabilities, that is, cash on hand and at the bank plus stock plus a bank guarantee given for the bond for the premises lease, less amounts owing for GST, payroll deductions and income tax.
The loan to former director Liu Xin of $38,549 comprises two amounts, viz, $22,500 described as a flexible term loan, plus $16,049. These amounts are shown separately on the financial statements prepared by Q&T Accountants and have been aggregated by the Tribunal for convenience. The Tribunal notes the delegate’s decision referred to the loan to Liu Xin as $58,549 however the Tribunal has ascertained the correct amount is $38,549. Further, the delegate concluded this loan could not be included as an asset of the Business as it was to a related party and not secured. As can be seen above at paragraph [67], excluding the loan to Liu Xin of $38,549, the Applicant’s share of the net business assets exceeds the threshold of $100,000 as required by cl.890.212.
The delegate’s decision also recorded the loan from the Applicant to the Business as $72,500 as at both 30 June 2016 and 30 June 2017. Whilst that amount is correct as at 30 June 2017, the Tribunal has ascertained the correct amount of the loan as at 30 June 2016 was $110,000.
On 4 September 2020 the Tribunal wrote to the Applicant seeking a submission as to the source of funds used to purchase her interest in ACN and her loan to the company. The Representative responded on 16 September 2020 with a submission including copies of various applications for overseas funds transfers and a statement setting out the income earning history of the Applicant in China together with various maintenance contributions received from her ex-husband. The Tribunal is satisfied the net business assets of the Applicant have been lawfully acquired.
Given the findings above, the Tribunal is satisfied the requirements of cl.890.212 are met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.
The secondary Applicant is remitted for reconsideration by the Department based on the outcome of the primary Applicant’s application.
DECISION
The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction the first named visa Applicant meets the following criteria for a Subclass 890 (Business Owner) visa:
cl.890.211 and cl.890.212 of Schedule 2 to the Regulations.
ATTACHMENT A - Legislation
Migration Regulations 1994
1.03 Definitions
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.
…
1.11 Main 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, 890 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
134 Cancellation of business visas
….
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.
ATTACHMENT B – Balance Sheets of ACN
2017 2016 Current Assets Cash on hand 20,000 20,000 Cash at bank – ANZ 13,083 68,421 Bank guarantee 16,700 16,700 Stock on hand 9,110 9,899 58,893 115,020 Non-Current Assets Equipment at WDV[17] 54,519 59,765 Total Assets 113,412 174,785 Current Liabilities Trade creditors GST payable 8,077 6,132 PAYG[18] withholding payable 5,040 3,812 Provision for income tax 3,064 (451) 16,181 9,493 Non-Current Liabilities Loan: Liu Xin (former director) (38,549) 90 Director loan: Xiaory Li 72,500 110,000 Total Liabilities 33,951 110,090 Net Assets $63,280 $55,202 Equity Issued share capital 50,000 50,000 Retained profits 13,280 5,202 Total Equity $63,280 $55,202 [17] Written down value is Nil as the assets are fully depreciated.
[18] Pay as you go
Key Legal Topics
Areas of Law
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Immigration
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Statutory Interpretation
Legal Concepts
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Judicial Review
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Jurisdiction
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Statutory Construction
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Procedural Fairness
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