PERERA (Migration) - [2018] AATA 5464

PERERA (Migration) [2018] AATA 5464 (9 November 2018)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS:  Mrs JENETTE JASINTHA DIAS PERERA
Mr ANTON SRIMATH DIAS PERERA
Mr CHANNA DIAS PERERA
CASE NUMBER:  1601146
DIBP REFERENCE(S):  BCC2014/2968548 BCC2015/3330628 BCC2015/3885578 BCC2015/3885616 BCC2015/3885635 BCC2015/3885662 BCC2015/3885674 BCC2015/3885695 BCC2016/156260
MEMBER:R. Skaros
DATE:9 November 2018
PLACE OF DECISION:  Sydney
DECISION:The Tribunal affirms the decision not to grant the applicants Business Skills (Residence) (Class DF) visas.
Statement made on 09 November 2018 at 1:15pm

CATCHWORDS
MIGRATION – Business Skills (Residence)(Class DF) visa – Subclass 892 – import and export business – providing employment, business and personal assets in Australia – net value of assets requirement not met – activities conducted in Australia limited – not a qualifying business – no exceptional circumstances – decision under review affirmed
LEGISLATION
Migration Act 1958, s 65
Migration Regulations 1994, rr 1.03, r 1.11, Schedule 2, cls 892.211, 892.212, 892.214

CASES
Teng v MIBP [2015] FCCA 1197

STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW

This is an application for review of a decision made by a delegate of the Minister for Immigration on 20 January 2016 to refuse to grant the applicants Business Skills (Residence) (Class DF) Subclass 892 visa under s.65 of the Migration Act 1958 (the Act).
The primary criteria for the grant of a Subclass 892 visa is set out in Schedule 2 to the Migration Regulations 1994 (the Regulations). The primary criteria must be satisfied by at least one member of the family unit. The other members of the family unit who are applicants for a visa of this subclass need satisfy only the secondary criteria.
The applicants applied for the visas on 7 November 2014. The delegate refused to grant the visas on the basis that the first named applicant (the applicant) did not satisfy cl.892.212 of the Regulations. The delegate found that the appropriate regional authority has not determined that there are exceptional circumstances and that the applicant did not satisfy at least 2 of the 3 requirements in cl.892.212 relating to providing employment, business and personal assets in Australia and assets in the main business in Australia.
The applicant provided a copy of the delegate’s decision record with the application for review.
The Tribunal invited the applicants to provide information regarding a number of requirements, to which the applicants’ former representative provided a response.
The first and second named applicants, who are spouses and shareholders of the nominated business, appeared before the Tribunal on 10 May 2018 to give evidence and present arguments. The Tribunal also took evidence from their accountant, Mr Johaan Zimsen.
The applicants were represented in relation to the review by their registered migration agents. Their former representative attended the hearing.
At the hearing, the Tribunal agreed to grant the applicants additional time, until 18 May 2018, to provide further information regarding the various issues discussed, including their net assets in the nominated business, whether the nominated business’ activities were in Australia, and whether the business was actively operating for a period of at least two years before the application was made, and whether the business is a ‘qualifying business’.
No information was received by the agreed date. On 10 September 2018, an officer of the Tribunal, on request from the member, contacted the former representative’s office to check if any post hearing information had been provided. The former representative confirmed that no information had been provided to the Tribunal and requested a period of 7 days to make contact with the applicant. On 14 September 2018, the Tribunal received an appointment of representative form together with correspondence from the applicants’ newly appointment representative advising that they now have carriage of the applicants’ matter. The representative requested a period of three weeks to make submissions. The Tribunal agreed to grant the extension of time. On 4 October 2018, the Tribunal received written submissions and supporting documents, which have been relevantly referred to below.
For the reasons that follow, the Tribunal has concluded that the decision under review should be affirmed.
CONSIDERATION OF CLAIMS AND EVIDENCE
Background
The applicant nominated Adriyan Holdings Australia Pty Ltd as the main business. In the two years immediately before the application was made, between 7 November 2012 and 6 November 2014, the applicant and her spouse held 100% of the shares in Adriyan Holdings Australia Pty Ltd.
The applicant provided a number of documents in support of the application, including an Australian Securities and Investment Commission (ASIC) current and historical extract of company statement, business activity statements, financial statements, bank account statements and evidence of ownership of property in Australia.
In providing an overview of the business’ activities, it was submitted that the applicant’s company is based in Melbourne and operates a business that is involved in the export and imports of goods. It was submitted that the company specialises in the reconditioning of machinery and spare parts and the supply of chemicals for manufacturing purposes, with their main client base being in Asia and the South East Asia region. In relation to overseas exports, it was submitted that the business obtains supplies from Taiwan and ships it directly to the purchasing client but maintains all financial transactions through Australian banks. In relation to Australian exports, it was submitted that the business has been involved in exporting chemicals and reconditioned Australian made machinery/parts to the Asia region.
It was also submitted that the business imports to Australia and has been involved in importing a chemical product to Australia for further development by a local Australian manufacturer. It was submitted that the business utilised the services of the local manufacturer to assist with manufacturing the required products, which was then exported to the client in Sri Lanka.
The Department sought further information from the applicant regarding a number of matters, including net assets in the business, loan to the company and an import/export schedule itemising each transaction together with bills of lading for each transaction, bank statements to show the purchase and sale of the goods and evidence of the legal title in respect of the goods imported into Australia and subsequently exported.
In response, submissions and supporting documents were provided to the Department. In a letter from the applicant’s accountants, it was relevantly submitted that the applicants had invested cash into the company which has been recorded in the financial reports under ‘Investment Funds – Capital Investment’. Copies of bank statements were provided as evidence of the funds transferred into the company’s business account. By reference to the financial statements for the year ended 30 June 2014, the accountant stated that the net assets were at least $75,000 throughout the nominated 12 months period.
In relation to the business’ income, the accountant explained that there were two main sources, being ‘service charges income’ and ‘export/import income’. It was noted that the service charges accrued makes up the majority of the business’ profit and is calculated as a fixed percentage fee of 15% of each export sales invoice and is payable by the overseas branch, C.D.P. Lanka (Pvt Ltd for export services provided by the Australian entity. In relation to the import/export income it was noted that this can be very minimal and that some invoices are break even or even a small loss due to foreign currency movements. It was submitted that the profitability of the business relies heavily on the ‘service charges income’ which is generated by the applicant’s specialised skills.
Further information was sought from the Department to which the then representative responded by way of submission and further supporting documents. In relation to the net assets, updated financial statements for the year ended 30 September 2014 were provided. The balance sheet showed that as at 30 September 2013 the net asset had declined to $9,602. The applicant provided bank statements and ledger documents to substantiate some of the information recorded in the financial statements. In relation to the company loan, statements issued by Westpac bank for an equity loan in the company’s name were provided together with the corresponding ledger entry reports.
In relation to the evidence of exports and imports requested by the Department, the applicant provided a list of all the transactions, approximately 50 in total, of the exports and imports arranged by the applicant’s company for the period between February 2013 and September 2014. The information also included details of the company’s suppliers and customers. Documents regarding each transaction, including signed contracts, invoices, shipment, payment details, correspondence with suppliers and product related documents were also provided to the Department.
It was submitted that neither Taiwan or Sri Lanka require export licences for the goods that the company exports to Sri Lanka as they are not classified as licenced items. In relation to the legal title of goods, it was submitted that the company, as the transacting business, sources the suppliers, signs contracts in the form of pro-forma invoices and arranges payments to be made to the supplier using the Westpac bank, with whom they have a credit facility. It was also submitted that the company signs agreements in the form of pro-forma invoices with customers for the provision of goods sourced from suppliers and arranges for the goods to be shipped to their clients in Sri Lanka. Payments are made by the customer via internet bank transactions. It was submitted that the applicant had maintained continuous and direct involvement in the management of the business and decision making process. In support of this, a number of documents were provided, including correspondence between the applicant and suppliers, the freight forwarding company, Westpac bank documents indicating the applicant is a signatory to the business and various documents and letters addressed to the applicant.
After considering the evidence, the delegate decided to refuse the application on the basis that the applicant did not meet cl.892.212 because the delegate was not satisfied that the applicant met at least two of the three requirements relating to providing employment, business and personal assets in Australia and assets in the main business in Australia. The delegate found that there was no evidence that the applicant employed the equivalent of one full time employee who is an Australian citizen, permanent resident or New Zealand passport holder. The delegate was also not satisfied that the assets owned by the applicant and her spouse in the main business in Australia had a net value of at least $75,000 throughout the period of 12 months ending before the application was made. Based on information in the company’s updated balance sheets, the delegate found that the company’s net assets were $9,602 as at 30 September 2013 and $143,339 as at 30 September 2014. The delegate considered the loans recorded on the balance sheet to be loans in respect of Westpac and not the applicant and/or her spouse and could therefore not be added to the net value of the business. As the applicant had not satisfied the requirements in cl.892.212(a) and (c) the application was refused.
Review application
On review, the Tribunal sought updated information about the requirements in cl.892.211, cl.892.212 and cl.892.214. In response, the applicant’s former representative provided extracts of documents that had already been provided to the Department. It was submitted that cl.892.212 was satisfied as the net assets in the three month period prior to lodgement was $143,339 and the applicants’ assets in Australia exceeded $250,000.
After considering all of the evidence before it, the Tribunal had a number of concerns. The first related to whether the applicant’s net assets in the business were at least $75,000 throughout the 12 months before the application was made. The second concern related to whether the activities in which the nominated business was involved had in fact been undertaken in Australia, given that the business’ import/export activities, with the exception of few transactions, were between China/Taiwan and Sri Lanka. The third concern related to whether the business is a ‘qualifying business’ for the purpose of meeting the definition of ‘main business’ in r.1.11 of the Regulations, given that the business’ customers, in almost all the trading transactions, is two companies – C.D.P. Lanka Pvt Ltd and Christic Lanka Polymers Pvt Ltd.
Hearing evidence
At the hearing, the applicant gave evidence about her experience and employment background. The applicant informed the Tribunal that she and her spouse have a business in Sri Lanka, C.D.P. Lanka Pvt Ltd, which they started in 1993. That business is involved in the import and export of industrial chemicals. She was a director and account keeper for the company. She informed the Tribunal that she continues to hold 50% of the shares in that company. Her spouse owns the other 50% of the shares. She informed the Tribunal that they also operate another company in Sri Lanka – Christic Lanka Polymers Pvt Ltd – which operates the manufacturing arm of their business. She and her spouse are the only shareholders of that company.
When asked about their Australian registered company, Adriyan Holdings Australia Pty Ltd, the applicant gave evidence that the company was established in 2009 and started operating in 2013. When asked about the operations of the business in Australia, the applicant stated that in February 2013 they started to communicate with overseas clients. They initially started to export goods from Australia to other countries. When asked how many shipments had been made from Australia to other countries, she stated three: two shipments of reconditioned machinery from F.A Maker in Victoria to Sri Lanka and another from Tollman and Redox to Sri Lanka. The Tribunal noted that it appears to only have a record of two transactions; however, after reviewing the list of transactions it acknowledges that there were about four shipments from Australia to Sri Lanka.
When asked if the company had been involved any other import/export activities to/from Australia, the applicant explained that by the time they started the business the manufacturing sector was shutting down in Australia. They found that Australia was importing from China and Taiwan and they were unable to be competitive. She stated that the factories which were exporting chemicals into Australia were shutting down.
The Tribunal noted that the evidence before it indicates that they were sourcing goods in China and shipping them directly to Sri Lanka and that the business’ activities appear to have limited connection to Australia. In response, she stated that they wanted to keep the financial hub in Australia and had plans to expand the business. The applicant gave evidence that she manages the business from her home office in Australia.
The Tribunal observed that the consignee for all the shipments to Sri Lanka was the applicants’ companies, C.D.P. Lanka Pvt Ltd and Christic Lanka Polymers Pvt Ltd. When asked whether the business had any other customers, the applicant stated that the goods were on sold to retailers. When queried further, the applicant confirmed that the shipped goods were received by their entities in Sri Lanka, who were also responsible for payment of the invoices issued by the Australian company. She also confirmed that the Australian entity has not had any direct dealings with any other companies in Sri Lanka.
The applicant gave evidence that she is the only employee of the Australian entity and that they have not employed anyone else in Australia.
The Tribunal observed that the transaction documents show that the business had arranged only one shipment into Australia. The applicant’s spouse confirmed that this occurred on 29 November 2013. The chemical was for a manufacturing company in Victoria and had a value of $2,000.
In relation to their personal assets in Australia, the applicant confirmed that they had purchased two properties in Melbourne, one in 2009 and the other in 2013, both of which were purchased outright.
The Tribunal then discussed with the applicant the delegate’s concerns regarding the claimed net assets in the business. The Tribunal also raised several concerns about the financial statements, including the value of the net assets, loan to the company and the high level of trade debtors, which was $507,685, compared to a trading income of $859,980 as at 30 September 2014. As part of the discussions with the applicants and the accountant, the following was submitted: that the capital investments made by the applicants by way of a cash injection into the business, which were $154,656 as at 30 September 2013 and $139,656 as at 30 September 2014, should be added to the net assets for the same periods, as the policy allows for loans by directors to the business to be added to the net assets. The Tribunal observed that the directors’ loans appeared as a separate entry on the accounts which recorded a loan of $5,603 as at 30 September 2014. The accountant explained that the amounts injected into the business by the directors was for working capital and could have been recorded on the accounts as a loan from the directors to the business. He stated that they elected to record it as a capital investment as they thought it would enhance the application.
The Tribunal noted that given many of the deposits into the business’ accounts were from the related overseas entities, it was somewhat difficult to identify which transactions were for payments of invoices and which were for working capital. The accountant indicated that this information could be identified and provided to the Tribunal.
The applicant’s spouse gave evidence that business equity access loans from Westpac were secured against one of their properties in Australia. He stated that they were advised not to sell one of the properties to fund the business and that it was better to set up a loan advance to the business and draw on those funds when required. The Tribunal indicated that it would provide additional time for the applicants to provide evidence of the funds they relied on as being loans to the business.
In relation the high level of trade debtors (receivables), which formed the majority of the company’s assets, the accountant explained that subsequent activity statements, reconciliations and bank statements will show that the relevant invoices have been paid and that the claimed turnover has come into being. The Tribunal reviewed the documents referred to by the accountant and observed that most of the amounts in respect of which the invoices were issued, and recorded as trade debtors, had been received from the overseas entities.
The Tribunal then discussed with the applicant its concern that the business’ activities were not being undertaken in Australia and/or were not undertaken for a total period of at least two years before the application was made, and that the business may not be considered a ‘qualifying business’ because it only sells goods or services to a related entity. The Tribunal discussed with the applicant the requirements in cl.892.211 and the definition of main business in r.1.11.
The Tribunal noted that the applicant had applied for the visa on 7 November 2014 and as such the relevant two year period is from 7 November 2012 to 6 November 2014. The Tribunal noted that the applicant’s business had to have been actively operating in Australia during that period. The Tribunal explained to the applicant that on her earlier evidence, the business commenced operation in February 2013, and that the business’ activity statements did not record any sales activity until the first quarter of 2013. The Tribunal noted that the evidence suggests the business may not have been actively operating in Australia for at least two years before the application.

The Tribunal further noted that while it accepts they have registered a company in Australia and chose to conduct the financial transactions through an Australian bank, the import/export activities of the business, with the exception of about four transactions, were not undertaken in Australia but were between China/Taiwan and the applicants’ businesses Sri Lanka.
The Tribunal then went on to explain the definition of ‘qualifying business’, which it noted includes, a business that is operated for the purpose of making profit through the provision of goods or services to the to the public. The Tribunal noted that the Australian entity’s customers were the related entities in Sri Lanka, namely C.D.P. Lanka Pvt Ltd and Christic Lanka Polymers Pvt Ltd, in which she and her spouse had an ownership interest. The Tribunal acknowledged that while the overseas entities may on sell the goods to the public, the Australian registered company was not involved in the provision of goods and/or services to the public. The Tribunal referred to the Federal Circuit Court decision in Tengv MIBP,[1] where the Court found no error in the Tribunal finding that the Australian company, in the provision of goods exclusively to a Taiwanese company, which was owned by the applicant in Taiwan, was not the provision of ‘goods to the public’. The Tribunal noted that the facts of the applicant’s case were similar to those in Teng and that the Tribunal may come to the same conclusion.
[1] [2015] FCCA 1197.
The applicant stated that they started to export to Sri Lanka but the factories were closing down and they were not able to do everything they wanted to do. The Tribunal acknowledged the applicant’s evidence but noted that there was no provision in the legislation to take into account any mitigating circumstances and that it had to make its decision in accordance with the relevant legislative provisions.
The Tribunal reiterated its concerns, which the applicant indicated she understood. When asked if she wanted to respond to each of the concerns raised, the applicant stated that this was likely to take time. The representative asked if they could have time to respond in writing to which the Tribunal agreed. It was agreed that a response would be provided by 18 May 2018. As noted above, no response was received by the agreed date; however, after following up with the former representative in September 2018, the Tribunal did receive submissions and supporting documents from the applicants’ current representative.
Post hearing submissions
It was submitted that the applicant’s net assets in the business exceeded the required $75,000 throughout the period of 12 months preceding lodgement. Documentary information was provided, including evidence of the transfer of funds into the Australian business’ account from persons to whom the applicants had previously loaned money and from the applicants’ company in Sri Lanka. It was submitted that the applicant transferred $105,000 from the company’s cash reserves account to the loan account and that this amount had been the applicant’s net assets in the business since 25 September 2013. It was submitted that the amount was recorded on the financial statements as part of the ‘investment fund-capital investment’ when it was in fact a director’s loan to the company. In relying on Departmental policy for calculating net assets, it was submitted that the applicant’s net assets in the business for the relevant periods should therefore have included the amounts recorded as investment funds. The net assets were recalculated as $169,861 as at 30 September 2018 and $282,995 as at 30 September 2014.
In relation to the issue of whether the business is a qualifying business, it was submitted that according to r.1.03 of the Regulations and the policy intention, a business that is operated for a purpose of a profit and has not been set up for a mere speculation or passive investment can be considered as a qualifying business. It was submitted that Adriyan Holdings Australia Pty Ltd has been set up to provide goods and services to the public as follows: in its first year of operation, in 2013 and 2014 the company imported chemicals, had them manufactured in Australia and exported to Sri Lanka. Evidence was attached indicating that in November 2013 the Australian company imported chemicals from Wuhan Rison Trading Company in China, which were subsequently manufactured in Australia by Tollman Pty Ltd and exported to the applicant’s company in Sri Lanka. Evidence of Australian freight companies having been paid for transport services was also provided.
It was submitted that the Australian company also conducted deals between overseas suppliers and exported them to Sri Lanka and that the Australian company benefited from the proceeds of the transaction. It was submitted that the company paid for freight forwarding in Australia benefiting an Australian business, and that it paid professional fees, commissions and ongoing business expenditure in Australia which benefited the Australian economy. It was submitted that in the year ending 30 September 2013, the company spent in excess of $8,000 in freight charges paid to Australian companies. Evidence to support the claim that the company exported and spent money in Australia was provided.
Considerations
The business skills visa scheme was introduced in 2003[2] and involves two stages whereby the majority of applicants initially apply for a four-year provisional business skills visa (Class UR) and, after providing satisfactory evidence of a specified level of business activity in Australia, may apply for an onshore permanent business skills visa (Class DF).[3]
[2] Migration Amendment Regulations 2002 (No.10) (SR 2002, No.348).
[3] Explanatory Statement to SR 2002, No.348.
The Business Skills (Residence) (Class DF) visa is the second stage of this two-staged processing structure, and provides Australian permanent residence for eligible business persons.
The criteria for a Subclass 892 visa are set out in Schedule 2 to the Regulations, and include cl.892.211(1) and cl.892.212, both of which require the applicant’s business to be a ‘main business’ as defined in r.1.11.
Relevantly, cl.892.211(1) requires that the applicant has had, and continues to have, an ownership interest in 1 or more actively operating main businesses in Australia for at least 2 years immediately before the application is made.
Regulation 1.11, as it applies to this case, defines ‘main business’ as follows:
(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 at least 10% of the total value of the business; and
d.the business is a qualifying business.
‘Qualifying business’ is defined in r.1.03 to mean 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.
The Tribunal accepts that the applicant travelled to Australia and registered a company in 2009 in which she has the required ownership interest. The Tribunal also accepts that the applicant’s company has undertaken some business activities in Australia. One of the concerns for the Tribunal; however, is that there is limited evidence of the active operation of the business in Australia for a period of at least two years immediately before the application was made. The activity statements provided with the application indicate nil sales and nil capital/non-capital purchases for the quarter ending 31 December 2012. The applicant also gave evidence at the hearing that the business commenced operating in February 2013, when they started to communicate with overseas clients. There is very limited evidence before the Tribunal which indicates that the business in which the applicant had an ownership interest was actively operating in Australia prior to February 2013.
The Tribunal acknowledges that the activity statement for the quarter ending 31 December 2012 shows an instalment payment of $31 for PAYG income tax instalment, which was consistently paid to the Australian Taxation Office (ATO) quarterly since July 2012 as indicated by the company’s itemised ATO transaction records. The Tribunal notes however, that the applicant has been the only employee of the business, and so payment of PAYG instalments towards any income tax liability for the period up to 31 December 2012 does not, on its own, satisfactorily establish that the business has been actively operating in Australia prior to the first quarter of 2013.
The Tribunal considers that the period of two years immediately before the application was made is between 7 November 2012 and 6 November 2014. Given the above concerns, the Tribunal is unable to be satisfied that there was an actively operating business, in which the applicant had an ownership interest, in Australia during the relevant two year period.
In relation to the operations of the business in Australia, the Tribunal has had regard to the submissions made by the representative post hearing regarding the activities conducted in Australia from which Australia has benefited. The representative referred to the business importing goods from China in November 2013 to be manufactured in Australia and the on sale of those goods to the company in Sri Lanka. The Tribunal notes, however, that the evidence, which is consistent with the import/export transaction schedule and other documents provided to the Department, indicates that this was the only occasion on which the Australian business imported goods into Australia. The chemicals were imported from China and had a value of $1,642, were given to Tollman Pty Ltd for manufacturing, were then purchased by the Australian business from Tollman for $4,923 and sent to the applicant’s business in Sri Lanka, Christic Lanka Polymers Pvt Ltd, on 13 January 2014. The other transactions that had a connection with Australia included the purchase of machinery from Australian companies, F.A. Maker Pty Ltd, on 22 August 2013, 11 June 2013 and 10 May 2014, and the purchase of chemicals from Redox Pty Ltd on 10 January 2014 and 6 May 2014. The consignee for all these transactions was C.D.P. Lanka Pvt Ltd or Christic Lanka Polymers Pvt Ltd. Of the 50 transactions arranged through the Australian company’s accounts between February 2013 and September 2014, about 6 were between Australia and another country, which the Tribunal considers to be very limited.
The Tribunal acknowledges that some activities were conducted by the business in Australia, including payments being made to Australian freight companies, payment of professional fees and commissions being paid in Australia as recorded on the profit and loss statement. However, the Tribunal’s concern is that activities conducted in Australia were very limited. Moreover, the activities, including the professional services provided by the applicant, appear to be for the benefit of the applicants’ businesses in Sri Lanka. Furthermore, the professional fees of 15% of export sales charged by the Australian business, were payable by the applicant and her spouse’s companies in Sri Lanka, which casts doubt over the commercial arrangement being at arms-length.
After considering the evidence as a whole, the Tribunal formed the view that the applicant travelled to Australia on the temporary business skills visa to establish and operate a business similar to that which she and her spouse operate in Sri Lanka, namely the purchase of chemicals from China/Taiwan and on selling it to manufacturers/companies in Australia, but that due to the downturn in the manufacturing industries in Australia at that time, the applicants were unable to fulfil their business plans. Not wanting to forego the opportunity of securing permanent residency on the basis of a business in Australia, it appears that the applicants decided to instead conduct their overseas business’ activities, using the Australian registered entity and directing some, possibly all, their importing transactions, through an Australian bank account.
While the manner in which applicants conducted their business activities may be perfectly lawful, it does not appear to be consistent with the purpose of the business owner two-stage visa program, which requires business owners to establish and actively operate a business in Australia. The Tribunal formed the view that the applicant’s presence in Australia appears to be more consistent with her managing the operations of an existing overseas business from within Australia, rather than managing an actively operating business in Australia.
The Tribunal now turns to consider the issue of whether the business is a ‘qualifying business’ as required by the definition of main business in r. 1.11(d), which the Tribunal considers to be the most problematic issue for the applicant in this case.
A qualifying business is one that 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.
The issue in this case is whether the applicant’s business, Adriyan Holdings Australia Pty Ltd, derived its profits through the provision of goods and services to the public. As submitted, Adriyan Holdings Australia Pty Ltd, through the professional services provided by the applicant, operates an import/export business. The financial reports indicate that the business derives its income from export sales and professional services fees.
The evidence before the Tribunal, including for the period prior to the application and subsequently, indicates that the only customers of Adriyan Holdings Australia Pty Ltd are the two related entities, C.D.P. Lanka Pvt Ltd or Christic Lanka Polymers Pvt Ltd, which are owned by the applicant and her spouse in Sri Lanka.
The definition of ‘qualifying business’ was considered in the case of Teng. In that case, the applicant’s company in Australia exported goods and sold it to a company in Taiwan that was owned by the applicant in Taiwan. The Tribunal found that the Australian company’s provision of goods to the Taiwanese company was not the provision of goods ‘to the public’ and, accordingly, it did not meet the definition of a ‘qualifying business’. On appeal, the applicant contended that the Tribunal erred in its interpretation and reliance on the Department’s policy. It was also contended that the Tribunal erred in finding that the only customer of the Australian company was the Taiwanese Company when, in fact, all of the end users in Taiwan were customers of the Australian enterprise.
In dismissing the application, the Court relevantly held that the Tribunal adopted a meaning of the phrase, ‘the provision of goods … to the public’, that was at least broadly consistent with the guidance set out in the policy. The Court found that the requirement in the definition of ‘qualifying business’ that the business be ‘operated for the purpose of making profit through the provisions of goods ... to the public’ cannot be broken up. What was required to be demonstrated was a particular kind of connection or relationship between the business of the Australian company and the provision of goods to the public. It needed to be shown that the Australian company derived profit through the provision of goods to the public. The word ‘through’ in this context could only sensibly mean ‘by virtue of’. It was found that the Tribunal in that case did not err in finding that the only customer of the Australian company was the Taiwanese company and to suggest all the end users in Taiwan were customers of the Australian company was incorrect.
The facts of this case are similar to those in Teng. In this case, the Australian company had an exclusive business arrangement with companies in Sri Lanka, which were owned by the applicant and her spouse. The Tribunal does not consider that the goods and services provided by Adriyan Holdings Australia Pty Ltd exclusively to these related entities come within the description of providing goods and services to the public. The Tribunal has had regard to the submission that C.D.P. Lanka Pvt Ltd and Christic Lanka Polymers Pvt Ltd on sells products to a more varied customer base in Sri Lanka; however, given the findings in Teng, the Tribunal does not consider that the end users of the exported products are customers of Adriyan Holdings Australia Pty Ltd. The Tribunal considers that the only customers of the Australian company were the related entities in Sri Lanka, whom the Tribunal does not consider to be ‘the public’.
The Tribunal has also had regard to the post hearing submissions, and while it acknowledges that the business was not set up for mere speculation or passive investment, it considers that the business must also derive its profit through sale of goods and services to the public to be a ‘qualifying business’. The Tribunal has considered the submission that the business was set up to provide goods and services to the public because in its first year of operation, in 2013/2014, it imported chemicals into Australia, where it had them manufactured, which were subsequently exported to Sri Lanka. The Tribunal notes that this occurred in respect of only one transaction, details of which have been discussed above, and the Tribunal does not consider that that transaction, in which the chemicals were on sold to the related entity, Christic Lanka Polymers Pvt Ltd, constitutes providing goods and/or services to the public.
The Tribunal has also considered the submission that the applicant’s Australian company, in conducting its business activities, has benefited Australian businesses and the Australian economy through its payment for freight forwarding in Australia, professional fees, commissions and ongoing business expenditure in Australia. However, the Tribunal does not consider that the company’s business activities and expenditure in Australia constitute providing goods and/or services to the public.
Given the above considerations, the Tribunal is not satisfied that Adriyan Holdings Australia Pty Ltd derived its profit through the provision of goods to the public. The Tribunal consequently finds that the business is not a qualifying business as required by r.1.11(d). The business nominated by the applicant therefore does not meet the definition of ‘main business’ in r.1.11. It follows that the applicant does not satisfy cl.892.211.
Given the above findings, it is not necessary for the Tribunal to consider the issue relating to whether the applicants had the required level of net assets in the business throughout the required period.
The applicants have not claimed, nor is there any evidence to suggest, that the applicants meet any of the other visa subclasses in Class DF.
Given the above findings, the decision under review must be affirmed.
The secondary applicants applied for their visas on the basis of being members of the family unit of the first named applicant. As the first named applicant does not meet the requirements for the visa, the Tribunal must also affirm the decisions in respect of the secondary applicants.
DECISION
The Tribunal affirms the decision not to grant the applicants Business Skills (Residence) (Class DF) visas.
R. Skaros
Member