Wang (Migration)
[2020] AATA 1263
•6 March 2020
Wang (Migration) [2020] AATA 1263 (6 March 2020)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT: Zhiqiang Wang
CASE NUMBER: 1909074
HOME AFFAIRS REFERENCE(S): BCC2017/1913193 – BCC2017/2220889
MEMBER:P Ranson
DATE:6 March 2020
PLACE OF DECISION: Brisbane
DECISION:The Tribunal affirms the decision not to grant the visa Applicant a Business Skills (Residence) (Class DF) visa.
Statement made on 06 March 2020 at 11:43am
CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) – Subclass 890 (Business Owner) – ownership interest in main business – direct and continuous involvement in management – frequent and extended absences from Australia – net assets of business – decreasing revenue and increasing losses each year – decision under review affirmedLEGISLATION
Migration Act 1958 (Cth), ss 65, 134(10), 359A
Migration Regulations 1994 (Cth), rr 1.11(1)(b), 1.11A, Schedule 2, cll 890.211(1), 890.212
CASES
Shahpari v Minister for Border Protection [2016] FCCA 513
Sun v Minister for Immigration [2015] FCCA 1266
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576
Any references appearing in square brackets indicate that information has been omitted from this decision pursuant to section 378 of the Migration Act 1958 and replaced with generic information.
STATEMENT OF DECISION AND REASONS
APPLICATION FOR REVIEW
This is an application for review of a decision made by a delegate of the Minister for Immigration on 3 April 2019 to refuse to grant the visa Applicant a Business Skills (Residence) (Class DF) (Subclass 890) visa under s.65 of the Migration Act 1958 (the Act).
Mr Zhiqiang Wang (the Applicant) applied for the visa on 30 May 2017. Certain criteria must be satisfied during the two year period ending immediately before the application is lodged, that is, 30 May 2015 to 29 May 2017 (the Application Period).
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 Applicant in this case is seeking to satisfy the criteria for the grant of a Subclass 890 (Business Owner) visa, as set out in Part 890 of Schedule 2 to the Migration Regulations 1994 (the Regulations).
The delegate in this case refused to grant the visa on the basis the visa Applicant did not satisfy the requirements of cl.890.212 of Schedule 2 to the Regulations because sufficient information was not provided to enable the delegate to confirm the net assets of the business were at least $100,000 for the 12 months immediately prior to the date of the application.
The Applicant appeared before the Tribunal on 23 October 2019 to give evidence and present arguments. The Applicant was represented in relation to the review by Mrs Li Qin (the Representative). The Representative attended the Tribunal hearing.
For the following reasons, the Tribunal has concluded the decision under review should be affirmed.
CONSIDERATION OF CLAIMS AND EVIDENCE
As mentioned above, the delegate in this case refused to grant the visa on the basis the visa Applicant did not satisfy the requirements for the value of the net assets of the business. Before the net asset position of the business can be tested it is necessary to firstly determine whether the main business test has been met. Clause 890.211(1) requires the Applicant to have an ownership interest in the main business specified in the application and to maintain 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.
The issues for the Tribunal in this case therefore are whether the extended absences from Australia by the Applicant allowed him to maintain continuous involvement and whether the business, which has reported increasing losses each year, is being operated for a purpose other than to make a profit, that is, does the Applicant meet the main business test.
Ownership interest in main business (cl.890.211(1))
The Applicant is required to have 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.[1]
[1] cl.890.221
No more than two businesses can be nominated for this purpose[2] and one or both of the businesses relied on to meet the time of application criterion must be relied on to meet the time of decision criterion.[3]
[2] r.1.11(2)
[3] Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.
The business relied on by the Applicant to satisfy this requirement is FantAsia Asian Food (FantAsia) in Toowong, Brisbane (FantAsia Toowong) (ABN 47 169 356 861). ABN is the initialisation of Australian Business Number. ABN 47 169 356 861 has been active and registered for GST continuously since 5 May 2014. The business is a franchise owned and operated by High Happy Pty Ltd (ACN 169 356 861) (High Happy).
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’ during the Application Period. The Tribunal must also consider these issues as at the date of this decision and whether the Applicant continues to satisfy cl.890.211(1).
Does the Applicant have an ownership interest in each business relied on at all relevant times?
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.[4] 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.[5]
[4] r.1.03 of the Regulations and s.134(10) of the Act
[5] r.1.11A(1).
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 both at the time of making that application and during the Application Period. In order to meet cl.890.221 the Tribunal must be satisfied the Applicant continues to satisfy this requirement at the time of this decision.
High Happy was incorporated on 2 May 2014. On 10 October 2014 the Applicant was appointed as a director of the company and acquired an additional 25 fully paid ordinary shares taking his holding to 60.[6] As there are 100 fully paid ordinary shares issued by High Happy, the Tribunal finds the Applicant has held a 60% interest in the company since 10 October 2014.
[6] Historical company extract for High Happy dated 28 November 2018
Accordingly, the Tribunal is satisfied the Applicant did have and does have an ownership interest in the nominated business at all relevant points in time.
Was each business relied on actively operating at all relevant times?
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. In order to meet cl.890.221 the Applicant must continue to satisfy this requirement at the time of this decision.
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.[7]
[7] Shahpari v Minister for Border Protection [2016] FCCA 513 at [71].
On 23 August 2014 Signature Chef Pty Ltd (ACN 143 506 192), the FantAsia franchisor, issued a tax invoice for $715,000, including GST, to High Happy for the franchise fee, shop fitout and other costs[8]. The copy of the franchise agreement between Signature Chef Pty Ltd and High Happy provided to the Tribunal, which is undated at Item 1 of the Schedule, was signed by the franchisor on 2 October 2014[9].
[8] Department file part 4 page 56
[9] Department file part 2 page 114
On 13 September 2014 High Happy entered into a lease agreement with YFG Shopping Centre Pty Ltd (ACN 056 974 844) for Shop No G66 in Toowong Shopping Centre in Brisbane[10]. The term of the initial lease was seven years with no options to continue the lease after the expiration of the initial lease term. The Applicant said at the Hearing his intention was to renew the lease of the shop at the expiration of the current lease.
[10] Department file part 2 page 93
Whilst the business has reported losses each year from 2015 to 2018, which must be concerning to the shareholders of High Happy, the declining turnover has still averaged just over $495,000 pa during that period clearly demonstrating financial gain has been generated from its activities. Financial statements for High Happy for the 2019 financial year have not been provided to the Tribunal.
The website for FantAsia Toowong reveals the store is open from 9:30 or 10:00 am to 7:30 or 9:00 pm seven days per week[11].
[11] type="1">
The financial statements of High Happy for the 2015 to 2018 financial years, which includes a one-off lease incentive of $60,000 from the landlord in the 2015 financial year, reveals:
Year
Turnover
Profit/(Loss)
2015
590,279
(19,211)
2016
575,955
(23,886)
2017
476,396
(27,925)
2018
339,875
(60,873)
Total
$1,982,505
$(131,895)
Average
$495,626
$(32,974)
The Tribunal finds FantAsia Toowong has been operated by High Happy continuously since at least 2 October 2014 in a repetitive, continuous and permanent manner.
Accordingly, the Tribunal is satisfied the nominated business was and is actively operating at all relevant points in time.
Does each business relied on satisfy the definition of ‘main business’ at all relevant points in time?
In order to satisfy the requirements of cl.890.211(1), the business or businesses relied on by the Applicant must meet the definition of ‘main business’ at the time of application and during the two years immediately before. Clause 890.221 requires the Applicant continues to satisfy this requirement at the time of decision. 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.
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.[12] If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met.[13] These provisions are set out in full in the attachment to this decision.
[12] r.1.03.
[13] r.1.11A.
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.
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 businesses is not operated by a publicly listed company and the annual turnover of the business is at least AUD400 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 AUD400 000; the value of the ownership interest must be at least 51% of the total value of the business.
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.[14]
[14] r.1.03.
The business is not operated by a public company and its turnover is greater than $400,000 pa. As shown above, the Applicant holds a 60% ownership interest in High Happy, which owns and operates the business of FantAsia Toowong.
FantAsia Toowong is open to the public and trades seven days each week from premises in a large suburban shopping centre in Brisbane.
A business must be operated for the purpose of making profit to be a qualifying business. The definition of the word ‘purpose’ is: ‘an intended or desired result; end or aim.’[15] A schedule showing the turnover and loss for each year from 2015 to 2018 is set out in paragraph 23 above. This schedule shows the business incurred losses each year which accumulated to $131,895 during those four years despite a rental incentive of $60,000 from the landlord in the 2015 year. Despite cutting the wage cost by 50% across the four years, the loss is increasing each year and sales are decreasing. The Applicant said the declining sales were consistent with a decline in business generally at Toowong Shopping Village without providing evidence of that decline.
[15] Macquarie dictionary
The Applicant was specifically asked at the Hearing about the history of losses of the business and when he expected a profit to emerge. His response was the business costs were largely controlled by the franchisor, in particular the food cost, and he was engaging local and overseas experts to assist him to turn the business around, without providing any evidence of that. He further advised with the agreement of the franchisor he would be changing the menu, presumably to improve the gross profit margin albeit he did not say that.
Initially no particular timeframe was offered by the Applicant as to when the business was expected to generate a profit. When asked if he anticipated achieving a profit within the next two years the Applicant answered yes, by increasing sales. This he said would be achieved by changing the menu with the agreement of the franchisor. The Applicant also said at the Hearing relations between he and the Franchisor had deteriorated. The Tribunal notes the business still operated at a loss when sales were much higher in the 2015 and 2016 years compared with the 2017 and 2018 years.
The Tribunal notes the balance sheet of High Happy includes intangible assets associated with the purchase of the FantAsia franchise, viz. goodwill, franchise fee and project management fee, totalling $160,235 (the Intangible Assets). Despite the ongoing losses and declining revenue, the balance sheets for the 2015 to 2018 financial years do not include any impairment charge against the intangible assets.
Despite the losses to date and the declining sales of the business, the evidence of the Applicant at the Hearing was FantAsia Toowong is intended to make a profit and he expects it to do so within two years. The Tribunal accepts the Applicant’s evidence because he has invested a large amount in order to buy the franchise initially and to fund the losses to date.
A further issue for the Applicant is whether he 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 during the whole of the Application Period and up to the time of this decision. The definition of the word ‘involvement’ is: ‘actively participating in’.[16] The two elements to this are:
(a)management of the business from day to day; and
(b)making decisions affecting the overall direction and performance of the business, which the Tribunal considers could be performed remotely.
[16] Macquarie dictionary
FantAsia Toowong is a single outlet fast food franchise operating from the food court of a large metropolitan shopping centre.[17] FantAsia is based in Brisbane and operates 11 stores throughout south-east Queensland.[18]
[17] >
Franchising is a business relationship in which the franchisor (the owner of the business providing the product or service) assigns to independent people (the franchisee) the right for a fixed period of time to market and distribute the franchisor's goods or services, and to use the business name. The International Franchise Association defines franchising as a "continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organising training, merchandising and management in return for a consideration from the franchisee".[19]
[19] >
Based on the above comments, the Tribunal expects the franchisor of FantAsia would be providing the franchisee, in this case High Happy, with all the required systems and training and in particular the menu as well as the use of the trademark and associated branding. Whilst the Applicant gave evidence at the Hearing he was changing the menu with the agreement of the Franchisor, nonetheless all the systems and branding are those of Signature Chef Pty Ltd and have been used by FantAsia Toowong since the commencement of the franchise. The Tribunal finds the Applicant was not required to devise the business systems rather implement them and train his staff accordingly. This is confirmed by his list of duties set out below in paragraph 43 which includes training staff but not devising systems.
The Tribunal notes High Happy registered the business name ‘Fantasia Toowong’ for three years on 21 October 2014.[20] A search of the business names register on the Australian Securities & Investments Commission (ASIC) website confirms the ongoing registration of that business name. A search of the ABN Lookup on the Australian Business Register (ABR) reveals the business name remains associated with High Happy.
[20] ASIC business name extract dated 21 October 2014 attached to the submission by the Representative dated 12 October 2019.
At the Hearing the Applicant was asked to comment on his duties as owner and manager of FantAsia Toowong. His response was:
(a)Open and close the store everyday unless he is away in which case one of the staff undertake this task;
(b)Train the staff;
(c)Improve the quality of service and food at the Toowong store;
(d)Ensure food safety and hygiene;
(e)Devise and arrange marketing activities such as advertisements on television and in the media;
The Tribunal categorises the above duties as between day-to-day management and overall direction and performance of the business as follows:
Open and close the store
Day-to-day management
Train the staff
Day-to-day management
Improve the quality of service and food at the Toowong store
Day-to-day management
Ensure food safety and hygiene
Day-to-day management
Devise and arrange marketing activities such as advertisements on television and in the media
Overall direction and performance
As can be seen from the above table, four of the five duties identified by the Applicant as his are day-to-day management. In the case of FantAsia Toowong, the Tribunal considers these four duties can only be competently performed on-site given the business is a single site, fast food outlet because they require a physical presence on site, that is, at Toowong Shopping Village.
Prior to the Hearing, the Tribunal obtained movement records from the Department of Immigration. Those records reveal the Applicant had been out of Australia during the following periods:
From To Days Offshore During the Application Period 19-May-15 22-Jun-15 35 12-Jul-15 13-Aug-15 33 29-Sep-15 02-Nov-15 35 12-Nov-15 18-Nov-15 7 06-Dec-15 05-Jan-16 31 01-Mar-16 20-Mar-16 20 21-Jun-16 12-Jul-16 22 10-Aug-16 19-Aug-16 10 17-Oct-16 25-Oct-16 9 27-Nov-16 08-Dec-16 12 20-Mar-17 18-Apr-17 30 Total (During the Application Period) 244 From To Days Offshore After the Application Period 13-Jun-17 24-Jun-17 12 29-Sep-17 15-Oct-17 17 29-Nov-17 24-Dec-17 26 29-Dec-17 04-Jan-18 7 17-Feb-18 17-Jul-18 151 02-Sep-18 04-Nov-18 64 18-Nov-18 13-Jan-19 57 27-Jan-19 02-Apr-19 66 27-Apr-19 17-Jul-19 82 30-Jul-19 22-Oct-19 85 Total (After the Application Period) 567 Overall Total 811 From 19 May 2015, that is, just before the commencement of the Application Period until 22 October 2019 the Applicant had been offshore for 811 days out of a total of 1,752, that is, 46% of his time has been spent offshore. Specifically, 244 days during the Application Period represents 33% of the available time and 567 days after the Application Period and up to 22 October 2019 represents 73% of the available time.
The absence of the Applicant for extended periods during the Application Period and subsequently was raised with the Applicant at the Hearing who was asked to comment on how he was able to maintain 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 while he was offshore. His response was he maintained regular contact with his employees via electronic means such as e-mail and WeChat. On 14 November 2019 the Tribunal wrote to the Applicant requesting various documents including copies or extracts of the e-mail and WeChat exchanges. The Representative responded on 20 November 2019 (the 20 November 2019 submission).
The 20 November 2019 Submission included a submission by the Representative and a nine page marketing report dated 8 November 2019 entitled ‘The Revolution of Asian Fast Food in Australia; MARKET RESEARCH’ (the Marketing Report), the author of which is not identified. Relevantly, paragraph 2 of the Representative’s submission reads as follows:
‘My client has been always exploring more opportunities and try very hard to make the retail fast food business successful in Australia. Therefore, he has been away from Australia for significant time, it is because the fast food business has been very successful and booming in China, he was doing market research to find out and research how to bring up his own fast food business in Australia. While he was away, he frequently contacted his employees, franchise head office to manage his business. As he has been managing the business since 2015, and there are some employees like Hong LIU has been working in the business for 4 – 5 years. My client is very familiar with the whole operation of the business. He gives instruction to his employee through emails and WeChat (WeChat is like What’s app Chinese version). We have attached email contacts and WeChat chatting records to prove that my client has been managing his business through Internet.’
The 20 November 2019 submission included 72 pages of e-mails with a date range of 16 February 2018 to 21 October 2019. The extracts of the WeChat messages are either not in English or appear to be voice messages without the associated audio file. Further, they appear to only cover time during the 2018 and 2019 calendar years, which does not include the Application Period.
The bulk of the emails are to or from [an email address]. The Tribunal assumes from the exchanges this is the e-mail address of the Applicant although no evidence of that was provided. The e-mails appear to fall into approximately three categories:
(a)e-mails between the Applicant and employees at FantAsia Toowong
(b)e-mails between the Applicant and the franchisor; and
(c)e-mails between the Applicant and centre management at Toowong shopping village.
The e-mails between the Applicant and the employees at FantAsia Toowong are largely instructions from the Applicant to the staff. A typical e-mail from the Applicant is worded as follows:
‘Replenish the stock and arrange all the works, I will be back tomorrow.’ Or
‘Please replenish the stock, arrange the weekend shift and the exam.’ Or
‘Please replenish the stock and make a new monthly plan for …’
The e-mails between the Applicant and the franchisor are largely about price increases or customer complaints and monthly store sales reports. The e-mails between the Applicant and centre management at Toowong Shopping Village are typically of an administrative nature usually dealing with rent or other tenancy matters.
The Tribunal notes in particular the Applicant was out of Australia for 85 days from 30 July 2019 to 22 October 2019 returning it seems to attend the Hearing. The Tribunal also notes from 17 February 2018 to 22 October 2019, the Applicant had been out of Australia for a total of 505 days, which represents 82% of the 613 available days during that period. The Tribunal considers this to be a significant amount of time for the Applicant to be out of Australia conducting market research. Further, the absences from Australia occur from the beginning of the Application Period, which was long before the market research was said to have been conducted and before relations between the Applicant and the franchisor deteriorated.
The Marketing Report submitted by the Applicant is nine pages of generic information which seems to the Tribunal to be very little to show for the amount of time he spent in China conducting so-called market research. There were 21 absences between 19 May 2015 and 22 October 2019 which suggests the Applicant had other motives for being offshore other than just conducting market research.
The Tribunal considers the Applicant would not be in a position to be a hands-on manager of the nominated business whilst offshore notwithstanding the copious number of electronic exchanges between the Applicant and the staff of the business during that time because the Tribunal considers four of his five duties can only be performed on-site and he has been offshore for significant periods of time from before the Application Period until the Hearing.
Further, the e-mail exchanges with the staff of FantAsia Toowong appear to suggest the day-to-day management of the business was conducted by the employees of FantAsia Toowong. The 20 November 2019 Submission suggests to the Tribunal the employee Hong LIU was most likely the local manager of the business under the supervision of the franchisor whilst the Applicant was overseas.
In Sun & Anor v Minister for Immigration & Anor [2015] FCCA 1266 (Sun), Simpson J considered an application for a Judicial Review of a decision of the then Migration Review Tribunal, now the Administrative Appeals Tribunal, concerning the significance of time spent outside of Australia when seeking to satisfy the requirement to maintain direct and continuous involvement in the day-to-day management of a business and in making decisions affecting the overall direction and performance of the business.
In Sun, the Applicant owned a taxi business and had spent large amounts of time outside of Australia, which the Tribunal considered were significant in its finding the Applicant could not satisfy the relevant condition. It is the Applicant who must meet the criteria not someone else whether they are an employee, associate or relative.
In Sun, the Tribunal found and the court upheld the day-to-day management tasks of that business could only be performed by a person onsite in Australia (emphasis added). The level of involvement by the Applicant, whilst offshore, could not satisfy the requirement to be continuously involved on a day-to-day basis. As Simpson J noted at [34]:
Whilst the Applicant may have attempted to continue such an involvement it is practically impossible for her to “directly and continuously” be involved in the management of the business from day-to-day. To suggest otherwise does not accord with common sense.
The Tribunal acknowledges modern-day marketing perhaps may not require a physical presence at a regular workplace or business premises and to the extent the work is digital, analytical, creative and strategic, it may not require hands-on execution. Provided the user has internet access and the relevant login credentials, the Tribunal notes managing social media, such as a Facebook account, is a task that could be done remotely. However, it seems to the Tribunal to be common sense for the manager of a single outlet, fast food business such as FantAsia Toowong to have a constant guiding presence with their team, which means they need to be on the ground, attending the store for at least part of every week (personal leave excepted), actively listening to what customers and employees are saying and constantly feeling the pulse of the business. A manager working remotely as much as the Applicant did and does risks being perceived as too far removed from the reality of the organisation’s day-to-day activities.
As discussed in detail above, during the period from the beginning of the Application Period to the date of the Hearing, the Applicant has been offshore 46% of his time and in particular, from 17 February 2018 to 22 October 2019 he has been offshore 82% of his time. The Tribunal considers the amount of time the Applicant is offshore to be so significant as to preclude him from being continuously (emphasis added) involved in the day-to-day management of the business.
On 31 January 2020 the Tribunal wrote to the Applicant pursuant to Section 359A of the Act advising him of the information it had found about his absences from Australia. The letter advised if the Tribunal relies on this information in making its decision, it may find he does not meet the requirements of a ‘main business’ as set out in Regulation 1.11, which may result in it finding he does not meet cl.890.211. If the Tribunal makes this finding, it may affirm the decision under review to refuse the grant the Applicant a Business Skills (Residence) (Class DF) (Subclass 890 – Business Owner) visa. That is, the letter advised him this information (about his extended absences from Australia), and subject to his response to the letter, would be the reason or part of the reason for affirming the decision.
On 14 February 2020 the Applicant responded to the Tribunal’s letter dated 21 January 2020 attaching copious amounts of documents (the 14 February 2020 Submission). Those documents included:
(a)e-mail exchanges from the 2014, 2015, 2017, 2018 and 2019 calendar years, partly in English and partly in Mandarin and partly repeating copies of e-mails previously provided in the 20 November 2019 Submission;
(b)The Marketing Report as provided in the 20 November 2019 Submission;
(c)WeChat messages as provided in the 20 November 2019 Submission;
(d)Documents, in the Mandarin language with official translation, which purport to be medical reports about the Applicant’s parents.
Documents not accompanied by an official translation into English, as stipulated in our letter of 31 January 2020, were considered insofar as the Tribunal could comprehend them given the lack of translation.
The covering letter in the 14 February 2020 Submission is in English and restates the Applicant’s assertion about conducting market research in China in order to resuscitate the business conducted by High Happy. The Tribunal’s view of the worth of the Marketing Report has already been discussed above.
The Tribunal regards the medical reports about the Applicant’s parents as adding weight to its view the Applicant was offshore for reasons other than attending to the day-to-day operations and management of FantAsia Toowong. The previously unseen e-mails in Mandarin have been considered to the extent the Tribunal could comprehend them. The previously unseen e-mails in English are either of an administration nature or dealing with customer complaints.
The Tribunal finds the 14 February 2020 Submission does not add any weight to the Applicant’s argument about being involved continuously in the day-to-day management of the business.
Given the findings above, in the case of FantAsia Toowong, the Tribunal is not satisfied the nominated business meets the definition of main business at all relevant points in time because the significant amount of time the Applicant is and has been away from Australia precludes him satisfying the requirement he 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 during the Application Period and up to the time of this decision.
Conclusion
The Tribunal finds r.1.11(1)(b) is not satisfied and therefore cl.890.211(1) is not met as the Applicant could not satisfy the definition of main business insofar as it related to his being continuously involved in the day-to-day activities and management of the business. Given this finding, the decision under review must be affirmed.
DECISION
The Tribunal affirms the decision not to grant the visa Applicant a Business Skills (Residence) (Class DF) visa.
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
Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 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).
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.
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.
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
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In this section:
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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.
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