Styles (Migration)

[2021] AATA 2033

Styles (Migration) [2021] AATA 2033 (13 May 2021)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Mr Brian Richard Styles
Mrs Andrea Louise Styles
Ms Olivia Hope Styles

Ms Jasmine Amber Hunt
Ms Gracie Louise Hunt
Mr Archie James Styles

CASE NUMBER:  1831533

DIBP REFERENCE(S):  BCC2017/3838105 BCC2018/4503395 BCC2018/5404922

MEMBER:Susan Hoffman

DATE:13 May 2021

PLACE OF DECISION:  Perth

DECISION:The Tribunal remits the applications for Business Skills (Permanent) (Class EC) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 888 visa:

•    cl.888.225 of Schedule 2 to the Regulations.

Statement made on 13 May 2021 at 11:56am

CATCHWORDS

MIGRATION – Business Skills (Permanent) (Class EC) visa – Subclass 888 Business Innovation and Investment (Permanent) – Business Innovation stream – personal and business assets with net value of at least AUD200 000 – main business – direct and continuous management of the business – Immigration SA form unstamped – loans to directors – decision under review remitted       

LEGISLATION

Migration Act 1958, s 65
Migration Regulations 1994, rr 1.03, 1.11; Schedule 2, cls 888.222, 888.225

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 5 October 2018 to refuse to grant the visa applicants a Business Innovation and Investment (Permanent) (subclass 888) visa in the Business Innovation stream under s.65 of the Migration Act 1958 (the Act).

2. The visa applicants applied for the visa on 19 October 2017. The delegate refused to grant the visas on the basis that they were not satisfied that the primary applicant had sufficient personal and business assets to meet the criteria set out in clause 888.225 in Schedule 2 of the Regulations.

3. Prior to hearing, the Tribunal received information that Mr Styles and Ms Styles had separated and were in the process of divorce. The exact situation was unclear to the Tribunal. For that reason, it issued an invitation for a hearing to Mr Styles alone. As the Presiding Member was located in Perth and the applicants were in Adelaide, the hearing was held via MS Teams video.

4. The applicant was represented in relation to the review by Mr Paul Butler. At the hearing Mr Butler said that he could not represent all the secondary applicants because of a conflict of interest.

5. The Tribunal was advised some weeks later that Mr Butler was now representing Ms Styles and the other secondary applicants.

6. The primary applicant (henceforth the applicant) appeared before the Tribunal on 25 March 2021 to give evidence and present arguments. Mr Ralph Assheton, senior accountant from Susan Nash and Associates, was present for part of the hearing and gave evidence as a witness on accounting issues.

7. A second hearing was scheduled for 6 May 2021, to be held by MS Teams video, with the invitation to attend extended to the five secondary applicants. Mrs Styles and the two older children attended the hearing. Only Mrs Styles gave evidence. Mr Butler was also present.

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

CONSIDERATION OF CLAIMS AND EVIDENCE

Legislation

1. The issue in the present case is whether cl. 888.225 is met. It reads as follows:

   cl. 888.225

   (1) If the nominating State or Territory government agency has not determined that there are exceptional circumstances:

   (a) the requirements in at least 2 of subclauses (2) to (4) are met; and

   (b) the requirement in subclause (5) is met.

   (2) The assets owned by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, in the main business or main businesses in Australia:

   (a) had a net value of at least AUD200 000 throughout the period of 12 months immediately before the application was made; and

   (b) continue to have a net value of at least AUD200 000; and

   (c) were lawfully acquired.

(3) In the period of 12 months immediately before the application was made:

(a) the main business in Australia, or main businesses in Australia, of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together provided employment in Australia to 2 or more employees for a total number of hours that was at least the total number of hours that would have been worked by 2 full-time employees; and

(b) each employee whose employment is used to work out that total number of hours:

(i) was not the applicant or a member of the family unit of the applicant during that period; and
(ii) was an Australian citizen, an Australian permanent resident or the holder of a valid New Zealand passport during that period.

(4) The business and personal assets in Australia of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together:

(a) had a net value of at least AUD600 000 in the period of 12 months ending immediately before the application was made; and

(b) continue to have a net value of at least AUD600 000; and

(c) were lawfully acquired.

(5) The main business in Australia, or main businesses in Australia, of the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together, had an annual turnover of at least AUD300 000 in the 12 months immediately before the application was made.

10.  R. 1.11 defines a main business as follows:

(1)  For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:

(a)  the applicant has, or has had, an ownership interestin the business; and

(b)  the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

(c)  the value of the applicant’s ownership interest or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the business is or was:

(i)  if the business is operated by a publicly listed company — at least 10% of the total value of the business; or

(ii)  if:

(A)  the business is not operated by a publicly listed company; and

(B)  the annual turnover of the business is at least AUD400 000;

at least 30% of the total value of the business; or

(iii)  if:

(A)  the business is not operated by a publicly listed company; and

(B)  the annual turnover of the business is less than AUD400 000;

at least 51% of the total value of the business; and

(d)  the business is a qualifying business.  

(2)  If an applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the applicant, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.

11.  R.1.03 defines a qualifying business as follows:

qualifying business means an enterprise that:

(a)  is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

(b)  is not operated primarily or substantially for the purpose of speculative or passive investment.

Evidence and findings

12.  The Tribunal was advised that Mr Styles and Mrs Styles were divorced on 5 February 2021.

13.  The main business operated by the applicant at the time of the visa application was The Styles Family Trust trading as the Café Olive Seacliff. The Tribunal is satisfied that the applicant and his then-spouse, Mrs Styles, had 100% ownership interest in the main business.

14.  It was submitted that the primary purpose of the Style Family Trust was to own and operate the main business. An organisational chart provided to the Department recorded the applicant as being the managing director and Ms Styles as the secretary. The Tribunal accepts that the applicant maintained direct and continuous involvement in the management of the business from day to day and in making decisions affecting the overall direction and performance of the business.

15.  It is agreed that this business was sold on 24 April 2018. According to departmental records, it was sold for AUD185,000. A new business, the Barn Bistro, was purchased with a settlement date of 19 February 2018. The business was purchased for AUD255,000 and the related property for AUD830,000. Both businesses – Café Olive and The Barn Bistro – were operated through the Styles Family Trust and owned ultimately by the applicant and his former spouse.

16.  The Department was satisfied that cl.888.222(1)(a) and (b) were met at the time they were assessed.

17.  The Tribunal is satisfied that the criteria set out in r.1.11(1)(a), (b) and (c) were met. It notes the use of phrases such as ‘has, or has had’; ‘maintains or has maintained’; and in regards to ownership interest ‘is or was’. These indicate that particular criteria do not need to be satisfied at the time of decision.

18.  R.11(1)(d) requires that for a business to be a main business in relation to an applicant for a visa ‘the business is a qualifying business.’ The Tribunal is satisfied that the café/restaurant together was a qualifying business in that they were both operated for profit through the provision of goods and/or services to the public.

19.  Referring back to r.888.225(1), the appropriate regional authority in this matter is the government of South Australia (SA). The nominating government agency at the time the visa application was made was SA’s Department of State Development (DSD).

20.  A copy of Form 1414, part of which was filled in by DSD and dated 24 October 2017, was submitted to the Department. The form recorded that DSD decided not to waive the requirements to do with there being two or more employees; turnover; the value of net business and personal assets; and the value of net assets in the business.

21.  The applicant submitted a second Form 1414 dated 24 July 2020 to the Tribunal which had not, at the time of hearing, been lodged with the Department. By this time, the relevant agency had changed and was called Immigration SA. The agency name was handwritten on the form rather than stamped as with the first Form 1414, and there was no agency stamp or seal as is usually the case with these forms. ‘South Australia P.G.’ was handwritten where the stamp or seal would otherwise be. Both forms appear to be signed off by the same person, but using a different pen.

22.  An email from a Mr Peter Grifoni to Mr Butler dated 23 April 2021 was submitted after the first hearing. According to this, Mr Grifoni is the Business Migration Development Manager in SA’s Department for Innovation and Skills. In his email, Mr Grifoni wrote that at the time the second form was signed, he and colleagues were splitting their time between working in the office and working from home. He wrote that he did not have access to his usual stamp when he signed the form. Mr Grifoni stated as follows:

We would consider the form to be valid at the time we issued it even without the stamp. As I was working from home, I wrote the name of the state that issued it and initialled it.

23.  The Tribunal is satisfied that the second Form 1414 is genuine and valid and there is no impediment to it accepting the second Form 1414, which was signed by an appropriate person from the relevant agency.

24.  This most recent Form 1414 includes a waiver in respect of the criteria set out in cl.888.225(2), 888.225(3) and 888.225(4) which are to do with employees, business and personal assets and/or net assets in the business.

25.  This means that the applicant is only required to satisfy the criterion set out in cl.888.225(5) which is that the main business in Australia of the applicant and his spouse had an annual turnover of at least AUD300,000 in the 12 months immediately before the visa application was made.

26.  According to financial statements for the period ended 30 September 2017, the sales of food and beverage for the previous 12 months were AUD526,928. For the previous year, the annual sales were AUD436,386. A departmental officer recorded that BAS returns for the period 1 July 2016 to 30 September 2017 were broadly consistent with the turnover figures reported in the financial statements. Given the financial records, the Tribunal finds that cl.888.225(5) is met. It follows that because of the waiver, cl.888.225 is also met.

Other matters - loans recorded in financial statements

27.  The Tribunal is not required to determine the value of business and personal assets because of the waiver included in the second Form 1414. However, as the delegate refused the visa because of the value of business and personal assets, the Tribunal notes the evidence submitted on that point for the record.

28.  Cl.888.225(4)(a) required the business and personal assets of the applicant and his spouse to have a net value of at least AUD600,000 in the 12-month period ending immediately before the visa application was made. 

29.  Financial statements were provided to the Department for the year ended 30 September 2017. The liabilities recorded in the balance sheet included a loan to the business from Mr Styles of AUD68,473 and also beneficiary loans in Mrs Styles’ name of AUD43,784 and Mr Styles’ name for AUD29,628.

30.  The three loans total AUD141,885 (AUD68,473 + AUD43,784 + AUD29,628). The Department requested evidence from Mr Styles of the director’s loans. He did not provide evidence of the loans that satisfied the delegate, and as a consequence, the delegate decided that cl.888.225(4) was not met.

31.  A letter sent to the Tribunal, addressed to ‘To Whom It May Concern’ and dated 9 July 2020, was written by Mr Ralph Assheton, senior accountant from Susan Nash and Associates.

32.  Mr Assheton stated that his firm has acted as accountants and tax agents for the applicant and his entities since December 2017. He wrote as follows:

A family trust must distribute its annual profits each year to avoid being taxed at the top marginal rate. It is normal practice to offset this distribution against any beneficiary loans created by drawing money from the Trust during the year. A beneficiary is not required to physically withdraw the entire profit distribution from the Trust. They can elect to leave some or all of the money in the Trust or loan money back to the business to maintain cash flow or help the business grow….

For taxation purposes, beneficiary loans are the distribution of the Trust’s profits to the beneficiary which in turn are/can be held in Trust…at some time in the future these amounts will need to be paid to the named beneficiaries.

33.  The Tribunal understands from this that the balances in the beneficiary loan accounts were the profits of the business that had yet to be paid out. The balance sheet figures would be the result of journal entries made after the quantum of the business profit had been established. There would be no physical movement of money underpinning these journals. 

34.  Mr Assheton also explained the second loan in the name of Mr Styles, the one which was not identified as a beneficiary loan. He referred to Mr Styles loaning money to the Trust to purchase the business and pay for stock, furniture plant and equipment and refurbishments.

35.  The Tribunal notes that the documents include a Commonwealth Bank Business Transaction Account bank statement for B & A Styles Pty Ltd as trustees for Styles Family Trust trading as Café Olive Seacliff. This statement showed an opening bank balance of nil as at 18 June 2015. Four deposits, each of AU20,000, were credited to the account during September 2015. A purchaser’s settlement statement for a café recorded that the settlement date was 28 September 2015 and the purchase price was AUD80,000. This is consistent with the applicant loaning funds to the Trust to buy the business.

36.  The Tribunal is satisfied with the explanations provided by Mr Assheton about the loans and is satisfied that the amounts recorded in the balance sheet as loans to the directors were assets of those directors.

CONCLUDING PARAGRAPH

37.  Given the findings above, the appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa in relation to the primary and secondary applicants.

DECISION

38.  The Tribunal remits the applications for Business Skills (Permanent) (Class EC) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 882 visa:

•cl.888.225 of Schedule 2 to the Regulations.

Susan Hoffman
Member