NGUYEN (Migration)

[2019] AATA 6319

NGUYEN (Migration) [2019] AATA 6319 (17 December 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs THI KIM LAN NGUYEN
Mr QUYET THANG TRAN
Mr QUOC ANH TRAN

CASE NUMBER:  1713885

DIBP REFERENCE(S):  BCC2016/71579 BCC2017/2530923 BCC2017/2534335

MEMBER:R. Skaros

DATE:17 December 2019

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 890 Business Owner visa:

· cl.890.213 of Schedule 2 of the Regulations.

Statement made on 17 December 2019 at 2:46pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) – annual turnover requirement – ‘main business’ – sales income – revised turnover figures – unaccounted cash sales – consistent cash deposits – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), ss 65, 134
Migration Regulations 1994 (Cth), r 1.11; Schedule 2, cl 890.213

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 Immigration on 26 June 2017 to refuse to grant the visa applicant a Business Skills (Residence) (Class DF) Subclass 890 visa under s.65 of the Migration Act 1958 (the Act).

2. The visa applicant applied for the visa on 5 January 2016. 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 applicant in this case is seeking to satisfy the criteria for the grant of a Subclass 890 (Business Owner) visa, 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.

3. The delegate refused to grant the visas on the basis that the first named visa applicant (the applicant) did not satisfy cl.890.213 of Schedule 2 to the Regulations because the delegate was not satisfied that in the 12 months immediately before the application was made, the applicant’s main business in Australia did not have an annual turnover of at least $300,000.

4. On review, the applicants provided detailed submissions, together with supporting documents which the Tribunal has had regard to further below.      

5. The applicants appeared before the Tribunal on 19 November 2019 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Vietnamese and English languages.

6. The applicants were represented in relation to the review by their registered migration agent.

7. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

   CONSIDERATION OF CLAIMS AND EVIDENCE

8. The issue in the present case is whether the applicant meets the criterion in cl.890.213, which requires that, in the 12 months immediately before lodgement of the application, the applicant’s main business in Australia had an annual turnover of at least $300,000.

9. 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. Accordingly, the Tribunal will first determine whether the applicant’s business is a ‘main business’, as defined in r.1.11, for the purposes of cl.890.213.

10. The applicant identified “Hoang Anh Pty Ltd” as her main business in the visa application form. The Tribunal notes that this is the entity that carries on the applicant’s business. The Tribunal considers that the business is the enterprise or activity that is carried on by the registered entity. In this case, the business is an import and retail business which is involved in importing a variety of goods from Vietnam, such as clothing, shoes, furniture and toys which are then sold to the public in Australia.

11. The Tribunal finds on the evidence before it that the retail outlet, which is known as ‘Sweet Home’ commenced trading in March 2013 at Beamish Ave Campsie. The applicant informed the Tribunal at the hearing that the due to the business’ expansion she had to operate the business from larger retail premises and they moved to a larger retail store on Canterbury Rd Campsie in 2016. The applicant also informed the Tribunal that in mid-2015 she acquired another retail business in Newtown which sells cigarettes, food and drinks. The applicant gave evidence that over the last 7 years she has been operating retail businesses in Australia in which she has personally invested over $1.8 million of her own funds. The applicant stated that she has worked hard to expand her business, which in the most recent financial year had a turnover of $2.3 million.

12. The Tribunal has before it an extract of an ASIC current and historical company statement in respect of Hoang Anh Pty Ltd which indicates that the company was registered on 24 October 2012 and that the applicant has held 90% of the shares issued in that company. As Hoang Anh Pty Ltd is the company that carries on the applicant’s retail business, the Tribunal finds that the applicant has an ownership interest, as provided for in s.134(10) of the Act, and therefore meets r.1.11(1)(a) of the definition of main business.

13. In relation to the applicant’s involvement and management of the business from day to day, the Tribunal queried the applicant extensively about the business, including its establishment, financial performance, assets, employees and the types of tasks she undertakes on a day to day basis. The Tribunal observed that the applicant was able to effortlessly and comprehensively respond to the Tribunal’s queries. Her responses were detailed and entirely consistent with documentary evidence before the Tribunal. The Tribunal is also satisfied that that the applicant is, and has always been, the person who oversees, directs and controls the day to day operations of the business and that she makes all the key decisions in relation to the business.

14. The Tribunal is satisfied that the applicant maintains, and has maintained, direct and continuous involvement in the day to day management and decision making in respect of the business. The applicant therefore meets r.1.11(1)(b) of the definition of main business.

15. In relation to the value of the applicant’s ownership interest, as required by r.1.11(1)(c), the Tribunal notes that as the applicant holds 90% of the shares in the company that carries on the business. The business is not operated by a publicly listed company and the annual turnover was, at the time of application, less than AUD 400,000 and, at the time of this decision, is more than AUD 400,000. In any case, as the value of the applicant’s ownership interest in the business is, and was, at least 51% of the total value of the business, it follows that she meets r.1.11(1)(c) of the definition of main business.

16. The Tribunal is also satisfied that the business is a qualifying business in that it is operated for the purpose of making a profit through the sale of goods to the public. The applicant’s nominated business is involved in retail trade activities and the Tribunal is satisfied that the business is not operated for the purposes of speculative or passive investment. The applicant accordingly meets r.1.11(1)(d) of the definition of main business.

17. Given all of the above findings, the Tribunal is satisfied that the applicant’s nominated business is a main business in relation to the applicant.

18. The Tribunal next considered the submissions and supporting the evidence in relation to the business’ turnover in the 12 months immediately before the application was made.

    Turnover of the main business

19. As the application was made on 5 January 2016, the relevant 12 months period is therefore between 5 January 2015 and 5 January 2016. The applicant is required to demonstrate that her nominated business had a turnover of at least $300,000 in the relevant 12 months period.

20. The Department initially received financial reports for the company for the years ended 30 June 2014, 2015 and 2016, which showed that the business had total sales of $334,081, $378,425 and $482,273 respectively. The delegate requested financial reports for the periods from 1 January 2014 to 31 December 2014 and 1 January 2015 to 31 December 2015, as the delegate proposed the 12 months period from 1 January 2015 to 31 December 2015 when assessing whether the requirement in cl.890.213 was met.

21. In response to the Department’s request, the applicant provided a number of documents which included quarterly business activity statements which relevantly indicated that the applicant utilised GST option 3 for the period between 1 July 2014 and 30 June 2016. Also provided were the financial statements for the 2014, 2015 and 2016 financial years and not the calendar years as requested by the delegate. In response to a further request by the Department, the applicant provided a financial report for the 12 months period ended 31 December 2015, however, this indicated that the sales for the business was $219,827. As the amount was not at least $300,000, the delegate refused the application.

22. On review, the Tribunal received a large volume of documents, including a revised profit and loss statement for the 12 months period ended 31 December 2015 which indicated that the business’ turnover was $389,493. In support of the revised turnover figures, the applicant also provided eftpos transaction reports, bank statements and handwritten cash sales books for the relevant 12 months period. The Tribunal also received a letter from the applicant’s accountant, a statutory declaration from the applicant and an independent review report from a charted accountant. In explaining the discrepancy regarding the business’ turnover for the relevant 12 months period, it was submitted that the financial report provided to the Department did not pick-up the cash sales for the period between 1 July 2015 and 31 December 2015.

23. In the explanation letter from the applicant’s accountants, the amounts for the business’ eftpos sales and cash sales were noted for each of the relevant quarters. The figures indicated that, in the quarters ended 30 September 2015 and 31 December 2015, the business had cash sales of $72,075 and $97,590 respectively. The accountant explained that during the relevant 12 months period the applicant had selected to Option 3 GST installment for their quarterly business activity statements and could therefore choose to report the total sales figures for the company after the end of the financial year of 30 June 2016. The accountant stated that the company had complied with all its reporting obligations to the Australian Taxation Office and the relevant GST and income tax liabilities were duly paid.

24. In the independent review report, the chartered accountant, Mr Dennis Dang CA from ASTA Services, stated that they had conducted a review in accordance with the Standard on Review Engagements ASRE 2405 Review of Historical Financial Information, other than on a financial report, which consisted of making enquiries of the primary of persons responsible for financial and accounting matters and applying analytical and other review procedures. They concluded that, based on the review, nothing has come to their attention that causes them to believe that the Schedule of Review for the company for the calendar year ended 31 December 2015 is not prepared in all material respects in accordance with the accounting policies used. Following the review, it was concluded that the actual revenue for the calendar year ended 31 December 2015 should be $389,493 and not $219,827 as previously reported. It was noted that the profit and loss statement for the calendar year ended 31 December 2015 which was signed in March 2017 was materially understated by $169,669 which is made up of the cash sales that were unaccounted for in the reporting period.

25. While the 12 months period ending 31 December 2015 is not strictly the 12 months immediately before the application was made, for ease of assessing the relevant financial evidence, the Tribunal also proposes to use the same period as the delegate as it covers the most recent four full quarters prior to lodgement of the application.

26. At the hearing, the Tribunal raised with the applicant the concerns about the discrepancies in the two financial reports. In response, the applicant explained that the business sales come from two sources, card and cash. She stated that during the relevant period her business consistently had sales of between $80,000 and $100,000 per quarter. She gave evidence that since commencing operation, the business’ sales had consistently increased in each year and had achieved a turnover of more than $300,000 since 2014. The applicant stated that her accountant had submitted the incorrect financial report and that she did not check it before it was submitted to the Department. She stated that she did not even consider that the turnover would be an issue because she was well aware of the requirement that she had to have sales of more than $300,000 a year to qualify for the visa and, because her business had been doing very well with sales, she had no reason to be concerned about the financials of the business. In explaining this further, the applicant stated that for the first half of the relevant period, namely, for the quarters ending 31 March 2015 and 30 June 2015, the figures were correct in that they had taken into account both the eftpos and the cash payments. Whereas the figures for the quarters ending 30 September 2015 and 31 December 2015 were incorrect because they relied on the figures in the instalment activity instalment statements lodged with the ATO, which were an estimate, and did not take into account the cash payments for those two quarters. The applicant explained that in each quarter they provide an estimate of their income on an instalment activity statement and that they consolidate their accounts, of both eftpos and cash sales, at the end of each financial year.

27. The Tribunal perused the information on cash sales books provided, including the total amounts noted for each day, each month and the two quarters ending 30 September 2015 and 31 December 2015. The Tribunal also perused the information on the printed transaction reports for these two quarters. The Tribunal observes that the amounts on the point of sale (sale transactions) reports for the period from 1 July 2015 to 31 December 2015 appears to reflect only the eftpos sales, which was $21,807 for the quarter ending 30 September 2015 and $23,007 for the quarter ending 31 December 2015. This is in contrast with other information provided about the sales performance of the business, including the consolidated bank transaction report for the period from 1 January 2015 to 30 June 2015, and the end of financial year company returns which support the applicant’s claims that the business achieves sales of between $80,000 and $100,000 per quarter.

28. Also of significance are the business’ bank statements for the period from 1 July 2015 to 31 December 2015 which show consistent cash deposits at the Commonwealth bank Campsie branch and a number of deposits at the Newtown branch. While the Tribunal cannot be absolutely certain that these cash deposits were in fact from the cash sales recorded, as the amounts deposited are in large lump sums and were not deposited on a daily basis, the Tribunal, having regard to the totality of the evidence before it, is prepared to accept the applicant’s claims that the cash deposits into the business’ bank account for the relevant period is from the cash sales recorded in the cash sales books

29. By reference to the cash sales books, bank accounts and consolidated financial reports, the applicant submits that the sales of the business in the relevant quarters were as follows:

    Period from 1/1/2015 to 31/03/2015 = $89,244.71.

    Period from 1/4/2015 to 30/06/2015 = $85,766.61.

    Period from 1/7/2015 to 30/09/2015 = $93,883.39

    Period from 1/10/2015 to 31/12/2015 = $120,597.86

30. This amounts to a total of $389,493 for the relevant 12 months period.

31. The applicant also provided the following summary of the business’ annual turnover in each fiscal year, which the Tribunal notes is consistent with the information in the lodged activity statements, company returns and financial reports:  

Turnover as at 30 June	2014	2015	2016	2017	2018	2019
AUD	$334,081	$378,425	$485,118	$770,935	$1,191,744	$2,308,291

1. When considering the totality of the evidence before it, including the business’ financial reports for each fiscal year prior to lodgement of the application and in the years after lodgement of the application, together with the business’ bank accounts, transaction reports, end of year company returns, end of year account reconciliation and payment of GST owing at the end of each financial year and the clear and consistent growth of the business’ sales since its establishment, the Tribunal accepts that the business’ turnover for the relevant 12 months period was well in excess of the required  $300,000.

2. Given the above, the Tribunal satisfied that in the 12 months immediately before the application was made, the applicant’s main business in Australia had an annual turnover of at least AUD 300,000. It follows that the requirement in cl.890.213 is met.

3. As the Tribunal has found that the applicant satisfied cl.890.213, the appropriate course is to remit the application to the Department to consider remaining criteria for grant of the visas. 

   DECISION

4. 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 890 Business Owner visa:

   ·

   cl. 890.213 of Schedule 2 of the Regulations.

   
   
   

   R. Skaros
   Senior Member

   
   

   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.

   1.11AOwnership 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.