Wang (Migration)

[2021] AATA 1333

Wang (Migration) [2021] AATA 1333 (12 March 2021)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Zhu Wang
Mrs Shaolin Zhao
Mr Zhubin Zhao
Miss Rui Zhao

CASE NUMBER:  1929535

DIBP REFERENCE(S): BCC2017/4207872 BCC2017/4517744

MEMBER:Peter Ranson

DATE:12 March 2021

PLACE OF DECISION:  Brisbane

DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction the first named visa applicant meets the following criteria for a Subclass 890 (Business Owner) visa:

·cl.890.211(1) and cl.890.212 of Schedule 2 to the Regulations.

Statement made on 12 March 2021 at 4:18pm

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) – ‘ownership interest’ – active operation of business – arm’s length customers – definition of ‘main business’ – continuous involvement in day-to-day management of business – value of net business assets – related party loans – lawful acquisition of assets – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), ss 65, 134
Migration Regulations 1994 (Cth), rr 1.11, 1.11A; Schedule 2, cl 890.211, 890.212

STATEMENT OF DECISION AND REASONS

Table of Contents

APPLICATION FOR REVIEW

CONSIDERATION OF CLAIMS AND EVIDENCE

Ownership interest in main business

Does the applicant have an ownership interest in each business relied on at all relevant times?

Was each business relied on actively operating at all relevant times?

Does each business relied on satisfy the ‘main business’ definition at all relevant points in time?

Adjusted net business assets

Shareholder loan of $180,000

Assets lawfully acquired

DECISION

ATTACHMENT B – Balance Sheets of IHome Group Pty Ltd

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 1 October 2019 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).

2. The delegate identified the applicants applied for the visas on 9 November 2017. Certain criteria must be satisfied during the two-year period ending immediately before the date of application, so for the purpose of this decision that is, 9 November 2015 to 8 November 2017 (the Relevant Period).

3. At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of Subclass 890 (Business Owner) visas, as set out in Part 890 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 890.2. The others need only to satisfy the secondary criteria set out in Subdivision 890.3.

4. The delegate in this case refused to grant the visas on the basis the first named visa applicant, Mr Zhu Wang, (the Applicant) did not satisfy the requirements of cl.890.212 of Schedule 2 to the Regulations because, by the delegate’s calculations, the net business assets of the Applicant and his spouse did not reach the required level of A$100,000. Mrs Shaolin Zhao, the Second Visa Applicant, is the partner of the Applicant.

5. The Applicant appeared before the Tribunal on 17 February 2021 to give evidence and present arguments. The Applicant was represented in relation to the review by Mr Eric Shu-Wah Ip[1] (the Representative) of Elite Migration and International Education Services Pty Ltd and by Mr Ming Zhao[2] of Sunfield Chambers Solicitors & Associates (the Second Representative). Both representatives attended the Tribunal hearing.

   [1] Migration Agent Registration Number: 0533968

   [2] Migration Agent Registration Number: 0105755

6. The Representatives and all parties attended the Hearing by video link facilitated by the Tribunal utilising Microsoft Teams. The hearing was held during the COVID-19 pandemic. The Tribunal determined it was reasonable to hold a hearing by video conference, having regard to the nature of this matter and the individual circumstances of the applicant. The Tribunal also had regard to the Tribunal’s objective of providing a mechanism of review that is fair, just, economical and quick, and the delay to the matter if the hearing was not to be conducted by video conference. The Tribunal is satisfied the applicant was given a fair opportunity to give evidence and present arguments.

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

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issues in this case are the calculation of net business assets and verification of the Applicant’s loan to the nominated business.

2. In accordance with the President’s Direction[3], the Tribunal will only address those elements of the criteria on which the delegate made an adverse finding, being the satisfaction of cl.890.212. In addition, the Tribunal has also considered cl.890.211(1).

   [3] Presidents Direction for Conducting Migration and Refugee Reviews dated 1 August 2018

Ownership interest in main business

1. Clause 890.211(1) requires the applicant had an ownership interest in one or more actively operating main businesses in Australia for at least two years immediately before the visa application was made and continued to have that interest at the time the visa application was made. The applicant must continue to satisfy this requirement at the time of this decision.[4] No more than two businesses can be nominated for this purpose[5] and one or both businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion.[6]

   [4] cl.890.221(a)

   [5] r.1.11(2)

   [6] Yang v Minister for Immigration and Border Protection [2014] FCCA 1576

2. The business relied on by the applicant to satisfy these requirements is retail sales and installation of flooring materials known as IHome Flooring (IHome Flooring) conducted by IHome Group Pty Ltd ACN 167 852 575 (IHome Group). Accordingly, the Tribunal must consider the nature of the applicant’s interest in this business, whether the business was actively operating and whether it met the definition of ‘main business’ in the period commencing two years immediately prior to the date of application and as at the date of application.

3. Case law has established a business is not a legal entity but rather an enterprise or undertaking. It is therefore important for the Tribunal to identify the business to which the definition of main business must be applied. It is also important to note that one business can be owned by multiple entities and conversely, multiple businesses can be owned by one entity. For the avoidance of doubt, an Australian Business Number (ABN) attaches to an entity, not to a business.

Does the applicant have an ownership interest in each business relied on at all relevant times?

1. An ‘ownership interest’, in relation to a business, means an interest in the business as:

   (a)a shareholder in a company that carries on the business, or

   (b)a partner in a partnership that carries on the business, or

   (c)the sole proprietor of the business;

   including such an interest held indirectly through one or more interposed companies, partnerships or trusts.[7] Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations, set out in the attachment to this decision: r.1.11A(1).

   [7] r.1.03 of the Regulations and s.134(10) of the Act

2. In order to meet cl.890.211(1) the Tribunal must be satisfied the applicant had an interest of this kind in the relevant business or businesses both at the time of making that application and for the two years immediately before.

1. IHome Group is a private company registered in New South Wales (NSW) on 3 February 2014. The application included an historic search of the records of the Australian Securities & Investments Commission (ASIC) dated 31 October 2017 (the 2017 ASIC Search), which shows the registered office and principal place of business is 103 The Crescent, Homebush West NSW 2140, which the Tribunal understands is the home address of Mr Lei Zhang who is a director and shareholder of IHome Group.

2. The 2017 ASIC Search reveals the issued capital of IHome Group is 10 ordinary shares held at that time by:

Shareholder	Number held
ZHANG, Lei	3
WANG, Zhu (the Applicant)	7
Total	10

1. Also included with the application was a share transfer form dated 1 May 2015 for seven shares in IHome Group showing the transferor as Lei Zhang and the transferee as the Applicant (the Share Transfer Form). The Share Transfer Form was stamped with nominal duty of $10 on 25 July 2015.[8] The ASIC search reveals the notification to ASIC of the transfer of shares from Lei Zhang to the Applicant was lodged on 28 September 2015. No explanation was offered to explain the delay in notifying ASIC of the change of shareholders, which the Tribunal understands incurs a late lodgment penalty payable to ASIC. Again, the Tribunal notes this decision does not turn on that discrepancy.

   [8] Reference number 0008196900-001

2. On 17 November 2020, the Tribunal conducted its own search of the records of ASIC for IHome Group (the 2020 ASIC Search) and concluded no changes had occurred in the shareholders of the company, that is, the Applicant retains seven ordinary shares as he did from 1 May 2015.

3. Accordingly, the Tribunal is satisfied the Applicant did have an ownership interest in the nominated business, IHome Flooring, at least at the time of application and during the Application Period because he held 7 out of 10 issued shares, that is, a 70% interest in IHome Group from 1 May 2015, and IHome Group is the operator of the nominated business.

Was each business relied on actively operating at all relevant times?

1. In order to meet cl.890.211(1) the Tribunal must be satisfied the relevant business or businesses were actively operating both at the time of making the visa application and during the Application Period.

2. The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, 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.[9]

[9] Shahpari v Minister for Border Protection [2016] FCCA 513 at [71]

1. The Applicant provided a copy of the financial statements for IHome Group, the operator of IHome Flooring, for the year ended 30 September 2017 with comparative figures for the year ended 30 September 2016, which covers the period 1 October 2015 to 30 September 2017.

2. The financial statements for 2016 and 2017 reveal the following:

2017	2016
Sales	1,501,591	1,431,508
Cost of sales	801,762	768,014
Gross profit	699,829	663,494
Expenses	654,126	614,856
Profit before tax	45,704	48,638
Income tax expense	0	0
Profit after tax	$45,704	$48,638

1. During the 2016 and 2017 years as shown above, IHome Flooring had combined sales of $2,933,099 (average $1,466,505) and generated combined net profit of $94,341 (average $47,171). The website of IHome Flooring indicates the business is open to the public Monday to Friday from 9:30 a.am to 4:30 a.m. and on Saturday from 10:00 a.m. to 4:00 p.m.[10]. It is apparent to the Tribunal the Business, IHome Flooring, is open to the public as evidenced by its website.

   [10] >

   The business address shown on the website is 103 The Crescent, Homebush West NSW 2140 (the Registered Office) whereas the application included a copy of a lease agreement dated 22 May 2017 for premises at 271 Beamish Street, Campsie NSW 2194 (the Campsie Premises). The lease agreement shows the lessee as IHome Group and the lease commencement was 16 May 2017 for a term of three years. The Tribunal understands the Campsie Premises are in a retail and commercial precinct.

2. Accordingly, the Tribunal is satisfied the relevant business, IHome Flooring, was actively operating both at the time of making the visa application and during the Application Period because it had arm’s length customers, made sales and generated profits.

Does each business relied on satisfy the ‘main business’ definition at all relevant points in time?

1. In order to satisfy the requirements of cl.890.211(1), the business or businesses relied on by the Applicant must meet the ‘main business’ definition at the time of application and during the Application Period. The term ‘main business’ is defined in r.1.11 of the Regulations and is set out in full in the attachment to this decision. There are four elements to the definition, each of which must be satisfied for a business to be a main business.

1. Firstly, the applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in s.134(10) of the Act.[11] If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met.[12] These provisions are set out in full in the attachment to this decision.

   [11] r.1.03

   [12] r.1.11A

2. 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.

3. 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 business must meet certain thresholds:

   (a)if the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business;

   (b)if the business is not operated by a publicly listed company and the annual turnover of the business is at least A$400,000, the value of the ownership interest must be at least 30% of the total value of the business;

   (c)If the business is not operated by a publicly listed company and the annual turnover of the business is less than A$400,000; the value of the ownership interest must be at least 51% of the total value of the business.

4. Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise 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 is not operated primarily or substantially for the purpose of speculative or passive investment.[13]

   [13] r.1.03

5. It is important to note the first three elements of the definition of ‘main business’ only have to be met at some point in time prior to or as at the date of application. The fourth element concerning qualifying business must be satisfied by the date of application and continue until the time of decision.

1. The Tribunal has previously established the Applicant, as a shareholder in IHome Group, held an 70% interest in the Business, IHome Flooring, at the time of application and during the Application Period, see paragraph [‎19].

2. The Tribunal finds the first and third elements of the definition of main business are satisfied because the turnover of IHome Flooring is more than A$400,000 p.a., see paragraph [‎23], so the interest required to be held by the Applicant is 30% and the Applicant held a 70% interest in IHome Flooring at the time of application and during the Application Period.

3. The second element requires the Applicant to have been continuously involved in the day to day management of the business and in making decisions affecting the overall direction and performance of the business. The definition of the word ‘involvement’ is ‘actively participating in’.[14]

   [14] Macquarie dictionary

4. The departmental file includes an organisation chart for the business and a brief description of the duties of the Applicant as General Manager of IHome Flooring.

5. The Representative’s Submission dated 10 September 2017 sets out the duties of the Applicant in more detail, which are summarised below and categorised as between day to day management and overall direction and performance of the business:

Coordinate installation team	Day-to-day management
Coordinate logistics	Day-to-day management
Daily operations	Day-to-day management
Human resource management	Day-to-day management
Procurement	Day-to-day management
Sourcing suppliers	Day-to-day management
Arrange print and digital media	Overall direction and performance
Finance	Overall direction and performance

1. The Tribunal notes none of the above duties involves providing services directly to customers, that is, sales and installation of flooring as these functions are carried out by others. All the above are managerial in nature and so are consistent with the Applicant being continuously involved in the day to day management (emphasis added) of the business and in making decisions affecting the overall direction and performance of the business.

2. As can be seen from the above table, six of the eight duties identified by the Applicant involve day-to-day management with the remainder involving overall direction and performance of the business. The Tribunal considers the six day-to-day management duties of the Applicant in the Business can only be competently performed on-site given IHome Flooring is a single site retail business because they require a physical presence at the Campsie Premises, see paragraph [‎25‎] and before then at the Registered Office.

3. The Business made substantial sales and was profitable during the 2016 and 2017 years, see paragraph ‎[‎23]. The Tribunal finds the financial results for those years can be attributed to the Applicant because he was appointed a director of IHome Group on 1 May 2015 and remains so today, and he is the controlling shareholder of IHome Group.

4. The Tribunal checked the movement records for the Applicant during the Relevant Period and found he had been offshore for a total of 44 days, which equates to 6% of his time.

5. In considering the requirement for the Applicant to be continuously involved in the day-to-day management of the Business, the Tribunal is unconcerned about these absences from Australia as there were three separate absences rather than one continuous absence, each ranging from 12 to 17 days, which is reasonable allowance for holidays or business related travel. Further, the Applicant would have been able to carry out the overall direction and performance duties remotely whilst offshore.

6. The Tribunal has already found IHome Group was actively operating the Business, IHome Flooring, during the Application Period, see paragraph [‎26]. The Tribunal finds the Business was a qualifying business both at the time of making the visa application and during the Relevant Period because it provided retail sales and installation of flooring to the public and there is no evidence it had been operated primarily or substantially for the purpose of speculative or passive investment such as property rental.

1. Accordingly, the Tribunal is satisfied the nominated business, IHome Flooring, does meet the definition of main business both at the time of making the visa application and during the Application Period.

2. Given the findings above, the Tribunal is satisfied cl 890.211(1) is met.

Requirements relating to applicant’s assets

1. At the time of visa application and in the 12 months immediately before the application is made, cl.890.212 requires the assets in the main business(es) in Australia of the applicant, or the applicant’s spouse or de facto partner, or the applicant and his spouse or de facto partner together have a net value of at least A$100,000. Further, these assets must have been lawfully acquired.

1. The Applicant has submitted the requirements concerning net assets in the main business are met by his interest in IHome Flooring. He provided a copy of the financial statements for IHome Group, the operator of IHome Flooring, prepared by Onward Business Consultants Pty Ltd, for the year ended 30 September 2017 with comparative figures for the year ended 30 September 2016. The reported business net assets as at 30 September 2016 and 30 September 2017 are reproduced at ATTACHMENT B – Balance Sheets of IHome Group Pty Ltd.

Departmental policy

1. Departmental policy regarding net business assets seeks to establish the Applicant has a record of financial commitment to business through personal financial involvement and exposure to risk by investing a substantial amount of money sourced from their own funds. Whilst departmental policy is not the law or the regulations, it can be a useful guide in determining net business assets, unless the circumstances of the case dictate otherwise.

2. Clause 890.212 anticipates the financial statements provided to test this criterion will be for the year ended on the application date (9 November 2017 in this case) with comparative figures. Under departmental policy, immediately before means any date in the three-month period immediately before the visa application was made. The financial statements provided with the application, viz, for the year ended 30 September 2017 with comparative figures for the year ended 30 September 2016, end within three months before the application date.

3. The Tribunal adopts a conservative approach to the valuation of privately held entities. Related party loans are generally disregarded unless they are documented on commercial terms, including security, in a legally binding loan agreement.

1. According to departmental policy, the steps to determine net business assets are:

   (a)From the reported financial statements, establish the net assets, which equals net equity, then

   (b)Add back any unsecured related party loans and other items requiring adjustment, then

   (c)Calculate the proportionate share of the adjusted net assets, then

   (d)Add the balance of any loans advanced to the business by the Applicant (or deduct funds loaned to the Applicant by the business) net of any loans the Applicant may have taken out to finance their investment in the business.

2. Accordingly, the Tribunal is comfortable to make its decision accepting departmental policy in this case and has based its assessment of cl.890.212 on the financial statements for the year ended 30 September 2017 and the above formula for determining net business assets.

3. The reported net assets of IHome Flooring before adjustment for related party loans are $111,640 as at 30 September 2017 and $65,936 as at 30 September 2016. Other than the related party loans, that is, the loans to Lei Zhang and from the Applicant, the Tribunal is satisfied the items on the balance sheets can be taken at face value as they are considered normal for the type of business conducted by IHome Flooring.

Adjusted net business assets

1. Adjusting the reported net business assets for unsecured related party loans results in the following net asset position for the Applicant:

30/09/2017	30/09/2016
Reported net assets	111,640	65,936
Add back: Related party loans
Lei Zhang	(187,547)	(141,418)
Zhu Wang (the Applicant)	180,000	180,000
Adjusted net assets	104,093	104,518
Applicants’ share (70%)	72,865	73,163
Add: Shareholder loan - Zhu Wang	180,000	180,000
Applicant’s net business assets	252,865	253,163

1. The adjusted net assets shown above of $104,093 as at 30 September 2017 and $104,518 as at 30 September 2016 represent the ‘hard’ assets of the business less its external liabilities, that is, cash on hand and at the bank plus inventories, less amounts owing for GST.

2. The application included a copy of the financial statements for IHome Group for the year ended 30 June 2017 with comparatives for the year ended 30 June 2016. Those financial statements show balances for Inventories of $123,890 and $120,460 at each year end respectively.

3. The Tribunal notes these financial statements, being prepared on a financial year basis, would be the basis for the preparation of income tax returns, which enhances their credibility. Further, attachment 5.1C to the Representative’s Submission of 30 June 2019 is a copy of the stocktake (Inventory List) for IHome Flooring dated 30 September 2017 and signed by Li Zhang, which shows the amount of $95,889 as shown in the financial statements as at that date.

4. Accordingly, the amounts shown on the balance sheets described as ‘Inventories’ as at 30 September 2017 and 30 September 2016 are accepted by the Tribunal because the balance of inventories is consistently between 6% and 10% of turnover across the four balance dates tested and supported by written stocktake lists.

Shareholder loan of $180,000

1. From 2017 to 2019, the Representative lodged three submissions with various attachments as follows:

   (a)10 September 2017, which is date stamped received by the department on 10 November 2017 (the Representative’s First Submission);

   (b)On 30 June 2019 (the Representative’s Second Submission); and

   (c)On 12 August 2019 (the Representative’s Third Submission).

2. The loan from the Applicant to IHome Group of $180,000 originated from a Loan Agreement dated 29 April 2015 between the Applicant and IHome Group (the Applicant’s Loan Agreement). A copy of the signed agreement was included in the Representative’s Third Submission. It shows the loan amount is $180,000 made on 29 April 2015 at a fixed interest rate and is payable by earlier termination of the facility or 29 August 2020 as a lump sum including interest.

3. The Tribunal notes the end date of the Applicant’s Loan Agreement has passed however as this date is after the time of application, it is not relevant to this decision whether the loan has or has not been repaid.

4. In the Representative’s First Submission, the loan of $180,000 from Zhu Wang to IHome Group is said to have occurred by way of two transfers of funds being: ‘Westpac 54-7091 statement show withdraw of $100,000 on 30 April 2015 and Westpac 82-1334 statements show withdraw of $80,000 on 01 June 2015’. The Representative’s First Submission includes copies of statements for Westpac bank accounts ending 7091 and 1334. Those statements show the account holder is the Applicant and the entries on 30 April 2015 and 1 June 2015 are for the amounts of $100,000 and $80,000 respectively each bearing the narration ‘TRANSFER WITHDRAWAL AT CAMPSIE NSW’.

5. Included in the Representative’s Third Submission was an extract from the general ledger of IHome Group for the ‘Loan from Zhu Wang’, which shows these amounts, $100,000 and $80,000, credited to this account on the dates the transfers occurred.

6. In the department’s decision, the delegate commented the loan from the Applicant was not genuine as the funds were immediately paid out to Mr Lei Zhang, who is the other shareholder and director of IHome Group. How IHome Group used those funds is a matter for it. The funds were its to disburse as it saw fit. By paying those funds to Mr Lei Zhang the company created an asset, being the receivable shown on the balance sheet, the terms and conditions of which is a matter for the company.

7. Attachment A-2a (in two parts) to the Representative’s Submission of 12 August 2019 is a copy of the loan agreement dated 29 April 2015 between IHome Group as lender and Mr Lei Zhang as borrower. The Tribunal has considered this evidence however, as the loan to Mr Lei Zhang has been disregarded in the calculation of net business assets, consistent with the findings of the delegate, see paragraph [‎‎54], this evidence has no part to play in the decision.

8. The delegate was not satisfied the amount shown for inventory should be included and the loan from the Applicant was not genuine so should also not be included. The Tribunal has satisfied itself as to the veracity of both these items.

Assets lawfully acquired

1. Returning to cl.890.212(c), the assets of 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 must have been lawfully acquired.

2. The question of how the Applicant and the Second Visa Applicant acquired the funds they brought to Australia was explored at the hearing. The Applicant was requested to make a post-hearing submission about that to clarify some of his evidence at the hearing. On 9 March 2021, the Second Representative made a detailed submission setting out the business and investment background of the Applicant and the Second Visa Applicant and the Tribunal wishes to acknowledge the quality of that submission as it provided a comprehensive statement with supporting documentation. The position regarding lawfully acquired is summarised in the final paragraph as follows:

   ‘Taking into account of Mr Wang and Mrs Zhao's total earnings of AUD 540,000 between 2008 and 2014, the proceeds of AUD 200,000 from the sale of shareholdings in the China Company by Mr Wang and Mrs Zhao in 2015, and the profit of AUD 821,910 from the sale of residential property in China in 2015, being a grand total of 1,561,910, it is submitted the amount of $180,000 lent to IHOME Group Pty Ltd in 2015 by Mr Wang has been lawfully acquired by Mr Wang and his spouse, thus meeting the visa requirements specified under subclause 890.212 of the Migration Regulations.’

3. The Tribunal checked the supporting documentation in the post-hearting submission which included:

   (a)Declaration dated 1 March 2021 by the Applicant;

   (b)Declaration dated 6 March 2021 by Mrs Shaomei Zhao who is the sister of the Second Visa Applicant with a Shareholder Resolution dated 9 December 2014 acknowledging her 100% ownership of Shanghai Hongquan Logistics Co., Ltd;

   (c)Share transfer agreement dated 9 December 2014 recording the transfer of shares from the Applicant to the Second Visa Applicant;

   (d)Shareholder Resolution dated 4 February 2015 appointing Mrs Shaomei Zhao as executive director in place of the Second Visa Applicant and share transfer agreement dated 4 February 2015 recording the transfer of shares from the Second Visa Applicant to Mrs Shaomei Zhao;

   (e)Bank account transaction lists dated from 2015 to 2018 showing the transfer of funds from Mrs Shaomei Zhao to the Second Visa Applicant;

   (f)Shanghai Commercial Housing Pre-sale contract dated 14 December 2003 between the Second Visa Applicant, her son and her daughter as purchaser of a property for CNY 840,448 described as Room 901, No. 150, Lane 1897, Longming Road (Herunjiayuan) to be used as a residence together with settlement documentation; and

   (g)Shanghai Real Estate Purchase-Sale Contract for the sale of the property described in (f) above for CNY4,950,000.

4. The Tribunal is satisfied the funds brought to Australia and invested in IHOME Group were lawfully acquired.

5. Given the findings above, the Tribunal is satisfied cl 890.212 is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.

6. The secondary visa applicants are remitted for reconsideration by the Department based on the outcome of the application by the primary visa Applicant.

DECISION

1. The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 890 (Business Owner) visa:

   ·cl.890.211(1) and cl.890.212 of Schedule 2 to the Regulations.

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03Definitions

In these Regulations, unless the contrary intention appears:

…

ownership interest has the meaning given to it in subsection 134(10) of the Act.

…

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.

…

1.11Main business

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

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

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

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

(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.

1.11AOwnership for the purposes of certain Parts of Schedule 2

(1)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 890 and 893 of Schedule 2, ownership by an applicant, or the applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

(2)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:

(a)a trust instrument; or

(b)a contract; or

(c)any other document capable of being used to enforce the rights of the applicant, or the applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

(3)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

(4)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the applicant, or the applicant’s spouse or de facto partner, has beneficial ownership:

(a)is a dependent child of the applicant; and

(b)made a combined application with the applicant; and

(c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.

Migration Act 1958

134Cancellation of business visas

….

1. In this section:

….

ownership interest, in relation to a business, means an interest in the business as:

(a) a shareholder in a company that carries on the business; or

(b) a partner in a partnership that carries on the business; or

(c) the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

ATTACHMENT B – Balance Sheets of IHome Group Pty Ltd

30/09/2017	30/09/2016
Current Assets
Cash on hand	10	10
Cash at bank	8,195	2,963
Stock on hand	95,889	101,546
104,094	104,519
Non-Current Assets
Loan to: Lei Zhang	187,547	141,418
Total Non-Current Assets	187,547	141,418
Total Assets	291,641	245,937
Current Liabilities
GST payable	1	1
Loan from: Zhu Wang	180,000	180,000
Total Liabilities	180,001	180,001
Net Assets	$111,640	$65,936
Equity
Issued share capital	10	10
Retained profits	111,630	65,926
Total Equity	$111,640	$65,936