LKM Daebak Pty Ltd (Migration)

[2021] AATA 1890

LKM Daebak Pty Ltd (Migration) [2021] AATA 1890 (31 May 2021)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  LKM Daebak Pty Ltd

CASE NUMBER:  1812391

HOME AFFAIRS REFERENCE(S):          BCC2017/1946361

MEMBER:Susan Reece Jones

DATE:31 May 2021

PLACE OF DECISION:  Melbourne

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

Statement made on 31 May 2021 at 12:59pm

CATCHWORDS
MIGRATION – application for approval of nomination of position – temporary residence transition stream – financial capacity to provide full-time employment for 2 years – no verifiable evidence provided to department – financial information provided to tribunal shows no growth in business for 5 years and repayment plan for increasing ATO debt – proposed role different from current role at lower than current salary – decision under review affirmed

LEGISLATION
Migration Act 1958 (Cth), s 359(2)
Migration Regulations 1994 (Cth), r 5.19(3)(d)

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Home Affairs on 13 April 2018 to reject the applicant’s application for approval of the nomination of a position in Australia under r.5.19 of the Migration Regulations 1994 (the Regulations).

2. The applicant applied for approval on 1 June 2017. The requirements for the approval of the nomination of a position of Customer Service Manager (ANZSCO: 149212) in Australia are found in r.5.19 of the Regulations which contains two alternative streams: a Temporary Residence Transition nomination stream (r.5.19(3)) and a Direct Entry nomination stream (r.5.19(4)). If the application is made in accordance with r.5.19(2) and meets the requirements of either stream, then the application must be approved. If any of the requirements are not met then the application must be refused: r.5.19(5).

3.    In this case, the applicant has applied for approval of a nomination, seeking to satisfy the criteria in the Temporary Residence Transition nomination stream.

4. The delegate refused the application on the basis the applicant’s nomination did not satisfy r.5.19(3)(d) of the Regulations because the applicant failed to provide any verifiable evidence in support of its application to the Department.

5.    The Tribunal received a review application on 1 May 2018. It was signed on behalf of the applicant by Mr Jai Su Lee, the applicant’s director who in this case is also the nominee. The review application was accompanied by a copy of the delegate’s decision.

6. On 23 October 2020, the Tribunal wrote to the applicant pursuant to s359(2) of the Migration Act, inviting the applicant to provide further evidence in support of its case that it would be able to employ its nominee for at least 2 years on a full time basis.

7.    On 6 November 2020, the Tribunal received a request for an extension of time to provide the information. The Tribunal granted and extension until 4 December 2020.

8.    In response, on 6 November 2020, the applicant’s representative Ms Anna Jun, Registered Migration Agent of Visa Grant Migration, provided the following documents to the Tribunal: 

·ASIC Current and Historical Extract dated 23 October 2020

·ABN/ASIC extract copy dated 23 October 2020

·Financial Statements: 2020

·ATO Activity Statement the dated 1 July 2019 – 4 December 2020 (which shows balance owed to ATO of $105,643) and Government Cash Flow boost  payment of $15,000 

·Nominee Tax Return 2020

·Employment Agreement 25 May 2017 with a salary of $54,000 plus superannuation

1. On behalf of the applicant, its director and nominee Mr Lee, appeared before the Tribunal on 12 March 2021 to give evidence and present arguments.

1. The applicant was represented in relation to the review by its registered migration agent, Ms Anna Jun, Registered Migration Agent of Visa Grant Migration.   

1. The Tribunal hearing was conducted with the assistance of an interpreter in the Korean and English languages.

2. The Tribunal exercised its discretion to hold the hearing by telephone. The hearing was held during the COVID-19 pandemic. The Tribunal determined it was reasonable to hold a hearing by telephone, having regard to the nature of this matter and the individual circumstances of the applicants. The Tribunal also had regard to the Tribunal’s objective of providing a mechanism of review that is fair, just, economical and quick, and the delay to the matter if the hearing was not to be conducted by telephone. The Tribunal is satisfied that the applicant was given a fair opportunity to give evidence and present arguments.

1. Following the hearing, on 12 April 2021, the applicant provided further evidence in support of its application; namely,    

   ·Various monthly invoices issued by the applicant from May 2015 to December 2020 (ranging from $720 to $980 per month)

   ·Financial Statements 2019

   ·Employment Agreement dated 12 April 2021

   ·Financial Statements 2020

   ·BAS 2018, 2019, 2020

   ·ATO Payment Plan in the sum of $111,345

   ·ATO Payment Plan in the sum of $12,055

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

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue in this case is whether the applicant meets the requirements for approval of the nomination under the Temporary Residence Transition nomination stream set out in r.5.19(3), which is extracted in the attachment to this decision. For the nomination to be approved, all the requirements must be met.

The application must be compliant: r.5.19(3)(a)

1. Regulation 5.19(3)(a) requires that the application for approval must be in the approved form, must be accompanied by the prescribed fee and, where applicable, must include the required written certification relating to conduct that contravenes s.245AR(1). The application must also identify a relevant person and occupation.

1. From the material on the Department file, the Tribunal is satisfied that the nomination application complied with the above requirements.

1. Given the above findings, the requirement in r.5.19(3)(a) is met.

Status of the nominator: r.5.19(3)(b)

1. Regulation 5.19(3)(b) requires the nominator to be or have been the relevant standard business sponsor who is actively and lawfully operating a business in Australia. In addition, the nominator, as that standard business sponsor, must not have met certain criteria relating to the operation of a business overseas, in the most recent sponsorship approval.

1. The Department’s records indicate that the applicant was approved as a standard business sponsor from SBS period 31 March 2015 to 31 March 2018. 

2. The Tribunal is satisfied that the company was the standard business sponsor who last identified the nominee, Mr Jai Su Lee, and nominated him for a subclass 457 visa.

3. The identified occupation in the application is Customer Service Manager (ANZSCO: 149212) with a base salary of $54,800.

1. The applicant appears to operate a commercial cleaning business for restaurants, house moving and shopping centres in Perth, Western Australia.

2. The applicant’s director Mr Lee is also the nominee in this case. The nominee’s personal ATO statement states his job as a commercial cleaner and his annual salary is stated to be $70,300 pa.

1. The Tribunal is satisfied based on the material before it, including the ASIC business' registration documents and BAS, that the nominator is actively and lawfully operating a business in Australia.

1. Given the above, the requirement in r.5.19(3)(b) is met.

Previous employment of the nominee: r.5.19(3)(c)

1. Broadly speaking, to meet the requirement in r.5.19(3)(c), either:

   ·     the nominee must have been employed full time in Australia in the position for which he or she holds a Subclass 457 visa for at least 2 of the 3 years preceding the nomination application; or

   ·     the nominee holds a Subclass 457 visa on the basis that s/he was identified in a nomination of a specified occupation for that visa, the nominator nominated the occupation, and the nominee has been employed in that occupation for at least 2 years in the 3 years immediately before the application.

2. The Tribunal is satisfied on the evidence before it that:

   ·     the nomination was made on 1 June 2017 for the position of Customer Service Manager ANZSCO 149212;

   ·     the relevant 3-year period is therefore 1 June 2014 to 1 June 2017;

   ·     the nominee was initially employed by the applicant on 22 April 2015 while the holder of a 457 visa;

   ·     the nominee applied for a subclass 457 visa on 12 March 2015 on the basis of his nomination by the applicant and was granted a Bridging visa A on that date;

   ·     he was granted a subclass 457 visa on 22 April 2015, which was valid until 22 April 2019; and

he had therefore worked for the applicant in the nominated position for approximately 2.1 years prior to the nomination, and for 2.1 years in the 3-year period immediately prior to the nomination application being lodged.

1. Given the above findings, the requirement in r.5.19(3)(c) is met.

Future employment of the visa holder: r.5.19(3)(d)

1. Regulation 5.19(3)(d) only applies to certain nominees (those described in r.5.19(3)(c)(i)). For this class of person, the Regulations require that the nominee will be employed on a full-time basis for at least 2 years on terms that do not expressly preclude the possibility of an extension. The Tribunal is satisfied that the nominee falls within r.5.19(3)(c)(i) and thus the applicant must demonstrate that the nominee will be employed on a full-time basis for at least 2 years on terms that do not expressly preclude the possibility of an extension.

1. The Department decision noted that the applicant employs no Australian employee(s) and 3 foreign employee(s). The head office of the business and the nominated position are located in Kardinya, Perth, Western Australia, 6163.

2. The applicant submitted at time of lodgement a number of documents to demonstrate the its financial capacity, including:

   ·     BAS statement for 01 July 2016 to 30 September 2016

   ·     Copy of company tax return 2016

   ·     Financial Report for the year ended 30 June 2016 (Not signed by the Director)

   ·     BAS statement for the period October 2016 to 31 December 2016.

3. However, the Department noted that the applicant did not provide any additional financial evidence that the applicant’s business had the financial capacity to provide a permanent, full-time position to the nominee for at least two years and pay the annual salary for him of $54,000.

1. It was further noted by the delegate that the financial report provided, indicated that the business had operated at loss in 2016 and 2015 and that the financial report was not signed by the business' director. In short, the Department gave little weight to the material provided by the applicant, and in the absence of any verifiable evidence, the Department found that the applicant did not meet regulation 5.19(3)(d).

1. The Tribunal’s analysis of the applicant’s financial evidence, including evidence provided since the delegate’s decision was made, shows that:

   ·the applicant’s business has not grown or expanded over the past 5 years – in fact its income in relative terms has been (at best) static; and

   ·the Financial Statements state that the applicant’s assets have increased to $232,487, however the applicant has provided no evidence or explanation as to how or why this has occurred particularly given the applicant’s static income and increasing ATO debt.

$	2016	2017	2018	2019	2020
Not provided
Total income	128,152	121,647	122,050	123,999
Wages	99,682	66,014	70,100	70,300
Superannuation	Nil	6,271	Nil	6,679
Total assets	24,411	109,135	171,776	232,487
Total liabilities*	27,320	103,095	145,578	187,524
*includes Total Taxation payable including ATO Running Balance, Income Tax payable, PAYG withholding payable, superannuation payable	63,135	101,463	145,557

1. The applicant submitted various BAS, which show as follows:

Quarter	$ sales
July -September  2018	4,005
October- December  2018	3,465
January- March 2019	2,321
April – June 2019	124,464
Total	134,255
July – September 2019	35,137
October – December 2019	35,356
January – March 2020	33,777
April - June 2020	32,127
Total	136,407

1. At the hearing the Tribunal discussed with Mr Lee (who is both the director of the applicant and its nominee), the Department’s decision and the requirement to provide verifiable evidence as to the applicant’s activities and financial status and capacity of the applicant’s business to employ him full time for at least 2 years at $54,000 per year. The Tribunal notes that the applicant director and nominee is currently paying himself $70,000 per annum.

1. Noting that the applicant had provided the Tribunal with an ATO Activity Statement dated 1 July 2019 to 4 December 2020 (refer paragraph 8 above) which showed $105,643 owed to the ATO, at hearing the Tribunal discussed this matter with the applicant director and nominee Mr Lee and he advised the Tribunal that he is the subject of an ATO review.

2. Mr Lee was asked to provide details to the Tribunal, which he duly did on 12 April 2021 (refer paragraph 13 above). The documents provided included two ATO taxation repayment plans which are as follows:   

   (a)  As at 30 April 2021, the applicant owes the ATO $111,345, which is required to be repaid by the applicant between April 2021 and March 2024;

   and

   (b)  The second ATO taxation repayment plan which, as at 30 April 2021, shows the applicant owes the ATO $12,055, requiring repayment between April 2021 and March 2024.

3. On the basis of the debt owed to the ATO, the Tribunal raised concerns about the applicant’s financial capacity to repay the ATO debt in addition to the nominee salary for a period of at least 2 years.

1. The Tribunal at hearing asked the Mr Lee to provide copies of the applicant’s contracts so as to assess the sustainability of the applicant. 

2. Despite being requested by the Tribunal to provide verifiable evidence as to the applicant’s activities and financial capacity, following the hearing the applicant only provided copies of monthly invoices (refer paragraph 13), issued by the applicant with no explanation. No contracts or agreements were provided to the Tribunal, only invoices.

3. The Tribunal appreciates that the applicant director is a sole operator and that his salary has been covered by the income generated by his company. However, the applicant has failed to meet its legal obligations to the ATO and is subject to a repayment plan to the ATO in excess of $120,000.

4. Further, the Tribunal gives little weight to the applicant’s financial statements which claim to show assets in 2020 of $232,857 (refer paragraph 35 above), on the basis of the ATO debt and also no evidence as to what the assets actually are. The applicant’s most recent Employment Agreement with the nominee (dated 12 April 2021), states a salary of $54,000 per annum.

5. The applicant’s nomination states that the nominee’s role is Customer Service Manager; however, the nominee’s personal ATO statement states his job is as a Commercial Cleaner (with his annual salary stated to be $70,300 pa.). This discrepancy adds further to the Tribunal’s concerns about the operations of the business and its financial capacity to continue to employ the nominee as a Customer Service Manager on $54,000 per year, as proposed.

6. The applicant provided no business plan or overview about its ongoing or future contracts (if any), or prospects of business development (if any). Nor did the applicant provide the Tribunal with any evidence in support of its case that show that the applicant has the financial capacity to continue to employ the nominee on a full-time basis for at least 2 years.

7. Based on the financial evidence provided, the Tribunal also is of the view that even if the applicant had additional contracts (although no evidence of any contracts has actually been provided), it would likely require engagement of an additional employee. Given the applicant’s ATO debt, the Tribunal is unsure that the applicant could support employing another employee. 

8. The Tribunal acknowledges that the nominee has been paid a salary each year in a sum in excess of his proposed Customer Service Manager salary. However, the current position of the business (clearly with a very substantial debt to the ATO), coupled with the lack of financial information about its current and likely future performance, mean that the Tribunal is not satisfied that the applicant has the financial capacity to meet its obligations under r.5.19(3)(d).

9. Given the above findings, the requirement in r.5.19(3)(d) is not met.

No less favourable terms and conditions of employment: r.5.19(3)(e)

1. Regulation 5.19(3)(e) requires that the terms and conditions of employment applicable to the nominated position will be no less favourable than those that are, or would be, provided to an Australian citizen or permanent resident performing equivalent work in the same workplace at the same location.

1. The Employee PAYG Summary or ATO Notice of Assessment for the nominee shows that he was paid $69,500 in 2019 and in 2020: $66,300.

2. Based on the ATO payment plans (refer paragraphs 13, 38 and 39 above), the Tribunal gives no weight to the applicant’s capacity to pay the obligated superannuation. Whilst the applicant has paid the nominee’s superannuation for 2018 and 2020, it did not in 2019.

3. Further, given that the applicant has substantial payments to make to the ATO the Tribunal is  not satisfied that the applicant could or would pay the nominee’s super going forward.          The Tribunal notes that the nominee’s most recent employment agreement dated April 2021, includes reference which the Tribunal considers may have been adapted or copied from another unknown organisation (possibly an organsiation known as Workshop which is referred to in the Employment Agreement).

4. The Tribunal is not satisfied that the director and nominee Mr. Lee understands what terms are actually contained in the Employment Agreement and that  the applicant must have included in the Employment Agreement, standard provisions relating to notice, termination and redundancy that are consistent with those in the Fair Work Act 2009 (Commonwealth) and National Employment Standards (NES) PayScale states that a Customer Service Manager is paid on average, $66,324 per annum. If the position is in reality a Commercial Cleaning role, then the salary noted on Payscale (accessed 27 May 2021) is $60,415 (refer Australian/Industry/=Commercial_Cleaning_Services).

5. Whilst there is no equivalent Australian employee (as the applicant director is the nominee and the sole employee), if there was, the salary ranges would be as stated above. The Tribunal notes that the nominee’s salary is within the range of what he is currently being paid.

6. On the basis of the above, the Tribunal reiterates that it is not satisfied  that the applicant will be able to pay  the nominee the salary. Nor is the Tribunal satisfied that the Employment Agreement terms are genuine as they do not appear to contain all the NES terms endorsed by Fair Work Australia and the name of another entity or business is stated in the document purporting to be the applicant’s Employment Agreement.

1. Accordingly, the requirement in r.5.19(3)(e) is not met.

Training commitments and obligations: r.5.19(3)(f)

1. Regulation 5.19(3)(f) requires the applicant to have fulfilled any commitments made relating to meeting training requirements, and complied with applicable obligations relating to training requirements, during the period of the  applicant’s most recent sponsorship approval.  These requirements may be disregarded if it is reasonable to do so.

1. The most recent Standard Business Sponsorship for the applicant commenced on 31 March 2015 and ran to 31 March 2018.

2. Specifically, the training requirements applicable for an established business with approval as a standard business sponsor in that period are set out in written instrument IMMI 13/030 as follows:

   • A) recent expenditure by the business to the equivalent of at least 2% of payroll of the business, in payments allocated to an industry training fund that operates in the same or related industry of 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.

3. IMMI 13/030 provides that expenditure that can count towards Training Benchmark B includes:

   • paying for a formal course of study for the business’s employees who are Australian citizens and Australian permanent residents or for TAFE or University students, as part of the organisational training strategy

• funding a scholarship in a formal course of study approved under the Australian Qualifications Framework for the business’s employees who are Australian citizens and Australian permanent residents or, for TAFE or University students, as part of the organisational training strategy

• employment of apprentices, trainees or recent graduates on an ongoing basis in numbers proportionate to the size of the business

• employment of a person who trains the business’s Australian employees who are Australian citizens and Australian permanent residents as a key part of their job

• evidence of payment of external providers to deliver training for Australian

employees

• on-the-job training that is structured with a timeframe and clearly identified

increase in the skills at each stage, and demonstrating:

• the learning outcomes of the employee at each stage;
• how the progress of the employee will be monitored and assessed;
• how the program will provide additional and enhanced skills;
• the use of qualified trainers to develop the program and set

assessments; and

• the number of people participating and their skill/occupation

1. The applicant must meet the obligations of the Training Benchmarks provisions for the period of the applicant’s most recent Standard Business Sponsorship, being 31 March 2015 to 31 March 2018.

1. The applicant provided the Tribunal with evidence of a Training Benchmarks A payment to TAFE Qld, dated 17 May 2017 in the sum of $2000. No other evidence was provided in relation to the Training Benchmarks payments.

2. As noted above, the applicant has failed to provide sufficient evidence to the Tribunal to show its financials in the relevant period it was an approved SBS. Accordingly, the Tribunal is unable to calculate whether the above payment in 2017 (which was only one of the 3 years for which the SBS approval ran) met the Training Benchmarks payments commitment.

3. The Tribunal thus does not have the basis on which to calculate the applicant’s payroll for all of the years relevant to the SBS approval period, nor of any other claimed training expenses, on which it could assess whether the applicant met its training obligations in IMMI 13/030 on the SBS period.

4. On this basis, the Tribunal is not satisfied that the applicant has complied with r.5.19(3)(f).

1. Accordingly, the requirement in r.5.19(3)(f) is not met.

No adverse information known to Immigration: r.5.19(3)(g)

1. Regulation 5.19(3)(g) requires that there is no adverse information known to Immigration about the nominator or person associated with the nominator; or it is reasonable to disregard any such information. For these purposes, ‘adverse information’ and ‘associated with’ have the meaning given in rr.1.13A and 1.13B. 

1. The Tribunal has reviewed the Department's records, including its Integrated Client Services Environment (ICSE) and has found nothing to indicate that there is any adverse information known to Immigration about the nominator or person associated with the applicant.

1. Accordingly, the requirement in r.5.19(3)(g) is met.

Satisfactory compliance with workplace relations laws: r.5.19(3)(h)

1. Regulation 5.19(3)(h) requires the applicant to have a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations.

1. There is no evidence before the Tribunal of any breaches of the workplace relations laws of the Commonwealth or Western Australia by the applicant.

2. Accordingly, the requirement in r.5.19(3)(h) is met.

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

DECISION

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

Susan Reece Jones
Member

ATTACHMENT  -  EXTRACTS FROM THE MIGRATION REGULATIONS 1994

5.19Approval of nominated positions (employer nomination)

…

1. The application must:

   (a)be made in accordance with approved form 1395…; and

   (aa) include a written certification by the nominator stating whether or not the nominator has engaged in conduct, in relation to the nomination, that constitutes a contravention of subsection 245AR(1) of the Act; and

   (b)be accompanied by the fee mentioned in regulation 5.37.

Temporary Residence Transition nomination

1. The Minister must, in writing, approve a nomination if:

   (a)the application for approval:

   (i)       is made in accordance with subregulation (2); and

   (ii)      identifies a person who holds a Subclass 457 … visa granted on the basis that the person satisfied the criterion in subclause 457.223(4) of Schedule 2; and

   (iii)     identifies an occupation, in relation to the position, that:

   (A)is listed in ANZSCO; and

   (B)has the same 4-digit occupation unit group code as the occupation carried  out by the holder of the Subclass 457 … visa; and

   (b)the nominator:

   (i)       is, or was, the standard business sponsor who last identified the holder of the Subclass 457 … visa in a nomination made under section 140GB of the Act or under regulation 1.20G or 1.20GA as in force immediately before 14 September 2009; and

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

   (iii)     did not, as that standard business sponsor, meet regulation 1.20DA, or paragraph 2.59(h) or 2.68(i), in the most recent approval as a standard business sponsor; and

   (c)either:

   (i)       both of the following apply:

   (A)in the period of 3 years immediately before the nominator made the application, the holder of the Subclass 457 …visa identified in subparagraph (a) (ii) has:    

   (I)held one or more Subclass 457 visas for a total period of at least 2 years; and

   (II)been employed in the position in respect of which the person holds the Subclass 457 … visa for a total period of at least 2 years (not including any period of unpaid leave);

   (B)the employment in the position has been full-time, and undertaken in Australia; or

   (ii)      all of the following apply:

   (A)the person holds the Subclass 457 … visa on the basis that the person was identified in a nomination of an occupation mentioned in sub-subparagraph 2.72(10)(d)(iii)(B) or sub-subparagraph 2.72(10)(e)(iii)(B);

   (B)the nominator nominated the occupation;

   (C)the person has been employed, in the occupation in respect of which the person holds the Subclass 457 … visa, for a total period of at least 2 years in the period of 3 years immediately before the nominator made the application; and

   (d)for a person to whom subparagraph (c)(i) applies:

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

   (ii)      the terms and conditions of the person’s employment will not include an express exclusion of the possibility of extending the period of employment; and

   (e)the terms and conditions of employment applicable to the position will be no less favourable than the terms and conditions that:

   (i)are provided; or

   (ii)would be provided;

   to an Australian citizen or an Australian permanent resident for performing equivalent work in the same workplace at the same location; and

   (f)either:

   (i)       the nominator:

   (A)fulfilled any commitments the nominator made relating to meeting the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; and

   (B)complied with the applicable obligations under Division 2.19 relating to the nominator’s training requirements during the period of the nominator’s most recent approval as a standard business sponsor; or

   (ii)      it is reasonable to disregard subparagraph (i); and

   Note Different training requirements apply depending on whether the application for approval as a standard business sponsor was made before 14 September 2009 or on or after that date.

   (g)either:

   (i)       there is no adverse information known to Immigration about the nominator or a person associated with the nominator; or

   (ii)      it is reasonable to disregard any adverse information known to Immigration about the nominator or a person associated with the nominator; and

   (h)the nominator has a satisfactory record of compliance with the laws of the Commonwealth, and of each State or Territory in which the applicant operates a business and employs employees in the business, relating to workplace relations.