Pidorenko v Minister for Immigration, Citizenship and Multicultural Affairs
[2024] FedCFamC2G 525
•11 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Pidorenko v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FedCFamC2G 525
File number(s): PEG 132 of 2021 Judgment of: JUDGE LUCEV Date of judgment: 11 June 2024 Catchwords: MIGRATION – Judicial review – Administrative Appeals Tribunal decision – Business Skills (Residence) (Class DF) visas – where business is a family partnership – whether calculation of business turnover should include or exclude the Goods and Services Tax when determining if threshold amount was reached in the relevant period – whether Tribunal determined ordinary meaning of turnover – whether Tribunal had regard to context and purpose of use of turnover – whether error material - whether jurisdictional error - writs issued
WORDS AND PHRASES – “turnover”
Legislation: A New Tax System (Goods and Services Tax) Act 1999 (Cth) Div 29, 38, Sch 1, ss 1-2, 7-5, 7-10, 7-15, 9-5, 11-5, 11-25, 17-5, 17-10, 19-10, 19-50, 27-5, 27-10, 29-5, 29-10, 29-20, 33-3, 33-5, 38-185, 38-3, 72-5, 195-1, 995-1
Corporations Act 2001 (Cth), s 334
Evidence Act 1995 (Cth) s 135
Income Tax Assessment Act 1997 (Cth) ss 3-5, 6-5, 17-15, 328-120
Insurance Contracts Act 1984 (Cth) ss 8, 11, 11C, 11D, 11DA, 13, 33C, 40, 65, 74, 75D
Migration Act 1958 (Cth) ss 65, 140, 474, 476
Taxation Administration Act 1953 (Cth) Pt IVC, Sch 1, ss 105-50, 105-55
Migration Regulations 1994 (Cth) regs 2.57A, 2.60W, 2.73, Sch 2, cll 188.112, 188.222, 189.233, 845.222, 846.212, 892.211, 892.213, Sch 7A, Pt 7A.9,
Migration (Skilling Australians Fund) Charges Regulations 2018) (Cth) reg 4
Cases cited: An v Minister for Immigration and Citizenship [2007] FCAFC 97; (2007) 160 FCR 480
Aris-Bainbridge v Turner Manufacturing Co Ltd [1950] 1 KB 563; [1950] 2 All ER 1178
Attorney-General for the Northern Territory v Minister for Aboriginal Affairs [1989] FCA 202; (1989) 23 FCR 536
Cheng v Minister for Immigration and Citizenship [2012] FMCA 911; (2012) 271 FLR 322; (2012) 134 ALD 119
Cheng v Minister for Immigration and Citizenship [2013] FCA 405; (2013) 213 FCR 362; (2013) 140 ALD 624
Collector of Customs v AGFA-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389; (1996) 71 ALJR 123; (1996) 35 ATR 249; (1996) 141 ALR 59; (1996) 43 ALD 193
Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280; (1993) 18 AAR 9; (1993) 115 ALR 1
El Ess & Anor v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1038; (2004) 142 FCR 43
Federal Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142; (2011) 197 FCR 580; (2011) 82 ATR 153; (2011) 284 ALR 279; (2011) 125 ALD 8
Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22; (2008) 236 CLR 342; (2008) 82 ALJR 968; (2008) 68 ATR 158; (2008) 246 ALR 448
Federal Commissioner of Taxation v Travelex Limited [2021] HCA 8; (2021) 271 CLR 605; (2021) 95 ALJR 334; (2021) 112 ATR 827
Gliksten and Son, Limited v Green [1929] AC 381; [1929] All ER Rep 383
House of Peace Pty Ltd v Bankstown CityCouncil [2000] NSWCA 44; (2000) 48 NSWLR 498; (2000) 106 LGERA 440
HP Mercantile Pty Ltd v Federal Commissioner of Taxation [2005] FCAFC 126; (2005) 143 FCR 553; (2005) 60 ATR 106; (2005) 219 ALR 591
Kuzmanovski v New South Wales Lotteries Corporation [2010] FCA 876; (2010) 270 ALR 65
Miller & Son v Oliver & Boyd (1906) F 390; (1906) 43 SLR 270
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259; (1996) 70 ALJR 568; (1996) 136 ALR 481; (1996) 41 ALD 1
Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Viane [2021] HCA 41; (2021) 274 CLR 398; (2021) 96 ALJR 13; (2021) 395 ALR 403; (2021) 178 ALD 279
MZAPC v Minister for Immigration and Border Protection [2021] HCA 17; (2021) 273 CLR 506; (2021) 95 ALJR 441; (2021) 390 ALR 590
MZXLD v Minister for Immigration and Citizenship [2007] FCA 1912
New South Wales Lotteries Corporation v Kuzmanovski [2011] FCAFC 106; (2011) 195 FCR 234
Plaintiff S157/2002 v Commonwealth [2003] HCA 2; (2003) 211 CLR 476; (2003) 77 ALJR 454; (2003) 195 ALR 24; (2003) 72 ALD 1
Polo/Lauren Co LP v Ziliani Holdings Pty Ltd [2008] FCAFC 195; (2008) 173 FCR 266; (2008) 80 IPR 531; [2009] AIPC 92-323
Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6; (1995) 22 AAR 35
Sterling Guardian Pty Ltd v Commissioner of Taxation (Cth) [2006] FCAFC 12; (2006) 149 FCR 255; (2006) 62 ATR 119; (2006) 228 ALR 712
SZATL and Anor v Minister for Immigration and Border Protectionand Anor [2017] HCA 34; (2017) 262 CLR 362; (2027) 91 ALJR 936; (2017) 347 ALR 405
Tung v Minister for Immigration & Anor [2019] FCCA 2368
Texts and Dictionaries: Australian Oxford Dictionary (2nd ed.)
Macquarie Dictionary (Online)
Oxford Dictionary of English (3rd ed.)
Division: Division 2 General Federal Law Number of paragraphs: 79 Date of hearing: 20 July 2022 Place: Perth Counsel for the Applicants: Mr M Crowley Solicitor for the Applicants: William Gerard Legal Counsel for the First Respondent: Ms C Taggart Solicitor for the First Respondent: Sparke Helmore Lawyers Second Respondent: Submitting appearance, save as to costs ORDERS
PEG 132 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ZBIGNIEW PIDORENKO
First Applicant
AGNIESZKA PIDORENKO
Second Applicant
ADRIAN PIDORENKO (and others named in the Schedule)
Third Applicant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP, MIGRANT SERVICES AND MULTICULTURAL AFFAIRS
First Respondent
ADMINISTRATIVE APPEALS TRIBUNAL
Second Respondent
ORDER MADE BY:
JUDGE LUCEV
DATE OF ORDER:
11 JUNE 2024
THE COURT ORDERS THAT:
1.The name of the First Respondent be amended to read “Minister for Immigration, Citizenship and Multicultural Affairs”.
2.Paragraphs 2 to 8 and annexures HWG-1 and HWG-2 of the affidavit of Hamish William Glenister affirmed 19 July 2022 be struck out.
3.A writ of certiorari issue quashing the decision of the Second Respondent made on 28 May 2021.
4.A writ of mandamus issue requiring the Second Respondent to re-determine its review of the decision of the delegate of the First Respondent made on 15 November 2018, and to determine it according to law.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LUCEV
INTRODUCTION AND BACKGROUND
The Judicial Review Application
Before the Court is an application for judicial review (“Judicial Review Application”) made under s 476 of the Migration Act 1958 (Cth) (“Migration Act”) by the applicants. The Judicial Review Application seeks review of a decision of the Administrative Appeals Tribunal (“Tribunal” and “Tribunal Decision” respectively). There is one ground of review, as follows:
The Second Respondent made a jurisdictional error at [40]-[41] by misapplying or misconstruing cl 892.213 of sch 2 of the Migration Regulations 1994 (Cth) by interpreting “annual turnover” as not including GST.
The Court may set aside a decision of the Tribunal upon judicial review if it is affected by material jurisdictional error: Migration Act, ss 474 and 476; Plaintiff S157/2002 v Commonwealth [2003] HCA 2; (2003) 211 CLR 476; (2003) 77 ALJR 454; (2003) 195 ALR 24; (2003) 72 ALD 1; MZAPC v Minister for Immigration and Border Protection [2021] HCA 17; (2021) 273 CLR 506; (2021) 95 ALJR 441; (2021) 390 ALR 590 (“MZAPC”) at [2] per Kiefel CJ, Gageler, Keane and Gleeson JJ.
The Court is cognisant that its role is not to review the merits of the Tribunal Decision and that it must read the Tribunal Decision fairly and as a whole: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259; (1996) 70 ALJR 568; (1996) 136 ALR 481; (1996) 41 ALD 1.
The applicants
Mr Zbigniew Pidorenko (“Mr Pidorenko”) is the first applicant, and his wife (“Ms Pidorenko”) is the second applicant. The third, fourth and fifth applicants are the three children of Mr and Ms Pidorenko. The grant of a visa to Ms Pidorenko and the three children is dependent upon the grant or refusal of Mr Pidorenko’s Business Skills Visa application: Migration Act, s 140(1). For convenience, the Court will, unless otherwise necessary, only refer to Mr Pidorenko in the remainder of these Reasons for Judgment.
Tribunal Decision
The Tribunal Decision affirmed a decision of a Delegate (“Delegate” and “Delegate’s Decision”) of the first respondent, now the Minister for Immigration, Citizenship and Multicultural Affairs (“Minister”) to refuse to grant Mr Pidorenko a Business Skills (Residence) (Class DF) visa (“Business Skills Visa”) under s 65 of the Migration Act.
Background prior to the Tribunal Decision
The background to the Judicial Review Application is as follows:
(a)Mr Pidorenko and his family are Polish nationals: CB 1;
(b)Mr and Ms Pidorenko have operated a partnership under the business name, “eurofurniture (“Business”), since about 2014: CB 31-34. The Business is a business involved in the “export, manufacturing, retail trade and wholesale trade”: CB 25, or the “organising and coordination of sales and distribution of goods, mainly furniture of various types”: CB 180 at [9];
(c)in the 12 months before Mr Pidorenko applied for the Business Skills Visa, the Business made sales totalling $206,982.00 (all dollar figures in these Reasons for Judgment are in Australian dollars): CB 79-95;
(d)on 24 May 2017 Mr Pidorenko applied for the Business Skills Visa: CB 1-30;
(e)on 15 November 2018 the Delegate’s Decision was made to refuse the Business Skills Visa: CB 113-130; and
(f)on 1 December 2018, Mr Pidorenko applied to the Tribunal for review of the Delegate’s Decision: CB 131-133.
Background to Tribunal Decision
The background to the Tribunal Decision is as follows:
(a)on 9 March 2022 the Tribunal emailed Mr Pidorenko inviting him to respond in writing to the Tribunal’s request for information (“Information Request”): CB 137-141, specifically, noting the following information:
(i)that the “regulations” required Mr Pidorenko’s main business in Australia, or main businesses in Australia together, to have had an annual turnover of at least $200,000 in the 12 months immediately before the Business Skills Visa application was made: CB 138. A copy of the relevant regulation, cl 892.213 of Sch 2 to the Migration Regulations 1994 (Cth) (“Migration Regulations”) was attached to the Information Request: CB 141;
(ii)that one main business was nominated in the Business Skills Visa application, that being the Business (formally, the A Pidorenko and Z Pidorenko Family Partnership): CB 138; and
(iii)that according to the financial statements and business activity statements (“BAS”) returns (“BAS Returns”) of the Business for the year ended 30 April 2017, annual turnover (sales) was $188,165: CB 138;
(b)at CB 139 the Tribunal explained that it was a requirement for the Business Skills Visa application to be successful, that the annual turnover immediately before the Business Skills Visa application was made had to be at least $200,000, and continued as follows:
Based on the financial statements and BAS returns, the turnover for the relevant period was AUD188,165.
If the minimum turnover threshold was not met, this would mean that you do not satisfy a requirement for the visas to be approved and … [the Tribunal] must affirm the decision that is under review.
(c)on 7 April 2021 Mr Pidorenko’s then lawyer responded to the Information Request: CB 152-154;
(d)on 14 April 2021 the Tribunal wrote to Mr Pidorenko’s then lawyer, inviting Mr Pidorenko and his then lawyer to attend a Tribunal hearing on 13 May 2021 (“Tribunal Hearing”): CB 159-163; and
(e)Mr Pidorenko appeared at the Tribunal Hearing on 13 May 2021 accompanied by his then lawyer and a Polish interpreter. The Tribunal hearing went for 25 minutes and Mr Pidorenko was given the opportunity to provide further written submissions: CB 171-174. No further written submissions appear to have been provided.
Tribunal Decision - Findings
In the Tribunal Decision made on 28 May 2021 the Tribunal found that:
(a)the turnover of the Business was $188,165, excluding goods and services tax (“GST”) for the 12-month period to 30 April 2017, which means that the threshold amount of $200,000, as set out in cl 892.213 of Sch 2 to the Migration Regulations was not met: CB 183 at [41]; and
(b)given its findings, the Delegate’s Decision must be affirmed: CB 183 at [42].
Materials before the Court
Materials before the Court include the following:
(c)a Court Book (“CB”) numbering 189 pages, which was marked as Exhibit 1 at hearing;
(d)an affidavit of Mr Pidorenko’s lawyer, Mr Hamish Glenister (“First Glenister Affidavit” and “Mr Glenister” respectively), affirmed 25 June 2021, annexing the Tribunal Decision (which also appears at CB 178-184);
(e)Mr Pidorenko’s written submissions filed 30 May 2022 (“Mr Pidorenko’s Submissions);
(f)the Minister’s written submissions filed 17 June 2022 (“Minister’s Submissions”);
(g)an affidavit of Mr Glenister, affirmed 19 July 2022 (“Second Glenister Affidavit”) annexing:
(i)documents obtained from the Australia Accounting Standards Board (“AASB”) website , namely:
(A)a document entitled “Revenue from Contracts with Customers”; and
(B)a document entitled “Glossary of Defined Terms” (together “AASB Documents”); and
(ii)extracts of the definition of “turnover” from various dictionaries; and
(h)the transcript of the hearing before the Court on 20 July 2022 (“Transcript”) which the Court has read in preparing these Reasons for Judgment.
The Minister objected to the tender of the AASB Documents in the Second Glenister Affidavit. That objection is dealt with at [70] below.
SUBMISSIONS
Mr Pidorenko’s Submissions
Mr Pidorenko’s submissions were as follows:
(a)as to the construction and meaning of a word or phrase Mr Pidorenko said that:
(i)traditionally, the question whether a word or phrase in an instrument is to be given its ordinary English meaning or some technical or other meaning or usage is a question of law that can vitiate an administrative decision for jurisdictional error;
(ii)the effect or “construction” (rather than the meaning) of a word or phrase, at least for a non-compound phrase, is also a question of law: Collector of Customs v AGFA-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389; (1996) 71 ALJR 123; (1996) 35 ATR 249; (1996) 141 ALR 59; (1996) 43 ALD 193 (“AGFA-Gevaert”) at [17] and [20] per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ; Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280; (1993) 18 AAR 9; (1993) 115 ALR 1 (“Pozzolanic Enterprises”) at [23] per Neaves, French and Cooper JJ that can vitiate an administrative decision for jurisdictional error;
(iii)whether, and if so how, the meaning of a word or phrase is affected by the “statutory context” (including the immediately surrounding text, the Migration Regulations as a whole, the Migration Act and its manifest object or purpose), is also a question of law: AGFA-Gevaert at [16] per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ; An v Minister for Immigration and Citizenship [2007] FCAFC 97; (2007) 160 FCR 480 (“An”) at [4] per Lindgren J, that can vitiate an administrative decision for jurisdictional error; and
(iv)whether there was no evidence to inform a finding of some technical or other meaning or usage is also a question of law that can vitiate an administrative decision for jurisdictional error: Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Viane [2021] HCA 41; (2021) 274 CLR 398; (2021) 96 ALJR 13; (2021) 395 ALR 403; (2021) 178 ALD 279 at [17] per Keane, Gordon, Edelman, Steward and Gleeson JJ;
(b)as to the ordinary meaning of “turnover” Mr Pidorenko said that:
(i)evidence not before the decision-maker is not inadmissible on judicial review just because it was not before the decision-maker: Attorney-General for the Northern Territory v Minister for Aboriginal Affairs [1989] FCA 202; (1989) 23 FCR 536 at [45] per Lockhart J;
(ii)there is an ordinary English meaning of “turnover”, that in any event there is no technical or other meaning or usage of “turnover” for “accounting purposes”, and moreover the Tribunal did not identify any evidentiary basis for its finding that there is an “accounting” meaning or usage of “turnover” which involves aggregating total sales and then subtracting the amount of GST liability that a particular entity may owe;
(iii)the Macquarie Dictionary (Online) states that “turnover” is a noun with the following relevant definitions:
…
(5) the turning over of the capital or stock of goods involved in a particular transaction or course of business;
(6) the total revenue generated from the provision of goods or services for a particular accounting period; and
(7) the total amount of business done in a given time.
(iv)the Australian Oxford Dictionary (2nd ed.) relevantly defines “turnover” as a noun meaning:
(2) the amount of money taken in a business;
(v)the Oxford Dictionary of English (3rd Ed.) relevantly defines “turnover” as a noun meaning:
(1) the amount of money taken by a business in a particular period: a turnover approaching £4 million;
(2) …;
(3) the rate at which goods are sold and replaced in a shop.
(vi)axiomatically, none of the relevant ordinary English meanings of “turnover” could supply a basis for the Tribunal’s conclusion at [41] that “turnover” involves a 2-stage process of determining the aggregate sales and then subtracting the amount of any GST liability;
(c)as to whether there is a meaning of “turnover” for “accounting purposes” Mr Pidorenko said that:
(i)“turnover” is not a concept which is recognised by the AASB in any published Australian Accounting Standard, and does not appear to be a term used for accounting purposes at all;
(ii)the AASB’s published Framework for the Preparation and Presentation of Financial Statements: ( recognises “income” as the increase in economic benefit over a reporting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants;
(iii)AASB’s published Compiled Accounting Standard AASB118 (Revenue: Objective, page 6 on the other hand recognises “revenue” as “income that arises in the course of ordinary activities of an entity and is referred to by a variety of different names including sales, fees, interest, dividends and royalties”;
(iv)“revenue” is a subcategory of “income” which:
includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue.
(v)whereas “revenue” is an accounting concept consistent with the approach taken by the Tribunal, there is no technical or other meaning or usage of “turnover”. There is however an ordinary English meaning which could not sustain the Tribunal’s conclusion at [40];
(d)in relation to GST and “turnover” Mr Pidorenko said that:
(i)within the context of the Migration Regulations, a meaning of “turnover” which involves subtracting GST from total sales creates capricious outcomes in application which would not have been intended; and
(ii)furthermore, tacitly conferring advantages on some business visa applicants and disadvantages on others would conflict with the manifest purpose of a visa stream which includes subclasses in which a State or Territory body has a role in identifying “in need” businesses or skills. The Migration Regulations themselves are deliberately agnostic about conferring such advantages;
(e)in relation to GST-free supplies Mr Pidorenko said that:
(i)the Tribunal’s conception of “turnover” leads to this outcome: Furniture producer “A” and furniture producer “B” make more or less the same products. Each has total sales of $200,000. If A exports but B sells domestically, on the Tribunal’s analysis A will have “turnover” of $200,000 but B will not;
(ii)under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (“GST Act”), taxable supply is defined in s 9-5 to exclude a GST-free supply. In the premises above, B makes “taxable supplies” and incurs a corresponding GST liability, whereas A does not as those supplies are “GST-free supplies” under s 38-185(1) of the GST Act. This would result in the owners of A getting visas, but not the owners of B;
(iii)exporters are only one category of GST-free supplies. There are 20 in total in Div 38 of the GST Act. The balance is all to do with domestic supplies: food; health; education; child-care; religious services; activities of charities, water, and sewerage; supplies of going concerns; transport; precious metals; inward supplies through duty-free shops; grants of land by governments; farmland supplies; cars for use by disabled people; international mail; telecommunications supplies made under arrangements for global roaming in Australia; eligible emissions units; and intangible consumer supplies;
(iv)there is a great deal of potential complexity. For example some supplies of food are GST-free under s 38–3(1) of the GST Act, but not food consumed on (some) premises, not hot take-away food, and not the individual food types listed at Schedule 1 to the GST Act (e.g., popcorn, hotdogs, doughnuts); and
(v)GST-free exports are GST-free for the policy reason that GST is a tax on consumption in Australia. But other GST-free domestic supplies are intended to remove the price impact;
(f)in relation to input-taxed supplies Mr Pidorenko said that:
(i)whereas GST-free supplies remove the economic burden of the GST completely, input-taxed supplies shift the economic burden of the GST to the supplier though the removal of the supplier’s entitlement to input tax credits on any “creditable acquisitions” or “creditable importations”: GST Act, ss 11-5 and 11-25;
(ii)while the GST is removed from the supply to the consumer, the supplier is still expected to indirectly pass on the economic burden of the loss of input tax credits in the price. The Full Court of the Federal Court put it this way in HP Mercantile Pty Ltd v Federal Commissioner of Taxation [2005] FCAFC 126; (2005) 143 FCR 553; (2005) 60 ATR 106; (2005) 219 ALR 591 at [16] per Hill J:
In terms of GST theory, it is generally accepted that there are certain kinds of activities where the basic system of output tax on supplies and input tax credits on acquisitions will not lead to taxation on the value added by each supplier in the chain. The most important example is said to be financial transactions of financial institutions such as, but not confined to, banks, because they constantly borrow and lend and turn over money in a way that amounts, such as interest charged, will not represent the real value added by the financial institutions. Indeed, as the explanatory memorandum distributed with the bill which, as amended, later became the GST Act (“the EM”) says in Chapter 1 [5.140]: “…there is no readily agreed identifiable value for supplies consumed by customers of financial services”. In such a case, it is the margin or imputed margin that is the real economic subject of the supply. There are other examples where this may be the case, one of which is the leasing of, or other dealings with, residential property (not being new residential property).
(iii)input-taxed supplies are GST-free in form but not in economic terms. They are GST-free in form because it is simply too difficult to apply input tax credits. But they are not GST-free in economic terms, because the price to consumer will reflect the supplier’s cost (which does not have an input tax credit). Such a supplier’s BASs would not reflect any GST liability, but the “turnover” would still include an amount which would have represented a GST liability had there been a corresponding input tax credit to nett-off against;
(g)as to GST liability Mr Pidorenko said that:
(i)strictly speaking there is no obligation to “pass-on” to the Federal Government any amount received on a “taxable supply”. There is simply an obligation to pay – at the end of the relevant tax period – an amount representing an entity’s GST liability nett of input tax credits;
(ii)the obligation to pay a GST liability does not accrue at the time consideration is received in respect of a taxable supply. The High Court has warned against approaching the GST based on assumptions about what it tries to achieve: Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22; (2008) 236 CLR 342; (2008) 82 ALJR 968; (2008) 68 ATR 158; (2008) 246 ALR 448 at [3] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ (approving Sterling Guardian Pty Ltd v Commissioner of Taxation (Cth) [2006] FCAFC 12; (2006) 149 FCR 255; (2006) 62 ATR 119; (2006) 228 ALR 712):
In economic terms it may be correct to call the GST a consumption tax, because the effective burden falls on the ultimate consumer. But as a matter of legal analysis what is taxed, that is what generates the tax liability (and the obligations of recording and reporting), is not consumption but a particular form of transaction, namely supply ...
(iii)section 7–5 of the GST Act provides for the netting-off of GST and input tax credits to produce a “net amount for a tax period (which may be altered to take account of adjustments)”. Section 7–10 of the GST Act then establishes that every entity “has tax periods applying to it”. Section 7–15 of the GST Act then imposes the duty to pay the tax for a relevant tax period;
(iv)unless by election, or if the Commissioner of Taxation otherwise determines in respect of a particular taxpayer, BASs are lodged quarterly (on the 21st day after the end of the relevant ‘tax period’): GST Act, s 27–5. As described above, in this case the partnership must have either elected, or else was required, to lodge BASs monthly: GST Act, s 27–10;
(v)it is only upon the filing of the BAS for a relevant period that an obligation to pay a GST liability accrues. If the net amount is greater than zero, that amount must be paid to the Commissioner on a specified day of the month after the relevant tax period: GST Act, ss 33–3 and 33–5. For a quarterly taxpayer, that would usually be the 28th day of the month after the end of the tax period. In other words, GST liability crystallizes later;
(vi)unlike “turnover” (in the ordinary sense), the “net amount” recorded in a particular BAS can change or be changed later. Errors in a BAS can be corrected in a later BAS: GSTE 2013/1–Goods and Services Tax: Correcting GST Errors Determination 2013;
(vii)if the Tribunal’s approach were correct, visa applicants in a similar position to Mr Pidorenko could lodge BASs recording an incorrect “net amount” and subsequently correct it;
(viii)there is yet more complexity. Entities will account for GST at different times depending on whether they choose or are otherwise permitted to account on a “cash basis” on an “accrual basis” under Div 29 of the GST Act;
(ix)for accruals taxpayers, GST payable on a supply is attributable to the tax period in which any of the consideration is received for the supply or a tax invoice is issued relating to the supply, whichever is earlier: GST Act, s 29–5(1). For cash taxpayers, GST payable on a taxable supply is attributable to a tax period to the extent that the consideration is received for the supply in that tax period: GST Act, s 29–5(2);
(x)further, the tax period to which input tax credits may be allocated (so as to be netted off against GST liability) differ according to whether the taxpayer is an accrual or cash basis taxpayer: GST Act s 29–10. For accruals taxpayers, input tax credits are attributable to the period in which the entity provides any of the consideration for the acquisition or an invoice is issued to the entity: GST Act, s 29–10(1);
(xi)for cash taxpayers, input tax credits are attributable to the tax period to the extent that consideration is provided for the acquisition: GST Act, s 29–10(2). But if the taxpayer does not hold a tax invoice, attribution is deferred: GST Act, s 29–10(3). That means of course that the BASs would in that circumstance record more than the GST ultimately payable, and, on the Tribunal’s approach, create a distorted view of the “turnover”.
(xii)that says nothing about “increasing adjustments” or “decreasing adjustments” which relate to a subsequent change in the GST reported as payable by an entity on a supply or a change in the input tax credits to which the entity is entitled: GST Act, s 19–50. In either case, the adjustments are attributable to the (subsequent) tax period in which the entity becomes aware of the adjustment: GST Act, s 29–20;
(xiii)increasing or decreasing adjustments may arise which have the effect of cancelling a supply or acquisition, or changing the consideration for a supply or acquisition, or causing a supply or acquisition to become or stop being a taxable supply or creditable acquisition: GST Act, s 19–10;
(xiv)that is not to mention that the Commissioner always has the powers under Part IVC of the Taxation Administration Act 1953 (Cth) (“TA Act”) to subsequently make a different “assessment” which would be conclusive evidence of a tax liability except in proceedings under Pt IVC of the TA Act: Federal Commissioner of Taxation v Travelex Limited [2021] HCA 8; (2021) 271 CLR 605; (2021) 95 ALJR 334; (2021) 112 ATR 827 at [6] per Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ, approving Federal Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142; (2011) 197 FCR 580; (2011) 82 ATR 153; (2011) 284 ALR 279. This can occur up to 4 years after the relevant tax period, unless the Commissioner forms the view that there has been fraud or evasion – in which case there is no time limit: TA Act, ss 105–50 and 105–55 of Sch 1;
(xv)it is true that cl 892.211(2)(b) of Sch 2 to the Migration Regulations includes a time of application criterion that “all Business Activity Statements required by the [ATO] for [at least 2 years immediately before the application is made] have been submitted to the ATO and have been included in the application”, but it would be wrong to read this as a statutory assumption that the Migration Regulations incorporate assumptions informing the GST scheme. There is no such thing in the GST legislative scheme as “Business Activity Statements” for starters. These are “GST Returns” in the rubric of the GST Act. Because BASs do, however, record “total sales” they are an obvious means of ensuring that “turnover” in the ordinary sense of the word can be easily calculated; and
(xvi)in the end, a definition of “turnover” which is calculated by subtracting GST liability from total sales is unworkable and productive of capricious results. The recorded GST liability will never be final. The recorded GST liability will be subject to change retrospectively for no sinister reasons. The recorded GST liability will be idiosyncratically higher or lower depending on policy decisions incorporated into the GST Act which have no analogue in the Migration Act and Migration Regulations;
(h)as to context Mr Pidorenko submitted that:
(i)the Tribunal’s approach is synonymous with “income”. So much so can be seen by the express analogy made by the Tribunal to ss 328–120(1) and 6–5 of the Income Tax Assessment Act 1997 (Cth) (“ITA Act 1997”): CB 181 at [21]-[23];
(ii)where the Migration Regulations mean “income” they say so expressly. Regulation 2.60W is an example of the Migration Regulations expressly incorporating “taxable income” from the ITA Act 1997;
(iii)in cl 189.233(1)(a) of Sch 2 to the Migration Regulations a criterion for the grant of a Subclass 189 visa is that an applicant’s “taxable income (within the meaning of the ITA Act 1997) is no less than the minimum amount”. Conversely, there is no express reference at all to “GST” or “goods and services tax”. And in cl 188.112 of Sch 2 to the Migration Regulations “income” is likewise used in the context of “eligible investment”;
(iv)for individuals, there is a concept of personal “earnings” under reg 2.57A of the Migration Regulations. But “earnings” has a prescribed formula which nets off reimbursements and superannuation contributions. It is telling that “turnover” has no such formula;
(v)further, subclass 188 (Business Innovation and Investment) stream visas incorporate as a criterion under cl 188.222(2) of Sch 2 to the Migration Regulations matters prescribed in Sch 7A to the Migration Regulations. Part 7A.9 of Sch 7A to the Migration Regulations includes Item 7A94:
at least one main business held by the applicant derived not less than 50% of its annual turnover from export trade in at least 2 of the 4 fiscal years immediately before that time ...
(vi)because there is no GST on exports, or more correctly no “taxable supply” of “GST-free supplies” consisting of exports, the statutory assumption here is that “turnover” does not include GST;
(vii)the difficulty is that the “net amount” of GST in a relevant period worked out under the formula in s 17–5 of the GST Act does not yield such distinctions;
(viii)under s 17–5 of the GST Act the total GST liability is netted off against total input tax credits for a tax period, and the sum is then further adjusted by reference to increasing or decreasing adjustments (which may, and usually will, originate from transactions related to previous tax periods): and also wine tax and luxury car tax: GST Act, s 17–10(2);
(ix)GST-free supplies, unlike input taxed supplies, permit an exporter to claim input tax credits on the steps in production prior to export. Starting with 100% of gross income less GST to then determine whether at least 50% of that was produced by exports does not yield a true picture of the “increase in economic benefit” in the relevant period under the Compiled Accounting Standard AASB118: Revenue – which is in substance the test applied by the Tribunal: Objective, page 6;
(x)put another way, that analysis could yield exports of 50% of “turnover” but which actually represent 55% of the economic benefit (because exports will have attracted an input tax credit without a correlative GST liability);
(xi)finally, reg 2.73(9)(da) of the Migration Regulations contains what appears to be a sui generis definition of “turnover”: “the annual turnover (within the meaning of the Migration (Skilling Australians Fund) Charges Regulations 2018 (Cth) (“Migration Skilling Charges Regulations”))” which sets out a definition of “annual turnover” which expressly adopts an “ordinary income (within the meaning of the [ITA Act 1997 ])” test;
(xii)clause 892.213(2) of Sch 2 to the Migration Regulations contains no such prescription. The appropriate inference to be drawn is that a different meaning is “intended”; and
(xiii)the Tribunal erred in:
(A)applying a definition of “turnover” other than its ordinary English meaning;
(B)in purporting to apply an “accounting purposes” meaning or usage to “turnover” without any evidentiary basis; and
(C)applying a meaning of “turnover” which reflected a range of assumptions and policy decisions inherent in the GST scheme but which was not open having regard to the statutory context of the Migration Act and Migration Regulations.
Minister’s Submissions
The Minister made submissions as follows:
(a)as to the meaning of “turnover” the Minister said that:
(i)“turnover” is not defined in the Migration Regulations. There are no explanatory memoranda or statements relevant to its use or meaning in the Regulations. As it is used in cl 892.213 of Sch 2 to the Migration Regulations, “turnover” has been found to be used in its ordinary meaning. The identification of its meaning and determination as to whether certain funds are “turnover” are questions of fact to be determined by the Tribunal: Cheng v Minister for Immigration and Citizenship [2013] FCA 405; (2013) 213 FCR 362; (2013) 140 ALD 624 (“Cheng Appeal”) at [11]-[12] per Cowdroy J (the Court notes that what the Minister refers to here is not the Federal Court’s findings but its summary of the findings made in the court below, the Federal Magistrate’s Court, in Cheng v Minister for Immigration and Citizenship [2012] FMCA 911; (2012) 271 FLR 322 (“Cheng – FMC”));
(ii)the Tribunal’s reasons make plain that it understood the meaning of “turnover” to be the gross income or revenue of a business for a relevant period, and that because GST was not income or revenue of the business it was not calculable as “turnover”. That was a finding of fact open to the Tribunal for the reasons that it explained;
(iii)it was a meaning and conclusion that was consistent with Departmental policy as set out in the Procedures Advice Manual (“PAM3”). PAM3 explains that turnover is the revenue generated by an entity as a result of the ordinary activities of a business. It is explained that “revenue” includes the total value received for the sale of goods (or other income generating activities) and expressly excludes GST. In particular, PAM3 explains: PAM3, Generic Guidelines, Visa application procedures, 3.9.4.2.:
Turnover appears in the income statement for the business in any given year. It may also appear as “revenue” or “total sales” and is recorded in BAS and/or tax returns for the business. Goods and Services Tax (GST) on “sales” should not be counted when arriving at a turnover figure. Only the amount that has been received and is lawfully receivable by the enterprise on its own account is considered to be revenue. (added emphasis)
(iv)that source of information was also supportive of the Tribunal’s conclusion that “turnover” meant the gross income or revenue from sales excluding GST. The Tribunal did not proceed as though they were bound to adopt Departmental policy. As with the other information before the Tribunal, PAM3 was simply consistent with the Tribunal’s own findings as to what “turnover” meant and why Mr Pidorenko’s contention that there was a unique or separate meaning for migration purposes was not accepted. There was no error in that approach: see, in particular, Cheng Appeal at [23]-[26] per Cowdroy J as to the relevance of PAM3 and “turnover”;
(v)insofar as Mr Pidorenko identifies reg 4 of the Migration Skilling Charges Regulations as prescribing a definition of “annual turnover” that adopts the definition of total ordinary income in the ITA Act 1997 as supportive of an inference that a different meaning to “annual turnover” in the Regulations is to be inferred, the inference called for is unavailable and does not assist; and
(vi)the Migration Skilling Charges Regulations were enacted after cl 892.213 of Sch 2 to the Migration Regulations and are separate from the Migration Regulations. The meaning or intention of cl 892.213 of Sch 2 to the Migration Regulations cannot be reasonably construed or inferred from later legislation. Further, Mr Pidorenko’s submission proceeds on the basis that “annual turnover” in the ITA Act 1997 (which is inextricably linked to “ordinary income”) or the Migration Skilling Charges Regulations must have a distinct or narrower meaning than its ordinary meaning. That basis is not established, including for the reasons found by the Tribunal as to the ordinary meaning of “turnover”;
(b)as to Mr Pidorenko’s proposed new evidence the Minister said that:
(i)Mr Pidorenko seeks to bring forward particular matters that were not before the Tribunal in order to establish the error contended for. Although there is no strict prohibition on evidence not before the decision-maker being adduced on review, the purpose and circumstances for which it may be admitted are limited to establishing jurisdictional error, and not to invite reconsideration of facts as found: MZXLD v Minister for Immigration and Citizenship [2007] FCA 1912 at [10]-[11] per Gordon J; and
(ii)the question to be resolved by this Court is not what does “turnover” mean. It is whether there was a jurisdictional error in the Tribunal’s finding(s) of fact that it means gross income for an accounting period, and that the GST collected by Mr Pidorenko on sales of goods was not relevant gross income;
(c)as to accounting standards the Minister said that:
(i)the Minister objects to Mr Pidorenko’s reliance upon the accounting standard AASB118 as proposed by Mr Pidorenko: Mr Pidorenko’s Submissions at [26]-[28];
(ii)the Tribunal’s reference to accounting principles and standards was in a different context and not for the purpose of making findings as to a trade specific or technical meaning of “turnover”. To the contrary, it was an explanation that there was no basis to distinguish between the “interpretation” of turnover as used in an accounting and migration context; and
(iii)the identified materials were not before the decision maker and are not relevant. They are a subset of available accounting information that may be available and cannot be accepted as conclusive or determinative of Mr Pidorenko’s position. They are inadmissible or, in the alternative, ought to be excluded pursuant to s 135 of the Evidence Act 1995 (Cth);
(d)as to dictionary definitions the Minister said that:
(i)Mr Pidorenko identifies a number of dictionary definitions. As recognised in Cheng – FMC, there are various definitions of “turnover”: Cheng – FMC at [48] per Driver FM; see also Mr Pidorenko’s Submissions at [33]. Amongst the definitions of “turnover” in Cheng – FMC the Macquarie Dictionary (described as the most authoritative Australian dictionary in House of Peace Pty Ltd v Bankstown CityCouncil [2000] NSWCA 44; (2000) 48 NSWLR 498; (2000) 106 LGERA 440 at [33] per Mason P) is cited and provides as follows (emphasis added):
a) the number of times that capital is invested and reinvested in a line of merchandise during a specific period of time;
b)the turning over of the capital or stock of goods involved in a particular transaction or course of business;
c)the total revenue generated from the provision of goods or services for a particular accounting period; and
d)the total amount of business done in a given time.
(ii)if regard is to be had to those definitions, it is also appropriate to consider “revenue” which is relevantly defined to mean:
(A)the income of a government from taxation, excise duties, customs, or other sources, appropriated to the payment of the public expenses;
(B)(plural) the collective items or amounts of income of a person, a state, etc;
(C)the return or yield from any kind of property; income;
(D)an amount of money regularly coming in;
(E)a particular item or source of income: Macquarie Online Dictionary;
(iii)regard to those dictionary definitions does not assist Mr Pidorenko. First, the available definitions are consistent with the meaning of “turnover” as identified by the Tribunal. Further, whilst definitions may provide authoritative aid, they are not determinative of the ordinary meaning of a word: Polo/Lauren Co LP v Ziliani Holdings Pty Ltd [2008] FCAFC 195; (2008) 173 FCR 266; (2008) 80 IPR 531; [2009] AIPC 92-323 at [24] per Black CJ, Jacobson and Perram JJ; Kuzmanovski v New South Wales Lotteries Corporation [2010] FCA 876; (2010) 270 ALR 65 at [38]-[40] per Perram J (reversed on appeal, without disturbing this particular part of the judgment; see New South Wales Lotteries Corporation v Kuzmanovski [2011] FCAFC 106; (2011) 195 FCR 234 at [90] per Siopis, Cowdroy and Tracey JJ);
(e)it was for the Tribunal to find what “turnover” meant. There was a factual basis before the Tribunal which supported the meaning it construed, including a clear policy statement that the identified meaning was apt. In this regard, it is for Mr Pidorenko to establish that any error on the part of the Tribunal was material. That policy statement was, and is, centrally relevant to the particular matter in issue and is entirely consistent with the findings made and the ordinary meaning of “turnover”. Mr Pidorenko made no submission before the Tribunal (or even here) as to why it ought not be guided by that policy. In all of the circumstances, Mr Pidorenko has not discharged his onus as to materiality;
(f)as to asserted capriciousness or complexity the Minister said that:
(i)contrary to Mr Pidorenko’s Submissions at [29], there is no capriciousness or otherwise in that result. Mr Pidorenko’s hypothetical comparison between a business required to collect GST and a business not required to collect to GST does not assist. The same hypothetical may be reversed: a person who is able to sell or supply goods and services with a gross sale value inclusive of GST, has achieved an advantage as against a person who is unable to collect that GST. It is a consideration that does not assist in establishing error (emphasis added),
(ii)Mr Pidorenko’s lengthy analysis of the GST Act is also not to the point. The Tribunal did not find that the meaning of turnover required total sales to be calculated with a deduction of GST liability. It expressly found that GST liability was a different consideration that did not alter the conclusion that the collection of GST on the sale of goods or services was not gross income to the business (emphasis added); and
(iii)the Tribunal found the question to be resolved is whether a business has reached a particular threshold of turnover without taking into account funds collected as GST. That question is not complex and is determinable at the point of sale. As the Tribunal made clear that is precisely what the financial statements provided by Mr Pidorenko demonstrated.
CONSIDERATION AND ANALYSIS OF THE ISSUES AND THE TRIBUNAL DECISION
Clause 892.213 of Sch 2 to the Migration Regulations
Central to the disposition of this matter is cl 892.213 of Sch 2 to the Migration Regulations (and, in particular, sub-cl (2) thereof) which sets out relevant criteria for the Business Skills Visa and provides as follows:
(1) The applicant meets the requirements of subclause (2) or (3).
(2)An applicant meets the requirements of this subclause if, in the 12 months immediately before the application is made, the applicant's main business in Australia, or main businesses in Australia together, had an annual turnover of at least AUD200 000.
(3) An applicant meets the requirements of this subclause if:
(a)the applicant meets at least 2 of the requirements set out in paragraphs 892.212(a), (b) and (c); and
(b)the applicant resides in, and operates the applicant's main business or businesses in Australia in, an area specified in an instrument in writing made by the Minister for this paragraph; and
(c)the appropriate regional authority has determined that there are exceptional circumstances for this subclause.
In this case the Tribunal, as set out at [8(a)] above, determined that the turnover of the Business was $188,165, excluding GST for the 12-month period to 30 April 2017, which means that the threshold amount of $200,000, as set out in cl 892.213 of Sch 2 to the Migration Regulations was not met: CB 183 at [41]. The Tribunal did so on the basis that it determined that “turnover should exclude GST”: CB 181 at [25].
Statutory interpretation
An error in determining the effect or construction of the Migration Regulations which directly affects whether or not a visa is granted can be a jurisdictional error: AGFA-Gevaert at [16], [17] and [20] per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ Pozzolanic Enterprises at [23] per Neaves, French and Cooper JJ; Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6; (1995) 22 AAR 35 (“Sharp Corporation”), FCR at 12-12 per Davies and Beazley JJ. Ultimately this case turns upon whether there was a material jurisdictional error made by the Tribunal in relation to its interpretation of the meaning of “turnover” in cl 892.213(2) of Sch 2 to the Migration Regulations.
The present basis for interpreting legislation in Australia is set out in SZATL and Anor v Minister for Immigration and Border Protectionand Anor [2017] HCA 34; (2017) 262 CLR 362; (2027) 91 ALJR 936; (2017) 347 ALR 405 at [14] per Kiefel CJ, Nettle and Gordon JJ the majority plurality in the High Court observed that (footnotes omitted):
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
Turnover – ordinary meaning
The starting point for a consideration of what is meant by “turnover” in cl 892.213(2) of Sch 2 to the Migration Regulations is therefore the ordinary meaning of that word.
Dictionary definitions
The relevant dictionary definitions cited by Mr Pidorenko and the Minister: see [11(b)(iii)-(v)] and [12(d)] above, provide that “turnover” means:
(a)from the Macquarie Dictionary (Online):
(6) the total revenue generated from the provision of goods or services for a particular accounting period; and
(b)from the Australian Oxford Dictionary (2nd ed.):
(2) the amount of money taken in a business; and
(c)from the Oxford Dictionary of English (3rd ed.):
(1) the amount of money taken by a business in a particular period: a turnover approaching £4 million;
Cases
Various cases have dealt with the ordinary meaning of “turnover”.
In Miller & Son v Oliver & Boyd (1906) F 390; (1906) 43 SLR 270 (“Miller”) the Court of Sessions in Scotland was dealing with the scope of a clause in an arbitration agreement which referred for arbitration a question concerning “business turnover”, and whether an amended question was capable of consideration by the arbitrator. The Lord President in Miller, F at 401 said that:
That amendment … has brought out perfectly clearly and satisfactorily the two different points which are sought to be raised. The one is that turnover means turnover capable of yielding a profit. That does not seem to me to be a question at all. I do not think it is possible for a person to take any phrase in a contract which is conceived in ordinary English, and then by attaching quite a fantastic meaning to the English to say that he had thereby raised a question of law. Turnover means turnover, and the result of that turnover may be a profit to the business or not, and, accordingly, I am of the opinion that there is no question in that point of the defence that could go to the arbiter, for there is nothing for him to determine.
Lord McLaren in Miller, F at 403 said that:
It may be that if parties had voluntarily gone before the arbitrator and one of them had said, “A turnover means a turnover that has resulted in a profit at the end of the year,” the arbitrator might well have found that the most convenient way of disposing of the defence was simply to repel it as manifestly unsound …
In Gliksten and Son, Limited v Green [1929] AC 381; [1929] All ER Rep 383 (“Gliksten”) the House of Lords dealt with a case in which a quantity of timber was destroyed in a fire and the insurer paid out the replacement value of the timber destroyed which was almost three times its estimated book value in the company’s books, with the company only including the lesser sum as turnover in its profit and loss account. The House of Lords held that the whole of the money received for insurance in respect of the timber destroyed had to be included in the company’s profit and loss account as a trading receipt. In Gliksten at 385 Viscount Dunedin said as follows:
The whole point is that the business of the company is to buy timber and to sell timber, and when they sell timber they turn it into money. This particular timber was turned into money, not because it was sold, but because it was burned and they had an insurance policy over it. The whole question comes to be whether that is a turnover in the ordinary course of their business. I think it was. They had that amount of timber, which they got rid of and for which they got a certain price … and that seems to me precisely in the same position as if they got rid of it by giving it to a customer.
In Aris-Bainbridge v Turner Manufacturing Co Ltd [1950] 1 KB 563; [1950] 2 All ER 1178 (“Aris-Bainbridge”) the issue arose as to whether commission was payable to a former employee for lump sum payments received by the company from the government as a result of contracts being broken pursuant to break clauses consequent upon the cessation of World War II. A single judge, McNair J, at KB 564 said that:
The question whether the Commission ought to have been paid on the whole of the company’s receipts or only on selected receipts turns primarily on the meaning of the phrase “turnover of the company’s annual business”. Giving to this phrase its ordinary grammatical meaning, I consider that it includes all sums received and receivable in the year in question as the result of the company’s trading, whether normal or abnormal; in other words, it means all the money which the company turns over in the year for the purpose of making its gains or losses.
In Cheng – FMC the then Federal Magistrates Court was judicially reviewing a decision of the then Migration Review Tribunal (“MR Tribunal”) in which the MR Tribunal found that, for the purposes of determining turnover in cl 892.213 of Sch 2 to the Migration Regulations, where a company that acted as agent for an overseas company in relation to the sourcing and export of a particular kind of acid used in the production of crayons, and where the company acting as agent never took legal title to the acid, turnover for the company acting as agent was to be determined by the service revenue (effectively commission), not on the basis of the total value of goods exported: Cheng Appeal at [6] per Cowdroy J. The MR Tribunal relied upon PAM3 Guidelines in determining the issue of agency and legal title, and therefore, ultimately, the meaning, and quantum, of turnover in that case, with the PAM3 Guidelines providing that only the service revenue (commission) was to be included in turnover, and the MR Tribunal so determined: Cheng Appeal at [6]-[9] per Cowdroy J.
In Cheng – FMC the Federal Magistrates Court had observed at [49] per Driver FM, by reference to four definitions of “turnover” in the Macquarie Dictionary (3rd ed) (set out in Cheng – FMC at [48] per Driver FM and identical to those cited in the Minister’s submissions at [12(d)(i)] above), that the application of the alternative meanings “could produce significantly different outcomes” and it was therefore “appropriate that the Tribunal have regard to policy guidance as to the interpretation of the visa criterion”, that policy guidance being the PAM3 Guidelines. The Federal Magistrates Court also observed that the Tribunal was correct to look beyond the appearance to the substance of the transaction in which the company acting as agent “acted as an intermediary” , and that as such “it was not entitled to retain for its own benefit all of the money received by it” from the overseas company for the goods supplied: Cheng – FMC at [53] per Driver FM.
In Cheng Appeal at [14] per Cowdroy J the Federal Court observed that there were “two distinct issues. The first is whether the [MR] Tribunal erred in its construction of the word “turnover”. The second is whether, having determined the meaning of “turnover”, the Tribunal erred in its application of that meaning to the facts.”
The Court notes that in Cheng Appeal at [21] per Cowdroy J the Federal Court said that Gliksten and Aris-Bainbridge “only serve as examples of the interpretation of “turnover” in particular business contexts in which companies receive funds for their own profit. These authorities do not consider the task before this Court, namely the interpretation of “turnover” in the context of the Regulations. In particular, they do not assist in resolving whether the monies received by … [the appellant’s main business] were by way of agency fees”.
In relation to the construction of a word and its statutory context the Federal Court said in Cheng Appeal at [17] per Cowdroy J that:
(a)the extent that the statutory context of a word affects its meaning is a question of law; and
(b)on judicial review the party seeking judicial review may challenge a finding as to the ordinary meaning of a word “by showing that the statutory context of that word evinces a meaning different from the ordinary meaning found by the court below”.
The Federal Court went on to find that the MR Tribunal did not err in having regard to PAM3 Guidelines as being consistent with its understanding of the meaning of turnover and agency, and to maintain consistency in administrative decision-making, and that no cogent reasons were provided to suggest that the MR Tribunal should not have referred to the PAM3 Guidelines: Cheng Appeal at [23] and [26] per Cowdroy J.
As to the application of the meaning of “turnover” the Federal Court in Cheng Appeal at [27] per Cowdroy J observed (citing An at [83] per Emmett J) that the ability to review the MR Tribunal’s decision on judicial review was limited because once the ordinary meaning of a word is determined whether the particular circumstances of the case fall within that word is a question of fact for the decision-maker. No error was found in the MR Tribunal’s application of the meaning of ““turnover” to the facts of this proceeding”: Cheng Appeal at [30] per Cowdroy J.
Conclusion – ordinary meaning
Having regard to the dictionary definitions and the case sited above it is clear that:
(a)the ordinary meaning of “turnover” is the total amount of money coming into a business in a particular period; and
(b)that in determining whether a particular total amount of money is turnover for the purposes of the Migration Regulations regard may be had by the Tribunal to the terms of the PAM3 Guidelines.
Context and purpose of the Migration Regulations
History
Clause 892.213 of Sch 2 to the Migration Regulations was:
(a)first introduced commencing 1 March 2003 in Statutory Rules 2002 No. 348, Migration Amendment Regulations 2002 (No. 10) 2002 No. 348 dated 19 December 2002. The clause was introduced as:
892.213
In the 12 months immediately before the application is made, the applicant’s main business, or main businesses together, had an annual turnover of at least AUD200 000.
(b)amended in Statutory Rules 2003 No. 94, Migration Amendment Regulations 2003 (No. 2) 2003 No. 94 dated 15 May 2003 commencing 1 July 2003. The clause was amended so that “main business or main business of the applicant” was omitted and in its place “main business in Australia, or main businesses in Australia, of the applicant,” was inserted; and
(c)most recently amended in Migration Amendment Regulations 2006 (No. 2), Select Legislative Instrument 2006 No. 123 dated 1 June 2006 commencing 1 June 2006 into its current form, which is as set out at [13] above.
Prior to the introduction of cl 892.213 of Sch 2 to the Migration Regulations there was a similar clause found in cl 846.212 of Sch 2 to the Migration Regulations which also specifically dealt with minimum turnover requirements for business visa purposes. This clause was related to the Subclass 846 visa which was introduced in 1997. The Subclass 846 visa was developed based on the Subclass 845 visa which was introduced in 1995 and although that visa subclass did not have a clause specifically dealing with turnover, it did require at cl 845.222 of Sch 2 to the Migration Regulations that applicants pass a business skills points test, with one of the methods of satisfying that points test being a minimum turnover requirement. Similar clauses requiring the passing of that business skills points test were also introduced in 1995 at the same time for subclasses 840, 841, 842, 843 and 844 visas. No definition of turnover was provided in the Migration Regulations relating to these prior visa subclasses. These subclasses were made obsolete upon the introduction of the new subclasses in 2003 (including the 892 subclass the subject of these proceedings).
The Court notes that “turnover” was referred to in the Migration Regulations in relation to business visas prior to the introduction of the GST on 1 July 2000: GST Act, s 1-2(1), and therefore “turnover” cannot have been defined as excluding GST prior to that date.
There is nothing in the relevant Explanatory Memoranda relating to the various business visas which deals with the meaning of turnover.
In the circumstances there is nothing in the history of cl 892.213 of Sch 2 to the Migration Regulations, or its immediate predecessors, which suggests that the meaning of turnover was anything other than its ordinary meaning as set out at [31] above, nor anything suggesting that turnover ought to exclude GST, particularly in circumstances where turnover requirements not dissimilar to those in cl 892.213 of Sch 2 to the Migration Regulations existed in the Migration Regulations prior to the introduction of the GST.
Other regulations
It is appropriate in considering the context in which cl 892.213 of Sch 2 to the Migration Regulations appears to have regard to other provisions of the Migration Regulations.
There are at least two examples in Mr Pidorenko’s submissions which might be of assistance:
(a)reg 2.60W of the Migration Regulations deals with when an applicant for approval as a family sponsor passes the income test, and in so doing:
(i)refers to the applicant’s “taxable income” for the “income year” (or years) specified: reg 2.60W(1) and (2); and
(ii)expressly defines “income year” and “taxable income” as having the meaning prescribed in the ITA Act 1997: reg 2.60W(5); and
(b)reg 2.73 of the Migration Regulations which deals with the process for nomination for certain work visas, and provides that certain information must be provided, including “annual turnover … within the meaning of” the Migration Skilling Charges Regulations: Migration Regulations, reg 2.73(9)(da). The definition of “annual turnover” under the Migration Skilling Charges Regulations contains two definitions, the first of which defines “annual turnover” to the nominating business as “total ordinary income (within the meaning of the … [ITA Act 1997])”.
The provisions of regs 2.60W and 2.73 of the Migration Regulations suggest that where in the Migration Regulations the legislature intends to define turnover differently to its ordinary meaning it appears to expressly do so. There is no apparent reason why it has not done so in relation to cl 892.213 of Sch 2 to the Migration Regulations, but the fact that it has not done so points to turnover in cl 892.213 of Sch 2 to the Migration Regulations having its ordinary meaning as set out at [31] above, and not a meaning which excludes GST.
Purpose
The purpose of cl 892.213 of Sch 2 to the Migration Regulations appears to be to set a minimum monetary amount of turnover for a business which must be met by an applicant applying for a Business Skills Visa. There is nothing inherent in that purpose which requires the minimum monetary amount of turnover to exclude GST.
Conclusion – context and purpose
There is nothing in the context or purpose of cl 892.213 of Sch 2 to the Migration Regulations which requires that turnover therein must exclude GST.
What did the Tribunal do?
It is necessary to look at what the Tribunal did in determining the meaning of turnover.
Business Skills Visa criteria and the dispositive issue before the Tribunal
In relation to the Business Skills Visa criteria and the dispositive issue the Tribunal:
(a)explained the consideration of claims and evidence it made in relation to the issue in the case before it, being whether the turnover of the Business should include or exclude the GST when determining if the threshold amount of $200,000 was reached in the relevant period: CB 179 at [7];
(b)set out the relevant provisions in cl 892.213 of Sch 2 to the Migration Regulations: CB 179-180 at [8]; and
(c)explained that the Business was required to have an annual turnover for the year before the Business Skills Visa was lodged of at least $200,000: CB 180 at [11].
Financial statements and BAS Returns
The factual context for the issue to be considered by the Tribunal was set by the Business’ financial statements and BAS Returns for the relevant period. The Tribunal noted Mr Pidorenko had provided it with:
(a)financial statements for the year ended 30 April 2017, and that the financial statements recorded that sales for the year to 30 April 2017 were $188,165: CB 180 at [12]-[14]; and
(b)copies of monthly BAS Returns, showing that for the 12 months to 30 April 2017, sales were $206,892 inclusive of GST and $188,165 excluding GST: CB 180 at [14].
The Tribunal’s summary of Mr Pidorenko’s arguments concerning the meaning of turnover
In relation to Mr Pidorenko’s arguments concerning the meaning of turnover the Tribunal:
(a)noted that Mr Pidorenko’s submitted that GST should be included in turnover and that arguments were made in support of that submission: CB 180 at [15];
(b)summarised Mr Pidorenko’s submissions as:
(i)seeking to demonstrate that there are different definitions of turnover for different purposes, and migration is a different enough purpose, from say, accounting purposes, such that there could be a different definition of turnover: CB 180 at [16];
(ii)being that, in broad terms, turnover is understood to be the gross income of the business, but that the exact definition of turnover, including what can and cannot be included, differs according to the particular scheme concerned, and noted Mr Pidorenko’s references to s 11 of the Insurance Contracts Act 1984 (Cth) (“IC Act”) and that it was different to the definition in s 328-120 of the ITA Act 1997: CB 180 at [17] and [19];
(c)did not agree with the proposition that there are different definitions of turnover for different purposes, and that the specific definition used in relation to body corporates is not because there is a different purpose in relation to them but because the definition of turnover as widely used for accounting purposes needs clarification when applied to body corporates because of characteristics unique to those entities: CB 181 at [20]; and
(d)explained the term “ordinary income” is defined in s 6-5 of the ITA Act 1997 and that it refers to assessable income and that s 17-15 of the ITA Act 1997 sets out that in calculating an amount that may be included in assessable income, an amount equal to GST payable is not to be included: CB 181 at [22].
The Tribunal’s consideration of its summary of Mr Pidorenko’s submissions
The Tribunal did not consider what might be the ordinary meaning of “turnover” in, or its meaning having regard to the context and purpose of, cl 892.213 of Sch 2 to the Migration Regulations. Rather than doing so the Tribunal moved straight into a consideration of definitions of “annual turnover” by reference to:
(a)other statutory provisions, namely those in the IC Act and the ITA Act 1997 (noting that those statutory provisions were matters raised by Mr Pidorenko’s lawyer before the Tribunal): CB 180-181 at [18]-[22]; and
(b)a definition of “turnover” from an Australian Taxation Office website (“ATO Website”): CB 181 at [24]-[25].
It is necessary to examine each of the IC Act, ITA Act 1997 and ATO Website in turn.
IC Act
In relation to the IC Act the Tribunal set out at CB 180-181 at [18] the definition of “annual turnover”, which appears in s 11(1) of the IC Act, as follows:
annual turnover, of a body corporate during a 12‑month period, means the sum of the values of all the supplies that the body corporate, and any body corporate related to the body corporate, have made, or are likely to make, during the 12‑month period, other than:
(a)supplies made from any of those bodies corporate to any other of those bodies corporate; or
(b) supplies that are input taxed; or
(c)supplies that are not for consideration (and are not taxable supplies under section 72‑5 of the A New Tax System (Goods and Services Tax) Act 1999); or
(d)supplies that are not made in connection with an enterprise that the body corporate carries on; or
(e) supplies that are not connected with Australia.
The definition of “annual turnover” did not however include the final part of the definition which is as follows:
Expressions used in this definition that are also used in the A New Tax System (Goods and Services Tax) Act 1999 have the same meaning as in that Act.
The Tribunal then went on at CB 181 at [20] to say that:
(a)it did “not agree with the proposition that there are different definitions of turnover for different purposes”: and
(b)the “specific definition used in the IC Act in relation to body corporates is not because there is a different purpose in relation to them but because the definition of turnover as widely used for accounting purposes needs clarification when applied to body corporates because of characteristics unique to those entities”.
Three points need to be made in relation to what the Tribunal said about the definition of “annual turnover” in the IC Act. First, that the IC Act is an Act which relates to insurance, and proposed insurance, contracts: IC Act, s 8(1), and it is for those purposes and in that context that “annual turnover” is defined. Second, “annual turnover” is defined in s 11(1) of the IC Act because it is used in s 75D(2)(c)(i) of the IC Act as a measure of the pecuniary penalty applicable for contravention of civil penalty provisions under the IC Act. The civil penalty provisions in the IC Act all relate to matters concerning insurance and insurance contracts:
(a)section 11C (requirement to provide certain insurance documents to the regulator);
(b)section 11D (requirements with respect to review of insurer’s administrative arrangements by the regulator);
(c)section 11DA (liability of directors, employees and agents for an insurer’s offence);
(d)section 13 (failure to comply with the duty of utmost good faith in insurance contracts);
(e)section 33C(1) (obligation to provide Key Fact Sheets for prescribed contracts);
(f)section 40 (provision of certain information in relation to certain contracts of liability insurance);
(g)section 65 (obligations concerning conditions attached to subrogation of rights under an insurance contract);
(h)section 74 (provision of insurance policy documents on request),
and ss 11(1) and 75D of the IC Act are the only instances of the use of the phrase “annual turnover” in the IC Act. Third, that the definition in s 11(1) of the IC Act defines “annual turnover” in a particular way as “the sum of the values of all the supplies that the body corporate … have made, or are likely to make, during the 12-month period”, and then goes on to modify that definition by excluding a range of supplies, including “supplies that are not for consideration” and which “are not taxable supplies under section 72-5” of the GST Act. Thus, for the purposes of insurance contracts, “annual turnover” is, by definition in s 11(1) of the IC Act, defined in a particular way, with certain and particular exclusions, different to the ordinary meaning of “annual turnover”, and only for the purpose of determining the quantum of civil penalty payable by an insurer who has contravened one or more civil penalty provisions in the IC Act.
The definition of “annual turnover” in s 11(1) of the IC Act demonstrates that turnover can be defined by a particular statute to mean something other than its ordinary meaning for the purposes of that statute, but that the starting point is the ordinary meaning of turnover.
ITA Act 1997
The Tribunal at CB 181 at [21] referred to s 328-120 of the ITA Act 1997 which deals with the meaning of “annual turnover” and set out the definition appearing in s 328-120(1) of the ITA Act 1997 of “annual turnover for an income year” as being the “total ordinary income” derived by an entity in the income year. The Tribunal went on at CB 181 at [22] to correctly observe that “ordinary income” was defined in s 6-5 of the ITA Act 1997 as referring to “assessable income” and said that s 17-15 of the ITA Act 1997 prescribes that “in calculating an amount that may be included in assessable income, an amount equal to GST payable is not to be included”. The Court notes that s 17-15 of the ITA Act 1997 refers to “not including an amount equal to any GST payable on a taxable supply related to the amount received or receivable”, and that “taxable supply” has the meaning given in s 195-1 of the GST Act: GST Act, s 995 -1(1), which refers to meanings in four other sections of the GST Act. For present purposes it is only necessary to refer to part of the definition of “taxable supply” in s 9-5(a) and (b) of the GST Act which includes a supply for consideration in the course of the enterprise being carried on.
Two points need to be made in relation to what the Tribunal said about the definition of “annual turnover” appearing in s 328-120(1) of the ITA Act 1997. First, the ITA Act 1997 is about assessing the amount of income tax payable by individuals, corporations and some other entities: ITA Act 1997, s 3-5, and it is for those purposes and in that context that “annual turnover” is defined in relation to small business entities. Second, “annual turnover” having been defined in s 328-120(1) of the ITA Act 1997 as set out at [53] above, it is then subject to:
(a)exclusions for
(i)“any amount that is non-assessable non-exempt income under section 17-5 (which is about GST)”: ITA Act 1997, s 328-120(2); and
(ii)“any amounts of ordinary income the entity derives from sales of retail fuel”: ITA Act 1997, s 328-120(3); and
(b)possible qualification by regulations under the ITA Act 1997 which “may provide that an entity’s annual turnover for an income year is to be calculated in a different way, but only so that it would be less than the amount worked out under this section”: ITA Act 1997, s 328-120(6).
The definition of “annual turnover” in s 328-120 of the ITA Act 1997, which is different to that in s 11(1) of the IC Act, again demonstrates that turnover can be defined by a particular statute to mean something other than its ordinary meaning for the purposes of that statute, but that, once again, the starting point is the ordinary meaning of turnover.
It is obvious that the Tribunal failed to properly consider or appreciate the point being made in Mr Pidorenko’s submissions to the Tribunal, namely that, by legislation, turnover could be defined to mean something other than its ordinary meaning (as in the IC Act and the ITA Act 1997), and that the ordinary meaning of turnover had not been so defined (or re-defined) for the purposes of the Migration Regulations.
Further consideration of the different definitions of “annual turnover” in the IC Act and ITA Act 1997 is, however, unnecessary because of the way in which the Tribunal ultimately came to define turnover, which was not by reference to anything contained in definitions of “annual turnover” in the IC Act or the ITA Act 1997, or any implications drawn therefrom.
ATO Website
The Tribunal referred to the ATO Website saying that it gave instructions as to how a small business entity is to work out its annual turnover: CB 181 at [23], and that the instructions specify what amounts should be included and should not be included as turnover, noting that ““GST you charged on a transaction” is listed as one of the amounts that are not to be included”: CB 181 at [24]. The source for this information was footnoted: CB 181 at [24] at fn 1, as follows:
lATO (2017) Small Business Entity Capital Gains Tax accessed 25 May 2021 at
The Tribunal said that it was “satisfied based on that ATO definition that turnover should exclude GST”: CB 181 at [25]. It is important to observe that this was the point at which the Tribunal determined the meaning of “turnover” for the purposes of cl 892.213 of Sch 2 to the Migration Regulations.
The Tribunal therefore determined the meaning of turnover for the purposes of cl 892.213 of Sch 2 to the Migration Regulations by reference to instructions for the calculation of capital gains tax (“CGT”) given on the ATO Website dealing with “Basic-conditions” for “small-business-CGT-concessions”. In so doing the Tribunal failed to have regard to or refer to or consider any of the following:
(a)dictionary definitions of “turnover”;
(b)decided cases dealing with the meaning of “turnover”;
(c)the context and purpose of cl 892.213 of Sch 2 to the Migration Regulations; or
(d)the PAM3 Guidelines insofar as they might have dealt with “turnover” (noting that the PAM3 Guidelines were not, in any event, referred to in the Tribunal Decision, and that although the Tribunal did refer to “[d]epartmental policy” at CB180 at [12] in relation to the timing of the provision of financial statements, this is not a reference to turnover, and it is not apparent that the “policy” referred to is the PAM3 Guidelines),
before basing its determination of the meaning of turnover upon instructions for the calculation of CGT concessions given on the ATO Website. Significantly, the Tribunal’s determination of the meaning of turnover was not based upon anything to do with the inclusion or exclusion of GST. Put differently, the Tribunal purported to determine the meaning of turnover by reference to instructions for the calculation of tax concessions for a tax (CGT) which was not relevant to, or in issue in relation to, cl 892.213 of Sch 2 to the Migration Regulations. To adopt the language of the plurality majority in Sharp Corporation the Tribunal “has not applied the well-understood ordinary meaning of a term but has given to it a meaning or qualification of his or her own”: FCR at 12 per Davies and Beazley JJ
Other matters referred to by the Tribunal
Having determined the meaning of “turnover” the Tribunal then went on to “address some other points made in … [Mr Pidorenko’s] submission” to the Tribunal: CB 181 at [25]. These “points” are dealt with below.
Cheng – FMCA
At CB 182 at [26] the Tribunal noted Mr Pidorenko’s submission referring to Cheng - FMC citing part of the quote from Aris-Bainbridge set out at [23] above. The Tribunal noted that “Aris-Bainbridge was decided in 1950” and said that it did “not consider a quote from a 1950 case to be particularly helpful as GST was introduced in 1986 and therefore would not have been considered in a decision made in 1950”: CB 182 at [27].
The Court can set to one side the fact that GST was introduced with effect from 1 July 2000: GST Act, s 1-2(1) and that the Tribunal also does not appear to appreciate that Aris-Bainbridge is an English decision. From Mr Pidorenko’s submissions to the Tribunal it appears that the point of referring the Tribunal to the quote in Cheng – FMC from Aris-Bainbridge was to have the Tribunal consider the meaning of “turnover” in the context of a Business Skills Visa application by reference to case law setting out the ordinary meaning of “turnover”, which Mr Pidorenko had submitted was “in a broad sense … understood to be the gross income of a business”: CB 153 at [7]-[8]. For reasons set out at [46] and [60] above the Tribunal failed to consider the ordinary meaning of “turnover” before determining that it did not include GST, and failed to give any, or any proper consideration, to Mr Pidrenko’s submission, including the quote from Aris-Bainbridge in Cheng – FMC, instead dismissing its relevance on the basis that it was a 1950 pre-GST case. The failure to consider the quote from Aris-Bainbridge in Cheng – FMC demonstrates that the Tribunal also seemingly failed to appreciate that it was necessary to consider the ordinary meaning of “turnover” and that it could be assisted in that task by decided cases as to the ordinary meaning of “turnover”.
The Court also notes that, strangely, the Tribunal was not referred to Cheng Appeal. Nor, however, did the Tribunal consider Cheng Appeal as a result of its own consideration of the issues. Cheng Appeal was relevant to the issue for consideration by the Tribunal, namely the ordinary meaning of “turnover”, and the fact that the Tribunal did not as a result of its own consideration either find, or if it did find it, consider, Cheng Appeal leaves open the inference that the Tribunal did not consider, or was not aware that it needed to consider, the ordinary meaning of the word “turnover” in cl 892.213 of Sch 2 to the Migration Regulations for the purposes of considering Mr Pidorenko’s Business Skills Visa.
The collection and payment of GST
In relation to the collection and payment of GST the Tribunal:
(a)noted Mr Pidorenko’s submission made that when a customer pays a business an amount to buy an item or service, the full amount inclusive of GST is paid directly to the business and that the business then takes ownership of the money in its business account, and that money may be used towards whatever purpose the business sees fit to use it for: CB 182 at [28];
(b)disagreed that a business can use GST collected for whatever purpose it likes, that the business is required to pay GST collected to the ATO even though the GST collected “will sit in a bank account until it is time to pay it to the ATO” and that “[t]here is, of course, nothing stopping the business from using all the money in its bank account and not having enough left to pay across any GST it owes, but that does not remove the obligation for the GST liability to be paid to the ATO”, and noted relevant information in that regard from another ATO website: CB 182 at [29];
(c)noted that generally businesses do not put the GST they collect in a separate bank account from their usual business bank account, but that they do, however, through their accounting systems, keep a record of GST collected and GST paid so that at any point in time, they can quickly ascertain how much GST they owe or are owed: CB 182 at [30];
(d)summarised Mr Pidorenko’s submission that GST paid to the ATO by a business should be correctly characterised as a cost of doing business rather than a tax collected by a business on behalf of the government, and that the business must be able to cover this liability when it becomes due, and that GST “is comparable to other taxes and predictable expenses which are not excluded from a business’s turnover figure”: CB 182 at [31], but disagreed with the submission, noting that a business’s turnover does not include other taxes or expenses, that turnover is equivalent to income generated from sales, excluding GST, and that there is no component of turnover which is an expense or a tax, with the Tribunal finding that the claim made suggesting the opposite was “simply incorrect”: CB 182 at [32];
(e)addressed Mr Pidorenko’s submission that GST paid to the government is a cost of doing business in the same way that general expenses are a cost of doing business as a submission that mischaracterises the GST, and found that the costs of doing business could include the purchases of goods that are on-sold, or staff costs or other costs that are incurred in order that the product or service offered by the business can be made available to their customer. The Tribunal found that if GST was a cost of doing business, then it would be recorded as such in the profit and loss account, but that this is not the case and that the accounting systems and standards put it beyond doubt that GST is not a cost of doing business: CB 182 at [33];
(f)further explained its rationale by saying that when a sale is made, the sale price net of GST is credited to the profit and loss account and the 10% GST component is debited to a GST account in the balance sheet, so that from the point in time that a sale is made, the GST element is separated out, recorded in the balance sheet as a liability, and not into the profit and loss account as an income or expense item would be: CB 183 at [33]-[35]; and
(g)noted the submission that generally businesses do not pay back the full amount of their GST liability for any given period as they are able to claim back a portion of GST as a credit, but said that a business will collect GST from its sales and will pay GST on its purchases. The two GST figures are netted off and either the balance is paid to the ATO or a refund is due from the ATO, and that while a business may not pay across all of the GST it has collected to the ATO, it is required to pay any balance due and that is the business’ GST liability, not the GST that the business has collected: CB 183 at [36]-[37].
This part of the Tribunal Decision largely deals with the means of collection and payment of GST by a business. The Tribunal reiterates its earlier conclusion that turnover does not include GST: CB 182 at [32], seemingly by reference to another ATO website, this time dealing with GST and how to account for GST in a business: CB 182 at fn 4. The Tribunal does not, however, deal with the ordinary meaning of “turnover” either at all, or by reference to the matters set out at [60(a)-(d)] above.
Accounting principles and standards
In relation to accounting principles and standards the Tribunal:
(a)returned to Mr Pidorenko’s submission that there could be a different definition of turnover for the purpose of migration law than is the case for accounting purposes, but noted that various criteria have to be met for the grant of a Business Skills Visa, which may include the value of an applicant’s personal and business assets: CB 183 at [38];
(b)explained the purposes of financial statements and found that “[i]t would not make sense” if those accounting principles and standards were acceptable when it comes to determining the value of business assets but not so with regard to turnover: CB 183 at [39]; and
(c)found that the accounting interpretation of turnover is well-understood as excluding GST, and that unless explicitly stated in the Migration Act that a different interpretation is to be used for migration purposes, rejected the suggestion that a different definition or interpretation of turnover should be used for the purposes of a Business Skills Visa application, and found it did not make sense, and that it is not logical or reasonable, to suggest a different interpretation of turnover should be used for migration purposes to that used in other circumstances: CB 183 at [40].
The Tribunal Decision refers to “accounting purposes”, “accounting principles and standards” and the “accounting interpretation of turnover” without defining those terms or establishing their provenance. It is thus unclear what the Tribunal means by those terms, or what are the “purposes”, “principles and standards” and “interpretation” referred to. The Tribunal had regard to the unknown and undefined “accounting purposes”, “accounting principles and standards” and the “accounting interpretation of turnover”, before deciding that it “is not logical or reasonable to suggest a different interpretation of turnover should be used for migration purposes to that used in other circumstances”: CB 183 at [40].
Once again, the Tribunal does not deal with the ordinary meaning of turnover, either at all, or by reference to the matters set out at [60(a)-(d)] above, but rather has regard to interpretations of turnover derived from the unknown and undefined “accounting purposes”, “accounting principles and standards” and the “accounting interpretation of turnover”.
Mr Pidorenko sought to have AASB Documents, admitted in evidence for the purpose of demonstrating that they contained no definition of turnover, and that the Tribunal had committed jurisdictional error by purporting to define turnover by reference to the unknown and undefined “accounting purposes”, “accounting principles and standards” and the “accounting interpretation of turnover”. The Minister objected to the admission of the AASB Documents. It is not evident that the AASB Documents were before the Tribunal, and nor is it evident, such is the level of vagueness in the Tribunal’s description of the unknown and undefined “accounting purposes”, “accounting principles and standards” and the “accounting interpretation of turnover”, that the AASB Documents were what the Tribunal was there referring to. More importantly, in circumstances where the AASB Documents contains no definition of “turnover”, accepting the AASB Documents into evidence does not assist in determining whether the Tribunal committed jurisdictional error by misapplying or misconstruing cl 892.213 of Sch 2 of the Migration Regulations by interpreting “annual turnover” as not including GST. Further, even if the AASB Documents did contain a definition of turnover, it would be a definition in a legislative instrument (AASB’s are legislative instruments: Corporations Act 2001 (Cth), s 334), and therefore may not necessarily reflect the ordinary meaning of turnover (in the same way that the definitions in s 11(1) of the IC Act and s 328-120 of the ITA Act 1997 do not reflect the ordinary meaning of “turnover”). In all the circumstances the AASB Documents are therefore not sufficiently relevant to be admitted into evidence. There will be an order striking out [2]-[8] and annexures HWG-1 and HWG-2 of the Second Glenister Affidavit.
Conclusion as to what the Tribunal did
At no stage did the Tribunal consider the meaning of turnover having regard to its context and purpose and its ordinary meaning. Rather, it interpreted turnover by reference to the content of the ATO Website which dealt with an unrelated issue (namely GST concessions for small business entities), and possibly also by reference to statutory definitions in statutes with different purposes to the Migrations Regulations and to purported accounting principles which bore no relation to the Migration Regulations (and in particular cl 892.213 of Sch 2 of the Migration Regulations). In so doing the Tribunal erred by misconstruing or misapplying cl 892.213 of Sch 2 of the Migration Regulations by interpreting “annual turnover” as excluding GST.
Materiality (and the PAM 3 Guidelines)
To constitute jurisdictional error an error must be material in the requisite sense explained in MZAPC at [2] per Kiefel CJ, Gageler, Keane and Gleeson JJ as follows:
Materiality was explained in Minister for Immigration & Border Protection v SZMTA (2019) 264 CLR 421 to involve a realistic possibility that the decision in fact made could have been different had the breach of the condition not occurred. Existence or non-existence of a realistic possibility that the decision could have been different was explained to be a question of fact in respect of which the plaintiff in an application for judicial review of the decision on the ground of jurisdictional error bears the onus of proof.
The Minister submits that any error was not material because the PAM3 Guidelines provide that GST is not to be counted when arriving at a turnover figure: see [12(a)(i)] above, and that there is no realistic possibility that the outcome could be different because the PAM3 Guidelines “directs what … turnover means”: Transcript, p 17. That, however, is not the law: the PAM3 Guidelines are not a “relevant consideration” in the sense that a failure to consider them amounts to jurisdictional error, or a failure to apply them or to apply them incorrectly in itself amounts to a jurisdictional error: El Ess & Anor v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1038; (2004) 142 FCR 43 (“El Ess”) at [45] per Gray J. The PAM3 Guidelines constitute no more than non-binding procedural and policy guidance to officers applying the Migration Act and Migration Regulations: El Ess at [45] per Gray J; Tung v Minister for Immigration & Anor [2019] FCCA 2368 at [75] per Judge Lucev.
It follows that the Tribunal has a discretion as to whether to apply the PAM3 Guidelines. In this case the Tribunal does not mention the PAM3 Guidelines at all, let alone purport to apply them. Nor are the PAM3 Guidelines referred to in the Tribunal’s Information Request preceding the Tribunal Hearing: CB 137-141. Therefore, not only did the Tribunal fail to have regard to the ordinary meaning of turnover and to its context and purpose in cl 892.213 of Sch 2 of the Migration Regulations it also appears to have failed to have regard to the PAM3 Guidelines. Having regard to the ordinary meaning of turnover and to its context and purpose in cl 892.213 of Sch 2 of the Migration Regulations the Tribunal could choose to exercise the discretion to not apply the PAM3 Guidelines, in which case turnover would include GST, and in this case that would mean that Mr Pidorenko meets the turnover criteria for the grant of the Business Skills Visa under cl 892.213 of Sch 2 of the Migration Regulations. There is therefore a realistic possibility that the outcome of the Tribunal Decision may have been different. The error made by the Tribunal is therefore material and is therefore a jurisdictional error. It is also true that the same result as occurred in the Tribunal Decision might come about if the Tribunal applied the PAM3 Guidelines, but the exercise of the discretion as to whether to apply the PAM3 Guidelines is solely a matter for the Tribunal. It is also true that this issue might be easily resolved for the future by the inserting of an appropriate definition of turnover into the Migration Regulations, either generally or for the specific purposes of cl 892.213 of Sch 2 of the Migration Regulations.
It follows that the Tribunal Decision is affected by jurisdictional error.
CONCLUSION AND ORDERS
In conclusion, the Court finds that the sole ground of the Judicial Review Application is made out, and that the Tribunal Decision is affected by jurisdictional error.
It follows from the fact that jurisdictional error has been established in the Tribunal Decision that writs of certiorari and mandamus ought to issue. There will be orders accordingly.
There will also be an order that the name of the Minister be amended to read “Minister for Immigration, Citizenship and Multicultural Affairs”.
The Court will hear the parties as to costs.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Lucev. Associate:
Dated: 11 June 2024
SCHEDULE OF PARTIES
PEG 132 of 2021 Applicants
Fourth Applicant:
ANNA PIDORENKO
Fifth Applicant:
DORIAN PIDORENKO
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