Wen (Migration)

[2022] AATA 1463

Wen (Migration) [2022] AATA 1463 (21 April 2022)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs Haiying Wen
Mr Jinhua Li
Ms Hongyu Li

REPRESENTATIVE:  Miss Xiaohan Li (MARN: 1281567)

CASE NUMBER:  1921414

HOME AFFAIRS REFERENCE(S):          BCC2017/2583950

MEMBER:Robyn Anderson

DATE:21 April 2022

PLACE OF DECISION:  Melbourne

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

·cl 188.226 of Schedule 2 to the Regulations; and

·cl 188.228 of Schedule 2 to the Regulations.

Statement made on 21 April 2022 at 4.30pm.

CATCHWORDS

MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional)) – business innovation stream – net value of business and personal assets – information provided with visa application not sufficient to establish ownership of property in Australia – title search and current valuation and mortgage – shareholdings in Chinese company not paid up in full, so net assets omitted from calculation – Australian company deregistered and applicants currently in home country – intention to return to Australia and recommence business operations – assets lawfully acquired – members of family unit – decision under review remitted

LEGISLATION

Migration Act 1958 (Cth), s 65

Migration Regulations 1994 (Cth), Schedule 2, cls 188.226, 188.228

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

1. This is an application for review of a decision made by a delegate of the Minister for Home Affairs on 23 July 2019 to refuse to grant the first named applicant (the visa applicant) a Business Skills (Provisional) Subclass 188 visa in the Business Innovation stream under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The visa applicant, Mrs Wen, applied for the visa on 20 July 2017, following an invitation to apply on 3 July 2017. The delegate refused to grant the visa on the basis that the visa applicant did not satisfy cl 188.226 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations). Relevantly, this required the visa applicant, the visa applicant’s spouse or de facto partner, or the visa applicant and her spouse or de facto partner together, to hold business and personal assets that can be applied to the establishment or conduct of a business in Australia with a net value of at least AUD800,000 at the time of invitation.

3. The Tribunal received a review application from the visa applicant on 3 August 2019. The matter was constituted to a Tribunal Member on 7 July 2021. The Tribunal wrote to the visa applicant on 23 November 2021 requesting further financial information and evidence of asset ownership. The Tribunal granted an extension of time for provision of the requested material and received further submissions and evidence on 20, 21 and 22 December 2021. The Tribunal addressed the clarification sought by the representative in respect of the loan accounts of the nominated business in China, Xinjiang Shuangjian Agricultural Machinery Manufacturing Co. Ltd. (the Chinese Company).  After some delay due to COVID-19 restrictions in Hong Kong, the Tribunal received further information on 4 April 2022.

4. The applicants were represented in relation to the review by Ms Li, of AuPass Migration Pty Ltd.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

6. As noted above, the issue in the present case is whether Mrs Wen and/or her spouse, Mr Li (the second named applicant), hold business and personal assets that can be applied to the establishment or conduct of a business in Australia with a net value of at least AUD800,000 at the time of invitation. The visa applicant’s nominated business and personal assets provided to the Department were as at 30 April 2017.

7. Departmental policy in GenGuide M – Business Visas – Visa application and related procedures (PAM 3), to which the Tribunal may have regard in appropriate cases, states at 3.9.20.2 that any one date in the 3 month period immediately before the visa application was made is acceptable.  While policy may provide guidance, the Tribunal is not bound to follow it. However, in this case, the Tribunal is satisfied that it is appropriate to consider the personal and business assets of Mrs Wen and/or Mr Li as at 30 April 2017, being less than 3 months immediately prior to the date of application.

8. The submission to the Department was as follows, using an exchange rate of AUD1 to RMB5.17.  The Tribunal accepts that the exchange rate is appropriate.

Type of assets	Details of assets	Net value (RMB)	Net value (AUD)
Cash	NAB…3313 Offset account	798,258
NAB…3516	33
NAB credit card…7865	(627)
NAB Home loan…0316	(1,073,660)
Real Estate	[Address 1]	1,550,000
Business assets Chinese Company	1,666,170	322,277
Loan to Chinese Company	56,541	10,936
TOTAL BUSINESS AND PERSONAL ASSETS	1,607,217

1. The delegate was not satisfied that sufficient information was provided to establish ownership of the [Suburb 1] property (the property). When excluded, the business and personal assets of Mrs Wen and Mr Li totalled AUD57,217. As the time of invitation was before 1 July 2021, cl 188.226(a) is applicable. Clearly AUD57,217 fell well short of the AUD800,000 required under cl 188.226(a) of Schedule 2 to the Regulations.

2. The Tribunal considered the evidence in respect of the business and personal assets of Mrs Wen and/or Mr Li.  The Tribunal considers that this should also include consideration of any business assets in Australia, Shuangjian Agricultural Machinery Manufacture Pty Ltd (the Australian Company).

3. In respect of the NAB bank accounts ending in …3313 and …516 and the credit card ending in …7865, the Tribunal is satisfied that the amounts submitted align exactly to the balances recorded on the respective bank statements and that all accounts are held in the name of Mr Li.

4. In respect of the property, the contract of sale was signed by Mr Li and the vendor on 26 October 2014 with settlement due to take place on 6 February 2015. The purchase price was AUD1,550,000.  A title search, dated 1 December 2021 in respect of the property records Mr Li as the sole proprietor from 16 February 2015.  A valuation report by Melbourne Property Valuers, dated 13 November 2018, records a value in respect of the property at 30 April 2017 in the amount of AUD2,100,000.

5. The title records a mortgage registered by the Commonwealth Bank of Australia on 30 June 2017.  However, at 30 April 2017, the corresponding mortgage for the property was with NAB.  The loan offer letter from NAB was before the Tribunal, dated 25 November 2014. NAB …0316 statements before the Tribunal, held in the name of Mr Li, record an outstanding liability at 30 April 2017 in the amount of AUD1,073,660.

6. In respect of the Chinese Company, according to the enquiry form from Chiangji Administrative Examination and Approval Bureau, the Chinese Company was listed as a limited liability company on 1 August 2011.   Mrs Wen and Mr Li have been recorded as holding 80% and 20% respectively of the total shareholdings since that time.  It is noteworthy that the subscribed capital contribution in respect of the shareholdings have not been paid up in full; Mrs Wen and Mr Li each contributing RMB250,000, equating to only 6.25% and 25% of the subscribed capital contribution in their respective shareholdings.

7. Financial statements before the Tribunal record net assets at 30 April 2017 in the amount of RMB1,666,170.  Furthermore, an amount due to Mrs Wen is recorded in the amount of RMB56,541.  For the purposes of assessing the business assets attributable to Mrs Wen and Mr Li in respect of the Chinese Company, the Tribunal notes the policy set out at 3.9.5.3 of PAM3 that the balance of any loans advanced to the business by the visa applicant should be added to the visa applicant’s share of the net asset value recorded on the balance sheet.  Consequently, the Tribunal calculates the net business assets attributable to Mrs Wen and/or Mr Li to be RMB1,722,711.  Using the same exchange rate of AUD1 to RMB5.17, this equates to AUD333,213. However, given the existing unpaid capital amounts, it is arguable whether Mrs Wen and Mr Li have a full entitlement to the net business assets as calculated.  In any event, as can be seen from the table below, if the net business assets in the Chinese Company were to be ignored, it has no impact on the remaining personal and business assets of Mrs Wen and/or Mr Li exceeding AUD800,000.

Business assets – Chinese Company	1,666,170	322,277
Loan to Chinese Company	56,541	10,936

1. Therefore, the Tribunal calculates the net personal and business assets of Mrs Wen and/or Mr Li, excluding the Chinese Company business assets, equate to AUD2,157,217, as set out below.

Type of assets	Details of assets	Net value (AUD)
Cash 798258.46	NAB…3313	Net value (RMB)	798,258
NAB…3516	33
NAB credit card…7865	(627)
Real Estate	[Address 1]	2,100,000
NAB Home loan…0316	(1,073,660)
TOTAL BUSINESS AND PERSONAL ASSETS	1,824,004

1. In respect of the Australian Company, ASIC records indicate that Mr Li was a 99% shareholder from the outset. According to the general ledger account of Director loans – current loan from Mr Jinhua Li, the amount owing Mr Li at 30 April 2017 was AUD94,401. There had been no movement since 30 June 2016. It is apparent that the significant increase at 30 June 2017 was reversed in early July 2017 on account of misallocation. At 30 June 2017, after accounting for the misallocation, the loan from Mr Li exceeds his 99% share of the net liabilities of the Australian Company at 30 June 2017 by AUD11,454. The Tribunal is also satisfied that the loan from Mr Li likely exceeds the net assets of the Australian Company at 30 April 2017. In any event, given that the verifiable personal and business assets of Mrs Wen and/or Mr Li at 30 April 2017 exceed AUD2,150,000, it also has no bearing on the applicants meeting the criterion under cl 188.226 of Schedule 2 to the Regulations. Consequently, the Tribunal finds that the personal and business assets of Mrs Wen and/or Mr Li that can be applied to the establishment or conduct of a business in Australia have a net value of at least AUD800,000 at the time of invitation and the criterion under cl 188.226 is met.

2. Of further note is the deregistration of the Australian Company on 18 August 2021.  It was apparent that the applicants returned to China in late 2019.  Mrs Wen and Mr Li have not returned since due to COVID-19.  However, they continue to operate a successful business through the Chinese Company, the nominated business for the purposes of the Subclass 188 visa.  It was submitted that the intention is to return to Australia if successfully granted the visa and recommence business operations in Australia, also introducing an advanced water-saving irrigation technology to Australia.  Having completed her Bachelor of Biomedicine in 2019, their daughter, Ms Li, returned to Melbourne in January 2020 to commence a Doctor of Dental Surgery at the University of Melbourne.

3. In addition, the delegate was not satisfied that sufficient evidence was provided to enable a finding in respect of the source of funds transferred to Australia. The Tribunal notes that cl 188.228 of Schedule 2 to the Regulations requires the business and personal assets of Mrs Wen and Mr Li to have been lawfully acquired and to be available for transfer to Australia within 2 years of the granting of a Subclass 188 visa.

4. The Tribunal requested further evidence in support of the assets being lawfully acquired.  While the profit and loss statements of the Australian Company record small profits and/or losses, the individual tax returns of Mr Li record gross wages received from the Australian Company in 2014/15, 2015/16 and 2016/17 in the amounts of AUD110,833, AUD190,000 and AUD126,664 respectively. 

5. Submissions and declarations from Mrs Wen and Mr Li explain their employment through various entities in China since the 1990s.  Mrs Wen is a Mechanic, while Mr Li is a Geological Engineer and also provides legal consulting services.  Their involvement in various entities involved the development of agricultural machinery and an increased reputation in the market.  This was followed by the transformation to an industrial company with the assistance of government funding policies and the expansion into overseas markets. In 2013, the applicants sought out new business opportunities that led them to apply for the Subclass 188 visa in Australia. While Mr Li set up and operated the Australian Company, Mrs Wen took over the sole management of the Chinese Company.

6. Mrs Wen and Mr Li submitted that their respective incomes included income and dividends from the Chinese Company.  Mrs Wen estimated her average annual after-tax income in the 12-year period to 2008 to be RMB120,000.  Mr Li estimated his average annual after-tax income in the 11-year period to 2007 to be RMB145,000. A spreadsheet explaining the transfer of funds in the total amount of AUD712,989 via the bank accounts of various friends in China between 22 December 2012 and 20 March 2019 was before the Tribunal.  Mrs Wen maintains that this was necessary due to the limitations placed on transfers from her and Mr Li on account of China’s foreign exchange restrictions.

7. The Tribunal received detailed general ledger accounts of the loan accounts of the Chinese Company in respect of Mrs Wen and Mr Li. It was evident that Mr Li was paid out his loan in March 2017 in the amount of RMB108,922. Consequently, he maintained a nil loan balance in the balance sheet of the Chinese Company at 30 April 2017. However, Mrs Wen continued to have a balance owing to her from the Chinese Company at 30 April 2017 in the amount of RMB56,541. This follows a significant repayment to Mrs Wen in March 2017 in the amount of RMB1,983,460. Given the success of the Chinese Company and the entities that existed in the years prior, together with the detailed summaries in respect of the loan accounts, the Tribunal is satisfied that the funds transferred to Australia for the purposes of the Australian Company and purchase of the property have been lawfully acquired by the applicants, including from the Chinese Company. Therefore, the Tribunal finds that cl 188.228(a) of Schedule 2 to the Regulations has been successfully met at the time of decision.

8. The Tribunal is cognisant that the value of the personal assets put to the Department that are already in Australia well exceed AUD800,000. The property remains in the sole name of Mr Li. According to realestate.com.au the current estimated median value is AUD2,160,000. The CBA corresponding mortgage and offset account balances at 30 December 2021 are AUD1,266,272 and AUD1,151,416 respectively. Therefore, the Tribunal calculates the net value of the property at time of decision to be AUD2,045,144. As in excess of AUD2,000,000 has already been transferred to Australia, the Tribunal finds that cl 188.228(b) of Schedule 2 to the Regulations has been successfully met at the time of decision.

9. Given the findings above, it follows that cl 188.226 and cl 188.228 of Schedule 2 to the Regulations have been met. Therefore, the appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.

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

    DECISION

11. The Tribunal remits the application for reconsideration, with the direction that the first named applicant meets the following criteria for a Business Skills (Provisional) Subclass 188 visa in the Business Innovation stream:

    ·cl 188.226 of Schedule 2 to the Regulations; and

    ·cl 188.228 of Schedule 2 to the Regulations.

    Robyn Anderson
    Member