Shan (Migration)

[2023] AATA 3482

Shan (Migration) [2023] AATA 3482 (19 September 2023)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs Yongfeng Shan
Mr Bo Chuan Ding
Mr Yi Ding
Miss Shu Chan Ding

REPRESENTATIVE:  Mr Hai Dong Shao (MARN: 0742867)

CASE NUMBER:  2017734

HOME AFFAIRS REFERENCE:               BCC2020/2103140

MEMBER:Robyn Anderson

DATE:19 September 2023

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal remits the applications for Business Skills (Provisional) (Class EB) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa for the Business Innovation Extension stream:

·cl 188.232 of Schedule 2 to the Migration Regulations1994.

Statement made on 19 September 2023 at 10.15am.

CATCHWORDS
MIGRATION – Subclass 188 (Business Innovation and Investment (Provisional)) visa – Subclass 188 – the export business is a qualifying business – applicant had an ownership interest in the export business and McMahons in the relevant period – applicant continues to have an ownership interest in the main business – businesses were actively operating in Australia – decision under review remitted

LEGISLATION
Migration Act 1958, ss 65, 134
Migration Regulations 1994, rr 1.11, 1.03, Schedule 2, cl 188.232

CASES
Minister for Immigration and Border Protection v Snyman [2016] FCA 242
Nassif v MIMIA [2003] FCA 481
Rahbarinejad v MIBP [2018] FCCA 2293

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Home Affairs on 26 November 2020 to refuse to grant the applicants Business Skills (Provisional) (Class EB) visas under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The visa applicants applied for the Business Innovation and Investment (Provisional) (Subclass 188) visa in the Business Innovation Extension stream on 17 August 2020. The criteria for the grant of a Subclass 188 (Business Innovation and Investment (Provisional)) visa are set out in Part 188 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations). The primary criteria must be satisfied by at least one applicant. Other members of the family unit who are applicants for the visa need satisfy only the secondary criteria.

3. The delegate refused to grant the visas on the basis that the criteria under cl 188.232 of Schedule 2 to the Regulations were not met. More specifically, the delegate was not satisfied that for the two years immediately before the application was made, one or more main businesses were actively operating in Australia in which the applicant held an ownership interest. This was due to the delegate not being satisfied that a main business was actively operating during the period 1 January 2019 to 30 June 2019 where no sales were recorded on the business activity statements in respect of the nominated main business.

4. The matter was constituted to a Tribunal Member on 25 May 2023. On 26 May 2023, the Tribunal wrote to the applicants and invited them to attend a hearing on 6 July 2023. On 29 June 2023, 30 June 2023, 3 July 2023 and 5 July 2023, the Tribunal received information from the applicants.

5. The applicants appeared before the Tribunal on 6 July 2023 to give evidence and present arguments by MS Teams video conference. The Tribunal received oral evidence on affirmation from the applicants. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

6. The applicants were represented in relation to the review by their legal representative, Mr Shao, who also participated by video conference.

7. On 6 July 2023, the Tribunal deferred making a decision in this matter to allow additional time for the applicants to provide further submissions. Additional information and a submission were provided to the Tribunal on 25 July 2023, 26 July 2023, 27 July 2023, 28 July 2023 and 31 July 2023.

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

CONSIDERATION OF CLAIMS AND EVIDENCE

1. According to departmental records, the applicants were granted a Subclass 188 provisional visa in May 2016. The first named applicant (the applicant) told the Tribunal that she had heard about the free lifestyle from friends who were living in Australia and wanted that for her family. At the time she and her husband were running a business in China trading in textiles, an area that both had studied at college. The business sold products within China and also to Europe, Japan and other south-east countries. Their plan was to operate a similar business in Australia.

2. It was evident from documents before the Tribunal that the applicant incorporated Flowever International Pty Ltd (the Company) on 18 April 2017. The corresponding Australian Business Number (ABN) and GST were registered from 30 May 2017. The applicant gave oral evidence that the textile market was much smaller in Australia and it was difficult to engage clients and to expand the market in China without being able to travel there. They also researched the possibility of operating a wool factory and farm in Australia. However, they were not satisfied that it would produce the required profitability. Within six months, the decision was made to commence operation of a convenience store in Camberwell. The purchase contract before the Tribunal for the convenience store is signed and dated by the applicant, recording settlement date as 18 July 2017.

3. The applicant further stated that while the convenience store was very successful, her intention was always to hopefully move back into trading, whether that be textiles or other products, such as baby formula and supplementary medicines.

4. The applicant submitted that in October 2017 she discovered she was pregnant. Given some potential physical issues with the baby that were identified in Australia and her age, the decision was made to return to Shanghai for the birth where family support was available and the language and medical system were familiar. To do so, the convenience store business was sold to a friend in March 2018 for a nominal sum and the value of the stock on hand. The applicant returned to China in April 2018, giving birth in July 2018.

5. The applicant gave oral evidence that now back in China she commenced researching and exploring the Chinese market in respect of the demand for Australian products. She had always enjoyed the trading business and dreamt of establishing a successful trading business between Australia and China.

6. Business activity statements of the Company reflect the sale of the Camberwell convenience store, recording nil sales in the June 2018 quarter. Following the birth of the applicant’s daughter, sales and GST in respect of expenses were recorded on the business activity statements submitted to the Department for the quarters ending 30 September 2018 and 31 December 2018, albeit sales were minimal. It is noteworthy that export sales do not attract GST. Nil sales and expenses were recorded for the quarters ending 31 March 2019 and 30 June 2019. However, sales and GST on expenses were again recorded for the quarters ending 30 September 2019 and 31 December 2019. All of these business activity statements were lodged in April 2020. Amended business activity statements in respect of the quarters ending 31 December 2018, 31 March 2019 and 30 June 2019 were lodged on 18 December 2020, recording sales and also GST on expenses.

7. The applicant gave oral and written evidence that the amendments were necessary because information sent to the accountant had been mislaid and not included in the original business activity statements. An email trail evidencing the discussion in relation to the missing information was provided to the Tribunal. Given that the sales from trading were recorded in all of the other relevant quarters, the Tribunal accepts that it was the result of an inadvertent error that nil sales were originally recorded on the business activity statements for the quarters ending 31 March 2018 and 30 June 2018, having since been rectified.

8. Evidence before the Tribunal indicates that the first deposit for sale of Australian products in China is recorded as 26 July 2018, while invoices for purchases of goods were dated from 30 April 2018. The applicant told the Tribunal that she purchased from various suppliers. A major supplier was the Camberwell Convenience Store, the owner also arranging freight of the goods and adding it to the purchase costs and invoicing the Company. Evidence for payment of goods purchased for sale by the Company is recorded on a combination of ANZ bank statements and WeChat throughout the relevant period. Random selections of transactions correlated to the invoices. It is noteworthy that invoices from the owners of Camberwell Convenience Store were provided to the Department in respect of the period April 2018 to June 2019.

9. In respect of sales, the applicant told the Tribunal that the customers generally paid for the goods via WeChat and sometimes Alipay. A transaction report from WeChat and Alipay was provided after the hearing whereby regular deposits throughout the relevant period were evident. The Tribunal observed that WeChat was also used by the applicant for various personal payments.

10. Evidence of WeChat communications between the applicant and various customers and suppliers was also provided after the hearing. The reports recorded conversations confirming orders throughout the relevant period. Also before the Tribunal, as before the Department, were financial statements of the Company for the 2017/18 and 2018/19 years recording freight as an expense. Such an expense was not recorded in the 2016/17 year, prior to the applicant’s return to China in April 2018 and indicates the commencement of the trading business.

11. According to the WeChat records, trading continued until December 2022 with sale of goods such as baby formula, vitamins and nutrients. In the meantime, the applicant and her family returned to Australia in December 2019 and purchased a milk bar business (McMahons) in February 2020, which continues to operate successfully. As such, the applicant submitted that her main focus has been on McMahons. She has little time left for the trading business, which she has concluded is not a major market.

12. Financial statements of the Company for the 2019/20 year record a significant increase in sales. Business activity statements for the quarters ending 31 March 2020 and 30 June 2020 reflect the same, coinciding with the purchase of McMahons. Business activity statements to 31 March 2023 were provided to the Tribunal, each recording quarterly sales in excess of $180,000.

13. As noted above, the issue in the present case is that the applicant must have an ownership interest in one or more “main businesses” that were actively operating in Australia for at least the two years immediately before the application was made, and that the applicant retains the ownership interest in the same actively operating main business/es at the time of decision, in accordance with cl 188.232 of Schedule 2 to the Regulations.

14. In this case, it is noteworthy that cl 188.232(1)(b) is also applicable. That is, relevantly, if the applicant held a Subclass 188 visa in the Business Innovation stream during a concession period and the visa was granted before 1 July 2019, then the applicant must have an ownership interest in one or more main businesses that were actively operating in Australia for a cumulative period of at least two years while the applicant was the holder of that visa.

15. Concession period is defined in reg 1.15N of the Regulations as commencing on 1 February 2020 and is apparently yet to end. As the applicant was granted the Subclass 188 visa in May 2016 and applied for the extension visa in August 2020, it is open to the Tribunal to also consider whether the applicant meets the criteria under cl 188.232(1)(a) or cl 188.232(1)(b). The criterion under cl 188.232(2) remains, in that the applicant must continue to have the ownership interest mentioned in cl 188.232(1).

16. As the application was lodged on 17 August 2020, it is undisputed that the relevant two-year period is 17 August 2018 to 16 August 2020 (the relevant period).

17. The word “business” is not defined in the Act or Regulations. In Nassif v MIMIA [2003] FCA 481, Branson J considered it significant that a “qualifying business” is defined to mean an enterprise of a particular kind. Her Honour concluded that other entities could be considered regardless of whether they were nominated on the initial application form. In the case of Rahbarinejad v MIBP [2018] FCCA 2293 (Wilson J, 14 August 2018) (Rahbarinejad) it was also concluded that the decision maker must not confine its consideration of the potential main businesses to the business identified on Form 1217. Rather, it should have regard to the totality of the factual scenario before it.

18. While the applicant nominated only the business of operating a milk bar retailing food and daily supplies on the application form (McMahons), she provided a written submission to the Department in which she outlined the commencement of a second business while in Shanghai, importing Australian products to sell to Chinese residents (the export business), which she submitted commenced immediately following the birth of her daughter.

19. In accordance with the findings in Rahbarinejad, the Tribunal is satisfied that in the relevant period, it is appropriate to consider the export business and also McMahons, noting that operation of the Camberwell Convenience Store ceased prior to commencement of the relevant period.

20. In the case of Minister for Immigration and Border Protection v Snyman [2016] FCA 242 (Snyman), Barker J set aside the decision of the Federal Circuit Court, finding that four separate “main businesses” could be operated under a single entity with a single ABN. It noted that the frequently asked questions pages of the websites of ASIC and the Australian Business Register conveyed that it was “permissible for a company to own more than one business and is permissible for more than one business to operate under the same ABN”.

21. As in Snyman, the financial statements of the Company have consolidated the income and expenses relating to the export business and McMahons. Barker J found that the primary judge had erred in finding error in the Tribunal concluding that there were four businesses being operated by a single entity and not a single main business. Accordingly, the Tribunal is satisfied that the Company as a single entity, has operated two businesses in Australia throughout the relevant period, being the export business and McMahons.

22. At 4.2 of Pam3 (GenGuide M – Business Visas PAM3), it is noted that the intention of the legislation is to demonstrate an ownership interest in one or more main businesses throughout the relevant period prior to application. It goes on to state that:

    The business/es may be a new business that the applicant has established (either in part or whole) in Australia or an existing business in which the applicant has become an owner or part-owner. The policy intention is that the 24-month period of ownership can be satisfied through consecutive ownership of businesses if a main business has not been owned for the full 24-month period. For example, the applicant may have owned “Business A" for 15 months and “Business B" for 9 months.

23. PAM3 also notes that, “Officers may use their judgment if there is a very short break between Business A winding up and Business B being established” while relevant period of ownership can be satisfied through consecutive ownership of businesses and discretion may be employed where there is a very short break between “Business A” winding up and “Business B” being established.

24. While that situation is in regard to a Subclass 888 visa, given that the Subclass 188 visa is a pathway to the Subclass 888 visa, for the purposes of consistency, the Tribunal’s view is that the example is also relevant to the application of the Subclass 188 visa requirements. The Tribunal notes that whilst PAM3 may provide guidance, the Tribunal is not bound to follow it. However, in this case the Tribunal is satisfied that it is consistent with the purpose of the legislation.

25. It therefore follows that there would be no expectation of continued ownership interest at the time of decision in both main businesses, as long as one of the main businesses operating in the relevant period continued to meet the relevant criteria at the time of decision.

26. The applicant must meet the criteria under cl 188.232 of Schedule 2 to the Regulations for the relevant period commencing 17 August 2018. Consequently, the export business must meet the main business criteria in respect of the period commencing 17 August 2018 until at least commencement of McMahons on 4 February 2020, or with only a short break in between before the Tribunal can be satisfied that a main business and/or main businesses were actively operating throughout the relevant period.

27. The Tribunal then turned its mind to whether the two businesses being relied upon by the applicant meet the criteria to be a “main business”.

28. The meaning of “main business” is set out in reg 1.11(1) of the Regulations (as defined in reg 1.03). The four criteria are not mutually exclusive and must all be met before a nominated business can be considered as the “main business”. Furthermore, reg 1.11(2) of the Regulations limits the number of qualifying businesses that can be relied on as a main business in relation to the applicant, to two, thereby posing no issue for the applicant in nominating only two main businesses.

    Export business

29. The first of the criteria under reg 1.11(1)(a) requires that the applicant has or has had an ownership interest in the export business. Regulation 1.03 provides that ownership interest has the meaning given to it in s 134(10) of the Act. The definition of ownership interest in relation to a business, as relevantly defined in s 134(10) of the Act means, amongst other things, “a shareholder in the company that carries on the business”.

30. According to ASIC records before the Tribunal, the applicant has been the sole director, secretary and shareholder of the Company since incorporation on 18 April 2017 and continues to hold those same positions.

31. As the export business is operated through the Company, the applicant clearly has had an ownership interest in the export business. Accordingly, the Tribunal finds that the first criterion in reg 1.11(1)(a) is met.

32. Secondly, the applicant must maintain or have maintained direct and continuous involvement in management of the business from day-to-day and in making decisions affecting the overall direction and performance of the business.

33. Based on the evidence before the Tribunal, largely in the form of WeChat communication trails with customers and suppliers, communication between the applicant and the accountant and evidence of discussions with future wholesalers, the Tribunal is satisfied that the applicant has had control of all aspects of the export business on a day-to-day basis and has made the decisions impacting the direction and performance of the export business throughout the relevant period. Therefore, the Tribunal finds that the second criterion in reg 1.11(1)(b) is met.

34. Thirdly, the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the export business must meet or have met certain thresholds. As the export business, operated through the Company, is not operated by a publicly listed company, the required ownership interest must be at least 30% if the annual turnover is greater than or equal to $400,000 and at least 51% if the annual turnover is less than $400,000. In this case, regardless of the turnover of the export business, as the Tribunal determined above that the applicant has always held a 100% ownership interest in the Company through which the export business operates, the third criterion in reg 1.11(1)(c) is clearly met and the Tribunal finds accordingly.

1. Finally, the export business must be a qualifying business. “Qualifying business” is defined in reg 1.03 as an enterprise that is operated for the purpose of making a profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public and is not operated primarily or substantially for the purpose of speculative or passive investment.

2. Business activity statements during the period in which only the export business was operating through the Company record a small profit in most of the quarters. WeChat records support the oral evidence of the applicant that the export business continued to operate beyond the relevant period. The Tribunal is satisfied that the export business was always operated for the purpose of making a profit. The fact that the profit was minimal is irrelevant. Furthermore, WeChat records support that the goods were being provided to the public.

3. Therefore, the Tribunal is satisfied the export business has operated for the purpose of making a profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public since at least July 2018 when the first sales were recorded. Furthermore, there is no question that the export business was not operated primarily or substantially for the purpose of speculative or passive investment. Therefore, the Tribunal finds that the export business is a qualifying business, thereby satisfying the criterion in reg 1.11(1)(d).

4. Accordingly, all four criteria under reg 1.11(1) are met and the export business can be considered as a “main business” throughout the relevant period.

   McMahons Milk Bar business

5. For the reasons discussed at paragraphs 38 and 39 above, as McMahons is also operated through the Company, the applicant clearly has had an ownership interest in the McMahons business from commencement of operations in February 2020, noting that the McMahons business continues to operate. Accordingly, the Tribunal finds that the first criterion in reg 1.11(1)(a) is met.

6. Secondly, the applicant must maintain or have maintained direct and continuous involvement in management of the business from day-to-day and in making decisions affecting the overall direction and performance of the business.

7. The applicant signed the Contract of Sale of Business on 4 February 2020, in her capacity as director of the Company in respect of the purchase of McMahons. The Deed of Transfer of Lease in respect of the premises from which McMahons has operated was signed by the applicant, in her capacity as director of the Company, and the Landlord on 4 February 2020. The applicant also signed the Deed of Transfer of Lease as personal guarantor. The applicant signed the Transfer of Registration of Food Premises form in her capacity as director on 5 February 2020. Furthermore, emails between suppliers, local council and the landlord are addressed directly to the applicant. Various invoices also address the applicant by name, representing the Company, such as Coles, MYOB and AGL.

8. The evidence points only to the applicant having control of all aspects of McMahons on a day-to-day basis and that she has made the decisions impacting the direction and performance of McMahons throughout the relevant period. Therefore, the Tribunal finds that the second criterion in reg 1.11(1)(b) is met.

9. According to ASIC records, the business name of McMahons Milk Bar was registered to the Company on 10 February 2020. Given that McMahons is operated through the Company, for the reasons discussed in paragraph 42 above the Tribunal finds that the third criterion in reg 1.11(1)(c) is clearly met in respect of McMahons and the Tribunal finds accordingly.

10. Finally, McMahons must be a qualifying business. “Qualifying business” is defined in reg 1.03 as an enterprise that is operated for the purpose of making a profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public and is not operated primarily or substantially for the purpose of speculative or passive investment.

11. Full financial statements in respect of the Company for the period in which McMahons has been operating were before the Tribunal for the year ending 16 August 2020, and the 2020/21 and 2021/22 financial years, all of which recorded a net profit. As noted above, these represent consolidated financial statements in respect of McMahons and the export business, albeit there was a significant increase in sales. Business activity statements in respect of the Company from the quarter ending 31 March 2020 also record a significant increase in quarterly sales, corresponding to commencement of McMahons. The quarterly business activity statements through to the quarter ending 30 June 2023 continue to record sales in excess of $150,000.

12. The Tribunal is satisfied McMahons has operated for the purpose of making a profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public since commencement in February 2020. Furthermore, there is no question that McMahons was not operated primarily or substantially for the purpose of speculative or passive investment. Therefore, the Tribunal finds that McMahons is a qualifying business, thereby satisfying the criterion in reg 1.11(1)(d).

13. Accordingly, all four criteria under reg 1.11(1) are met and McMahons can be considered as a “main business” from commencement on 4 February 2020. Furthermore, the Tribunal is satisfied that McMahons continues to meet the main business criteria.

14. As the Tribunal is satisfied that the export business and McMahons are “main businesses” for the purpose of cl 188.232 of Schedule 2 to the Regulations, the Tribunal must now be satisfied that firstly the applicant had an ownership interest in the export business and McMahons in the relevant period and secondly, that the export business and McMahons were actively operating in Australia in the relevant period.

    Has the applicant had an ownership interest in the export business and McMahons and were they actively operating in the relevant period?

    Export business

15. As found above, the applicant has been the sole director, secretary and shareholder of the Company since incorporation on 18 April 2017 and continues to hold those same positions. As the export business operates through the Company, the applicant clearly has had an ownership interest in the export business since 17 August 2018.

16. While “actively operating” is not defined in the Regulations or the Act, the case of Shahpari and Ors v Minister for Immigration & Anor [2016] FCCA 513 provides some guidance, where the Court held that it was open to the Tribunal to find that the expression “actively operating” involved a consideration of whether the business exhibited activity of a “repetitive, continuous and permanent character” in which the business “actively sought to generate business, in fact generated trade and custom, and derived some financial gain for its activities in the relevant period”. It is noteworthy that these four conditions require a different consideration to that of “qualifying business”.

17. The Tribunal noted above that the business activity statements for the quarter commencing 1 July 2018 until the quarter ending 31 March 2020 were all lodged at the same time, on 20 April 2020. Furthermore, the quarters ending 31 March 2019 and 30 June 2019 recorded nil sales. It was on this basis that the delegate decided that no business was actively operating for six months and refused to grant the visa. Amended business activity statements for the period 1 September 2018 to 30 June 2019 were lodged in December 2020 recording sales. In the Tribunal’s view, a few business activity statements recording nil sales do not provide sufficient evidence in respect of a business not actively operating. In addition to the amended business activity statements recording sales and GST on expenses for the disputed quarters, all other business activity statements and other evidence in the form of bank statements and WeChat records reflect the existence of regular sales on a monthly basis throughout the relevant period.

18. WeChat communication records with a customer in mid-December 2019 in respect of a prospective order, records the applicant stating that she has “never stopped the trading business of Australian products.” Other WeChat communication records between the applicant and various customers indicate queries and placement of orders throughout 2020, 2021 and 2022. The Tribunal is satisfied that the evidence supports the export business being repetitive, continuous and permanent in character from July 2018 to at least December 2022.

19. Therefore, the Tribunal finds that the applicant had an ownership interest in the export business which was actively operating throughout the relevant period.

    McMahons Milk Bar business

20. As found above, the applicant has been the sole director, secretary and shareholder of the Company since incorporation on 18 April 2017 and continues to hold those same positions. As McMahons operates through the Company, the applicant clearly has had an ownership interest in it from commencement of operations on 4 February 2020, throughout the relevant period remaining and to date at time of decision.

21. In respect of McMahons, the evidence discussed above supports the business being repetitive, continuous and permanent in character from commencement on 4 February 2020 to date and the Tribunal so finds.

22. Therefore, as the Tribunal is satisfied that the applicant meets the ownership interest criterion in respect of the export business and McMahons throughout the relevant period and that the two main businesses have together been actively operating throughout the relevant period, the Tribunal finds that the applicant meets the criteria under cl 188.232(1)(a) of Schedule 2 to the Regulations. As such there is no need to go on and consider the concessional provisions under cl 188.232(1)(b) of Schedule 2 to the Regulations.

23. In respect of cl 188.232(2) of Schedule 2 to the Regulations, the Tribunal finds that at the time of decision, the applicant continues to have an ownership interest in the main business of McMahons, which continues to actively operate. As such, there is no necessity to pursue further evidence as to whether or not the export business is continuing to actively operate beyond December 2022.

24. Given the findings above that the applicant has met the requirements under cl 188.232 of Schedule 2 to the Regulations, the Tribunal considers that the appropriate course is to remit the matter to the Minister to consider the remaining criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa for the Business Innovation Extension stream.

25. The Tribunal finds that as the second, third and fourth named applicants applied on the basis of being family unit members of the first named applicant, their applications will be determined by reference to the outcome of the first named applicant’s application on remittal to the Department for reconsideration.

    DECISION

26. The Tribunal remits the applications for Business Skills (Provisional) (Class EB) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa for the Business Innovation Extension stream:

    ·cl 188.232 of Schedule 2 to the Migration Regulations1994.