Signage Accountants Pty Ltd (Migration)

[2024] AATA 3332

Signage Accountants Pty Ltd (Migration) [2024] AATA 3332 (2 September 2024)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Signage Accountants Pty Ltd

REPRESENTATIVE:  Mr Dushan Nikolic

CASE NUMBER:  2310914

HOME AFFAIRS REFERENCE(S):          OPF2022/3535

MEMBER:Jason Pennell

DATE:2 September 2024

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s 140M of the Migration Act 1958 (Cth).

Statement made on 02 September 2024 at 11:03am

CATCHWORDS

MIGRATION – sponsorship cancellation or bar – ensuring work in the nominated occupation – position of Accountant (General) – impact of the COVID-19 pandemic – work development and training restricted and delayed – evidence of financial reports and statements – references from clients – power to take an action does not arise – decision under review set aside     

LEGISLATION

Migration Act 1958, s 140
Migration Regulations 1994, rr 2.86, 2.89-2.94

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 to take an action under s 140M of the Migration Act 1958 (Cth) (the Act) in relation to the applicant’s sponsorship.

2. The applicant was approved as a Standard Business Sponsor – Aus Business on 18 December 2019. On 7 July 2023, the delegate decided to bar the applicant until 7 January 2024 from sponsoring more people under the terms of the approved standard business sponsorship under s 140M on the basis that the applicant failed to satisfy his sponsorship obligations pursuant to reg 2.89 of the Migration Regulations 1994 (Cth) (the Regulations). The delegate identified the breach of the sponsorship obligation as being a breach of reg 2.86 by failing to ensure that the primary sponsored person works or participates in the nominated occupation, program, or activity.

3. Mr Maulik Shah (Maulik), a director of the applicant, appeared before the Tribunal on 19 August 2024 to give evidence and present arguments in support of the application for review. The Tribunal also received oral evidence from Parth Hitesh Shah (Shah) and Pallavi Devendra Deotale (Deotale).

4. The applicant was represented in relation to the review. The representative attended the Tribunal hearing.

5. For the following reasons, the Tribunal has decided to set aside the decision under review and substitute a decision not to take one or more of the actions specified in s 140M.

CONSIDERATION OF CLAIMS AND EVIDENCE

1. Sections 140K, 140L and 140M of the Act provide for the imposition of sanctions on approved sponsors in certain circumstances.

2. Under s 140M, if prescribed circumstances exist, the Minister (and the Tribunal on review) may take one or more of the following actions:

   ·cancelling the sponsorship approval in relation to a class to which the sponsor belongs;

   ·cancelling the sponsorship approval for all classes to which the sponsor belongs;

   ·barring the sponsor for a specified period from sponsoring more people under the terms of any existing approval; and

   ·barring the sponsor for a specified period from making future applications for sponsorship approval in relation to one or more classes of sponsor.

3. For these purposes, the circumstances are prescribed in regs 2.89–2.94B and include circumstances in which the Minister, or Tribunal on review, is satisfied there has been: a failure to satisfy a sponsorship obligation; provision of false or misleading information; sponsorship application or variation criteria no longer met; a contravention of the law; unapproved changes to a program; a failure to pay additional security; a failure to comply with certain terms of an agreement; or a failure to pay medical and hospital expenses.

4. Where a prescribed circumstance has been found to exist, the regulations prescribe criteria that must be taken into account when determining what action, if any, to take: regs 2.89–2.94B. These criteria, as they relevantly apply to the circumstances of this case are set out in the attachment to this decision.

Does a circumstance for the taking of an action exist?

Failure to satisfy a sponsorship obligation: reg 2.89

1. The Minister may take one or more of the actions in s 140M if satisfied the sponsor has failed to satisfy a sponsorship obligation referred to in Division 2.19 of the Regulations.[1]

   [1] Regulation 2.89(2).

2. In May 2023 the applicant received a Notice of Intention to Take Action (NOITTA) in which the applicant was notified that the following circumstances prescribed in the Regulations had been identified as potentially being applicable:

   ·reg 2.89 - Failure to satisfy sponsorship obligation.

3. The applicant was informed that he may have failed to satisfy the following sponsorship obligation:

   ·reg 2.86 – Obligation to ensure primary sponsored person works or participates in nominated occupation, program or activity.   

4. While the delegate accepted that the primary sponsored person (Shah) may have held the relevant qualifications to work as an Accountant, he found that there was insufficient evidence to demonstrate that he was working in his nominated occupation as an accountant as prescribed by the ANZSCO.

5. The applicant is a Chartered Accountant and Registered Tax Agent specialising in providing services to approximately 3,000 clients including small and medium-sized enterprises (SMEs), Self-Managed Superannuation Funds, Trusts, partnerships and companies (‘the business’). The applicant has been an approved sponsor since 2015 with the most recent sponsorship approval being granted on 18 December 2019.[2]

   [2] Applicant’s submissions dated 1 June 2023.

6. On 1 February 2023, the Australian Boarder Force (ABF) conducted a site visit at the applicant’s business. During this visit, officers interviewed Maulik, Shah and Deotale.

7. On 3 February 2023, the ABF issued the business with a Notice requesting records and/or information. The sponsor subsequently provided the requested information on 14 February 2023.

8. On 11 May 2023 the ABF issued an NOITTA to the applicant. The NOITTA stated that a delegate of the Minister was considering taking action under s 140M of the Act in relation to an alleged breach of the applicant’s sponsorship obligations through reg 2.86 of the Regulations.

9. The NOITTA states that on 29 July 2021 the applicant nominated Shah to work in the business as an Accountant (General).[3] The nomination application form stated that the main duties of the position would be to (‘the nominated duties’):

   ·Prepare, examine, and analyse accounting records, financial statements, and other financial reports to assess accuracy, completeness, and conformance to reporting and procedural standards for clients.

   ·Compute taxes owed and prepare tax returns for individuals, companies, trusts, SMSFs and partnerships, ensuring compliance with payment, reporting and other tax requirements.

   ·Prepare reports and returns and undertake audits. Provide advice to clients regarding taxation on various business operations and structures.

   ·Analyse business operations, trends, costs, revenues, financial commitments, and obligations to project future revenues and expenses or to provide advice to clients.

   ·Prepare reports for monthly management accounts regarding finances.

   ·Establish tables of accounts and assign entries to proper accounts, develop, maintain and analyse budgets, preparing periodic reports that compare budgeted costs to actual costs.

   [3] Notice of Intention to Take Action dated 11 May 2023.

10. In addition, as part of the nomination application the applicant certified that the tasks of the position would include as listed for an Accountant (General) 221111 in the ANZSCO (‘the ANZSCO tasks’), which include :

    ·assisting in formulating budgetary and accounting policies;

    ·preparing financial statements for presentation to boards of directors, management, shareholders, and governing and statutory bodies;

    ·conducting financial investigations, preparing reports, undertaking audits and advising on matters such as the purchase and sale of businesses, mergers, capital financing, suspected fraud, insolvency and taxation;

    ·examining operating costs and organisations’ income and expenditure;

    ·providing assurance about the accuracy of information contained in financial reports and their compliance with statutory requirements;

    ·providing financial and taxation advice on business structures, plans and operations;

    ·preparing taxation returns for individuals and organisations;

    ·liaising with financial institutions and brokers to establish funds management arrangements;

    ·introducing and maintaining accounting systems, and advising on the selection and application of computer-based accounting systems;

    ·maintaining internal control systems;

    ·may appraise cash flow and financial risk of capital investment projects.

11. On 7 July 2023, based on the investigations made by the ABF officers the delegate determined that the applicant had failed to satisfy its sponsorship obligation under reg 2.86. As such, pursuant to s 140M(1) of the Act, the delegate barred the applicant from sponsoring more people under the terms of the approved standard business sponsorship until 7 January 2024.

12. Maulik’s evidence to the Tribunal was that Shah had been working for the applicant on a full-time basis from 14 September 2021. The applicant conducts a small accounting business consisting of Maulik, as Director and Principal of the applicant and six employees, including the two employees referred to in the NOITTA, Deotale and Shah. Deotale was granted a Subclass 482 visa as an Accountant on 16 January 2020 and has applied for a Subclass 186 visa. Shah is the primary sponsored person. He was granted a Subclass 482 visa as an Accountant on 13 September 2021 and has applied for a Subclass 186 visa. 

13. In addition to the staff employed in Australia, the applicant employs contractors in India to facilitate the data entry needs of the accounting practice. The applicant provided the Tribunal with a copy of a Contract of Service entitled Independent Contractor Agreement between the applicant and Signage Accountants India dated 20 November 2015[4] as evidence of data entry services being performed by offshore contractors.

    [4]    Independent Contractor Agreement dated 20 November 2015, AAT file No 2310914, Doc ID: 13308065.

14. Maulik’s evidence was that Shah was employed during the COVID-19 pandemic. As a result, he was required to initially work from home. Nevertheless, his evidence was that Shah has the care of conduct of approximately 20 small businesses including retail operators, taxi operators and builders.[5] His responsibilities include:

    ·Preparing, examining and analysing accounting records, financial statements and other financial reports.

    ·Assessing the accuracy, completeness and conformance to reporting and procedural standards for clients.

    ·Calculating taxes owed and preparing tax returns for individuals, companies, trusts and partnerships in addition to ensuring compliance with the payment of taxation by clients and reporting other tax requirements when necessary.

    ·Analysing business operations, trends, costs, revenues, financial commitments and obligations to project future revenues and expenses or to provide advice to clients.

    ·Preparing reports for monthly management of accounts regarding finances. Establishing tables of accounts and assigning entries to proper accounts by using effective and efficient computer-based accounting systems. Developing, maintaining and analysing budgets, preparing periodic reports and comparing budgeted costs to actual costs.

    ·Providing taxation advice to clients and operating structures.

    [5]    Applicant’s letter dated 30 May 2023, AAT file No 2310914, Doc ID: 13308090.

15. Maulik’s evidence was that due to the COVID-19 pandemic Shah’s training and exposure to more larger clients and more complex tax structures was delayed. As a result, it took longer than expected for Shah to develop his technical and practical knowledge. As a result, Shah was directed to working on smaller clients for the purposes of him developing his technical and practical knowledge. The Tribunal accepts Maulik’s evidence that Shah was employed during the COVID-19 pandemic and as a result his development and training was restricted and delayed. The applicant’s evidence was that Shah has continued his training and development by monthly tax updates through TaxBanter.[6]   

    [6]   Ibid.

16. However, the fact that Shah may be less experienced and not have the same technical and practical knowledge as other Accountants engaged by the applicant does not mean he was not performing the role as an Accountant in accordance with the applicant’s nominated duties or the tasks outlined for an Accountant (General) 221111 in the ANZSCO.  It was Maulik’s evidence that Shah provided tax advice and prepared financial reports for his clients subject to Maulik’s consideration and approval. That is, Shah performed the work subject to Maulik’s review as Principal of the applicant. The applicant provided copies of financial statements and reports, Income Tax Returns and Regulatory Returns, Annual Member Statements and Trustee Representation letters prepared by Shah from November 2023 to July 2024.[7] The financial reports are attached to emails from Shah to Maulik. It was Maulik’s evidence that Shah is responsible for the preparation of any advice and/or financial statements of his clients but it was necessary for Maulik as Director and Principal of the applicant to consider and approve any such advice or reports before being sent. The Tribunal notes that from the documents provided by the applicant, the financial reports and statements prepared by Deotale from August 2023 to May 2024 were also sent to Maulik for his consideration and approval. The Tribunal considers that it would be a necessary and prudent practice of the business that all advice, financial statements, and correspondence prepared by its employees would be considered and approved by Maulik, as its Principal, before being sent.

    [7]    Various financial statements November 2023 to July 2024, AAT file No 2310914, Doc ID: 13354080.

17. The applicant provided several references from clients which attested to the fact that Shah had performed work as an Accountant for them including preparation of tax returns,[8] review of financial reports and review of monthly and quarterly profit and loss reports.[9]  While the references only provide limited insight into tasks performed by Shah, the Tribunal acknowledges it does indicate that he has performed accounting tasks consistent with the nominated duties and the ANZSCO tasks.

    [8] Letter J & S Homes dated 22 July 2024, AAT file No 2310914, Doc ID: 13308090.

    [9] GF Precinct dated 26 May 2023, AAT file No 2310914, Doc ID: 13308090.

18. The delegate noted that Shah escorted the ABF officers to his workspace at the time of the inspection being, the reception desk and showed them how he entered BAS data into the ATO Portal / XERO. It’s noted that there were only limited emails regarding work with clients or other staff. The evidence of Maulik was that Shah’s desk was located next to other staff members. His evidence was that the reception desk is not often used because the business does not have many walk-in clients. His evidence was that Shah moved to the reception desk because it offered more natural light and was a quieter place to work. His evidence was that other staff had done the same thing in the past. In circumstances where the size of the business is small and has limited walk-in clients, the Tribunal places no weight on the fact that Shah may have chosen to work from the reception desk. In addition, in circumstances where the evidence was that due to the COVID-19 pandemic Shah’s training and exposure to more larger clients had been delayed, the Tribunal places no weight adverse to the applicant that Shah was witnessed inputting BAS data into the ATO Portal / XERO and had limited email correspondence at the time of the ABF inspection. Despite what was observed by the ABF officers the documentation provided appears to indicate that he has undertaken work consistent with the nominated duties and the ANZSCO tasks.

19. Therefore, based on the documents provided to the Tribunal and evidence of Maulik as Director of the applicant, the Tribunal finds that Shah did perform the nominated duties and the majority of the ANZSCO tasks in the performance of his sponsored role as an Accountant with the applicant.

20. Accordingly, the Tribunal is not satisfied that the prescribed circumstances in reg 2.89 exist for the purpose of s 140M of the Act.

Action to be taken

1. As the Tribunal finds that none of the circumstances for s 140L(1)(a) exist, it follows that the power to take an action under s 140M does not arise. 

DECISION

1. The Tribunal sets aside the decision under review and substitutes a decision not to take one or more of the actions specified in s 140M of the Migration Act 1958 (Cth).

Jason Pennell
Member

ATTACHMENT – Extract from the Migration Regulations 1994

2.89   Failure to satisfy sponsorship obligation

…

1. For paragraph 140L(1)(b) of the Act, the criteria that the Minister must take into account in determining what action (if any) to take under section 140M of the Act in relation to the circumstance mentioned in subregulation (2) are:

(a)    the past and present conduct of the person in relation to Immigration; and
(b)    the number of occasions on which the person has failed to satisfy the sponsorship obligation; and

(c)     the nature and severity of the circumstances relating to the failure to satisfy the sponsorship obligation, including the period of time over which the failure has occurred; and

(d)    the period of time over which the person has been an approved sponsor; and

(e)     whether, and the extent to which, the failure to satisfy the sponsorship obligation has had a direct or indirect impact on another person; and

(f)     whether, and the extent to which, the failure to satisfy the sponsorship obligation was intentional, reckless or inadvertent; and

(g)     whether, and the extent to which, the person has cooperated with Immigration, including whether the person informed Immigration of the failure; and

(h)    the steps (if any) the person has taken to rectify the failure to satisfy the sponsorship obligation, including whether the steps were taken at the request of Immigration or otherwise; and

(i)    the processes (if any) the person has implemented to ensure future compliance with the sponsorship obligation; and

(j)     the number of other sponsorship obligations that the person has failed to satisfy, and the number of occasions on which the person has failed to satisfy other sponsorship obligations; and

(k)    any other relevant factors.

…