Wong (Migration)
[2020] AATA 475
•23 January 2020
Wong (Migration) [2020] AATA 475 (23 January 2020)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANT: Vivien Siew Ling WONG
Amberly Mei Yi SHIM
CASE NUMBER: 1720418
HOME AFFAIRS REFERENCE: BCC2017/1252514
TRIBUNAL:Member P Ranson
DATE:23 January 2020
PLACE OF DECISION: Brisbane
DECISION:The Tribunal affirms the decision not to grant the visa applicants Business Skills (Residence) (Class DF) visas.
Statement made on 23 January 2020 at 9:55am
CATCHWORDS
MIGRATION – Business Skills (Residence)(Class DF) visa – Subclass 892 (State/Territory Sponsored Business Owner) – time of application criteria – source and supply business not nominated in visa application – not actively operating business in Australia – connection to Australia not sufficient – recruitment services for overseas markets – sourcing products from US and delivering to customers outside Australia – decision under review affirmed
LEGISLATION
Migration Act 1958 (Cth), ss 65, 134(10)
Migration Amendment Regulations 2001 (No. 10) (2002, No.348)
Migration Regulations 1994 (Cth), rr 1.03, 1.11, Schedule 2, cls 892.212, 892.213, 892.221
CASES
Lee v Minister for Immigration and Citizenship [2009] FCA 977
Shahpari v Minister for Border Protection [2016] FCCA 513
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576
Zhu & Ors v Minister for Immigration & Anor [2016] FCCA 1874
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 1 September 2017 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).
The applicants applied for the visas on 22 January 2016. The application period is the two years immediately before the application is made, i.e. 22 January 2014 to 21 January 2016 (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 applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Business Owner) visas, as set out in Part 892 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 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.
Two of the original secondary visa applicants, viz. Benjamin Khin Chiang SHIM (Mr Shim) and Nathan Jin Feng LAI were not included in the application to the Tribunal for a review of the department’s decision of 1 September 2017.
The delegate in this case refused to grant the visas on the basis that the first named visa applicant (‘the applicant’) did not satisfy the requirements of cl.892.211 of Schedule 2 to the Regulations as the nominated business was not a qualifying business in Australia because the bulk of its activities are offshore notwithstanding the business is managed from Australia.
The applicant appeared before the Tribunal on 4 October 2019 to give evidence and present arguments. The applicant was represented in relation to the review by Lester Ong of Munro Doig Lawyers. The representative attended the Tribunal hearing.
For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.
CONSIDERATION OF CLAIMS AND EVIDENCE
The main issue in this case is whether the applicant can satisfy the criterion 892.211 with the nominated business conducted by Avakas Well Services Pty Ltd ACN 159 443 893 (Avakas). Avakas is owned by the applicant and her spouse and operated from Australia however the bulk of its sales are to customers offshore. The Form 1217 which accompanied the application recorded the major business activity as: ‘Recruitment services to supply manpowers [sic manpower] to overseas market [sic markets] especially to Asia and the Middle East’.
The explanatory memorandum to the Migration Amendment Regulations 2001 (No. 10) (2002, No.348) states that ‘new clause 892.221 requires that the Applicant continues to satisfy certain time of application criteria. This is to ensure that nothing material has changed in the Applicant’s circumstances. Where there has been a material change in circumstances, such as a change in businesses (emphasis added), cl.892.221 cannot therefore be satisfied. The significance of this is discussed later in this decision.
It is important to note at this point that subsequent case law has established that 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.
The applicant’s submission dated 14 January 2016 (the 14 January 2016 submission) mentions: ‘The company is also an authorised distributor for a USA company distributing specialised equipment for the oil and gas industry in the Asia Pacific Region’. The Form 1217 makes no mention of this as a business activity and in describing her duties in that submission the Applicant only lists activities in connection with the recruitment business.
In an undated company profile reference is made to the appointment of Avakas as a distributor for B&T Oilfield Products, which are said in the profile to specialise in ‘Slickline Tools, O’rings, Gasket, Junk Catcher and Spare Parts’. Under a heading ‘Our Methodology’ the company profile goes on to describe a four step process, which appears to only deal with the recruitment business and makes no mention of B&T Oilfield Products. The list of clients on that document does include two Asian based companies to whom tool sales are made. The remaining seven clients are all noted as receiving manpower supply or consulting services.
The 14 January 2016 submission also makes reference to the acquisition on 8 September 2014 of another business; PostNet. However the PostNet franchise agreement provided by the applicant lists the franchisee as Thriven Business Services Pty Ltd ACN 601 643 145 (Thriven) which was incorporated on 4 September 2014. As Thriven is a different entity in a different business to Avakas, not included in the form 1217 and did not operate for the entirety of the Application Period it cannot be considered for the purpose of this application.
This decision will consider whether the recruitment and B&T Oilfield Products businesses conducted by Avakas meets the definition of main business, whether it was operating continuously during the application period as required by cl.892.211(1) and up to the time of decision as required by cl.892.221(a) and whether there has been a material change in the business since the time of application.
Seeking further information post-Hearing, the Tribunal wrote to the Applicant on 20 December 2019 raising two issues; viz. whether Avakas has met the requisite turnover threshold and whether Avakas has commenced a new business. The latter issue was discussed at the Hearing. On 13 January 2020 the Representative responded to the request for further information.
Accordingly, the Tribunal will also consider whether the applicant met the turnover threshold as required by cl.892.213(2) and whether Avakas commenced a new business after lodging the visa application.
Ownership interest in main business
Clause 892.211(1) requires the applicant 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] No more than two businesses can be nominated for this purpose[2] and only one or both of the businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion.[3]
[1] cl.892.221(a).
[2] r.1.11(2)
[3] Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.
The businesses relied on by the applicant to satisfy these requirements are conducted by Avakas. Accordingly, the Tribunal must consider the nature of the applicant’s interest in these businesses, whether the businesses were actively operating and whether they meet 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. The Tribunal must also consider these issues as at the date of this decision and whether the applicant continues to satisfy cl.892.211(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 shareholder in a company that carries on the business, or
·a partner in a partnership that carries on the business, or
·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.892.211(1) the Tribunal must be satisfied that 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. In order to meet cl.892.221(a) the Tribunal must be satisfied that the applicant continues to satisfy this requirement at the time of this decision.
The applicant provided a copy of Australian Securities & Investments Commission (ASIC) Form 201 dated 11 July 2012 by which Avakas was incorporated. That form shows the applicant as one of two directors and the holder of 50 of 100 issued ordinary shares. The applicant’s husband, Mr Shim, is the other director and holds the other 50 ordinary shares. An ASIC extract for Avakas dated 23 December 2015, which was provided with the application, confirmed there had been no change in the directors and shareholders at that time.
Accordingly, as Avakas conducts the nominated business the Tribunal is satisfied that the applicant did have and does have an ownership interest in the nominated businesses at all relevant points in time.
Was each business relied on actively operating at all relevant times?
In order to meet cl.892.211(1) the Tribunal must be satisfied that 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.892.221(a) 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.[6]
[6] Shahpari v Minister for Border Protection [2016] FCCA 513 at [71].
Included with the application were copies of the eight Business Activity Statements (BAS) from March 2014 to December 2015. The sales, excluding goods and services tax (GST) and showing the value of export sales, as shown on those BAS are set out below:
Quarter ended
Sales (net of GST)
Export Sales[7]
March 2014
62,826
0
June 2014
234,421
234,373
September 2014
228,724
228,447
December 2014
62,003
62,499
Total Sales (net of GST)
$587,974
$525,319
March 2015
94,104
0
June 2015
50,702
50,548
September 2015
16,323
16,174
December 2015
18,093
18,278
Total Sales (net of GST)
$179,222
$85,000
[7] Export sales are GST free as discussed later in this decision.
The businesses of Avakas are conducted by the applicant from her home. Given the nature of the businesses as stated on the form 1217 and the application generally as discussed above, the Tribunal accepts that such businesses could successfully be operated from a home base. The sales, net of GST, as shown above clearly indicate that the business was operating continuously during that time because there are sales each quarter, the total sales for the eight quarters is $767,196, which averages $95,890 per quarter.
Accordingly, the Tribunal is satisfied that the nominated business was 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.892.211(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 892.221(a) requires that 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.[8] If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met.[9] These provisions are set out in full in the attachment to this decision.
[8] r.1.03.
[9] 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:
·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;
·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;
·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 that 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 is not operated primarily or substantially for the purpose of speculative or passive investment.[10]
[10] r.1.03.
Avakas is privately owned and its businesses have turnover of less than $400,000. The Applicant and her husband have together owned 100% of Avakas since incorporation in 2012 and continue to do so.
Recruitment business
The applicant provided a submission setting out under three separate categories her duties and responsibilities as Business Manager / Director of Avakas as follows:
A. Recruitment Management
· Preparing quotations
· CV Sourcing and selection
· Interviewing candidates
· Contract negotiations with Clients and Contractors
· Issuing Hiring Contracts to contractors
· Contract Signing with clients
· Monitoring Mobilization or Demobilization of Contractors
· Managing and Checking of Crew Change reports
B. Accounting Management
· Issue Invoices
· Receivables reconciliation
· Monitoring overdue invoices
· Managing internet banking
· Authorising payments to suppliers, Contractors, BPAY
· Preparing BAS report quarterly
C. Marketing
· Visit clients
· Conduct business presentations
· Arrange internet job site advertisements such as LinkedIn, SEEK and Learn4Good
The duties and responsibilities set out above are consistent with the expectations of the Tribunal for a business which is involved in recruitment services to supply manpower to overseas markets especially in Asia and the Middle East. The applicant is one of two directors and even though Avakas did employee staff from approximately July 2013 to June 2016, as evidenced on the BAS, the volume of business generated suggests that the applicant would have maintained direct and continuous involvement in management of the recruitment business from day to day and in making decisions affecting the overall direction and performance of the business from incorporation at least until 30 June 2016.
The Tribunal notes that none of the duties listed above appears to relate to the other business of Avakas; viz. sales of B&T Oilfield Products.
The evidence before the Tribunal is that the businesses provide goods and services, have not been set up for speculative or passive investment and are operated for the purpose of making a profit.
As stated above, the applicant is required to have an ownership interest in one or more actively operating main businesses in Australia (emphasis added) for at least two years immediately before the visa application was made and continue to have that interest at the time the visa application was made and until the time of decision. The issue, on which the application failed when it was considered by the delegate, is whether the businesses are actively operating in Australia given one is involved in recruitment services to supply manpower to overseas markets especially in Asia and the Middle East and the other is involved in sourcing tools and equipment from the US and shipping it direct to customers outside of Australia. That is, do the businesses conducted by Avakas have sufficient connection with Australia to be qualifying businesses?
The applicant and her representative have pointed out in various submissions to the Tribunal the factors which weigh in favour of Avakas having sufficient connection with Australia to be a qualifying business include; the company was incorporated in Australia, the business is operated the directors’ home which is in Australia, the company prepares and lodges income tax returns in Australia and pays the tax arising, GST where applicable is charged on its sales[11] and remitted as part of the regular lodgment of BAS. Further, the business operations insofar as they involve the seeking of contracts, recruitment of staff and the administration of those contracts is all done from Australia. Most of those factors relate to Avakas the entity and not to the businesses nominated in the application.
[11] Excludes export sales – see discussion following.
An analysis of the sales as recorded on the BAS provided shows export sales as a percentage of total sales as follows:
Financial year ended
% Export Sales
30 June 2014
74%
30 June 2015
78%
30 June 2016
100%
30 June 2017
1%
A similar analysis done on a calendar year basis shows 80% export sales for the 2014 calendar year, 47% export sales for the 2015 calendar year and 100% export sales for the 2016 calendar year.
Whilst this decision concerns the application of the Act and not A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) the Tribunal notes from the Australian Taxation Office (ATO) website[12] that ‘Broadly, a supply of a service is GST-free if the recipient of the service is outside Australia and the use of the service is outside Australia’.
[12] type="1">
Viewed on either a financial year or calendar year basis, the BAS identify a substantial portion of the sales of the Avakas businesses as export sales. Further, the applicant provided a post-hearing submission which included an analysis of sales as between Australian clients and overseas clients as reported in the BAS from 1 July 2013 to 30 June 2019.[13] The analysis by the applicant shows for those six years, which includes the application period, the amount of Australian business is only 14% with 86% coming from overseas. The broad definition of export sales, that is, the recipient of those services and the use of those services is outside Australia, supports the view that such services have little connection with Australia.
[13] Annexure 2 to the submission by the representative dated 31 October 2019
The factors identified by the Representative in establishing the connection with Australia mostly relate to the entity Avakas and not to the nominated businesses. The Tribunal finds 86% of overseas sales of either the recruitment business or the B&T Oil Products business is insufficient to establish a connection with Australia.
The applicant’s accountant provided a submission dated 13 March 2017 (accountant’s submission of 13 March 2017) in which he states in relation to BAS and export sales: ‘There has been an accounting error in that the BAS reporting in that the export sales should have been allocated as ‘GST free sales’. There is no difference to the GST liability for Avakas Well Services Pty Ltd’. The submission offers no explanation as to why the sales should be classified ‘GST-free’ as opposed to ‘Export’. The Tribunal notes that exports are one of the examples of GST-free sales suggested by the ATO on their website[14] so this part of the accountant’s submission of 13 March 2017 does not appear to add any useful explanation.
[14] Oilfield Products
The accountant’s submission of 13 March 2017 also comments in relation to ‘How business calculates the sales’: ‘Secondly, Avakas Well Services Pty Ltd is also an authorised distributor for tools used in the oil and gas industry. These tools are supplied from the USA to be sold in the Asia Pacific region. Avakas Well Services Pty Ltd earns a margin on these sales.’ The submission doesn’t specifically say so however the Tribunal assumes this is a reference to the B&T Oilfield Products franchise. The submission also directs the reader to an example invoice as provided by the client for further information, without identifying the example invoice or its relevance to how the business calculates its sales.
The representative’s submission dated 26 April 2017 clarifies the nature of the B&T Oilfield Product sales: ‘As for the tool supplies, there is no manufacturer in Australia for the required tools, the applicant has no choice but to source the supply from overseas and deliver them directly from the port of shipment to the port of destination instead of shipping them to Australia then to the final port of destination. This is a common business practice to avoid double handling charges/customer duties.’ Whilst this method of arranging sales of the B&T Oilfield Products may well be commercially expedient for Avakas, it clearly demonstrates there is no Australian connection to these sales other than they are arranged by the applicant from her home office.
Given the findings above, and notwithstanding Avakas was incorporated in Australia and operates from an Australian address, the Tribunal is not satisfied that Avakas meets the definition of main business for the purpose of cl.892.211(1) because:
·The vast majority of the business of Avakas is overseas, that is, 86% as calculated by the Applicant with the recipient of the service being outside Australia and the use of the service being outside Australia;
·The B&T Oilfield Products are ordered from the US supplier and shipped direct to the customer who is not in Australia.
Accordingly, the Tribunal finds that cl.892.211(1) is not met. The Tribunal has also considered cl.892.211(2).
Australian Business Number and Business Activity Statements
Clause 892.211(2) must be satisfied as at the time of visa application. It requires that, for each business to which cl.892.211(1) applies:
·an Australian Business Number has been obtained, and
·all Business Activity Statements required by the Australian Taxation Office (ATO) for the two years immediately before the visa application was made have been submitted to the ATO and have been included in the application.
Having regard to the above findings, the relevant businesses are conducted by Avakas. Set out above in the discussion about the businesses of Avakas actively operating during the application period is a schedule setting out the BAS for the eight quarters from March 2014 to December 2015 as required to comply with cl.892.211(2). The Tribunal has confirmed Australian Business Number (ABN) 93 159 443 893 is that of Avakas and has been active and registered for GST since 11 July 2012.
Given the findings above, the Tribunal is satisfied that cl.892.211(2) is met.
The Tribunal then considered cl.892.212 which has three parts as follows:
Unless the appropriate regional authority has determined that there are exceptional circumstances, the applicant meets at least 2 of the following requirements:
(a) in the period of 12 months ending immediately before the application is made, 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:
(i)provided an employee, or employees, with a total number of hours of employment at least equivalent to the total number of hours that would have been worked by 1 full-time employee over that period of 12 months; and
(ii)provided those hours of employment to an employee, or employees, who:
(A)were not the applicant or a member of the family unit of the applicant; and
(B)were Australian citizens, Australian permanent residents or New Zealand passport holders;
(b) 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:
(i)have a net value of at least AUD250 000; and
(ii)had a net value of at least AUD250 000 throughout the period of 12 months ending immediately before the application is made; and
(iii)have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together;
(c) 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:
(i)have a net value of at least AUD75 000; and
(ii)had a net value of at least AUD75 000 throughout the period of 12 months ending immediately before the application is made; and
have been lawfully acquired by the applicant, the applicant’s spouse or de facto partner, or the applicant and his or her spouse or de facto partner together.
No information has been provided to the Tribunal to support the employment of the equivalent of one full time employee during the 12 months immediately prior to the Application. The Tribunal concludes the Applicant does not seek to rely on cl.892.212(a) and so it will not be considered further in this decision.
The net assets of Avakas and the Applicant as at 31 October 2015 are as follows[15]:
[15] Statement of Assets and Liabilities accompanying Form 1217 – department file vol 1 page 80
31 October 2015
31 October 2014
Net assets per balance sheet
47,568
12,729
Add: Directors loan
88,326
121,992
Net business assets
$135,894
$134,721
Net equity: Atwell property
398,929
382,934
Westpac offset account
239,678
330,442
Net personal assets
$638,607
$713,376
Net business & personal assets
$774,501
$848,097
The net business assets have been checked and found to be in accordance with the balance sheet of Avakas as at 31 October 2015 provided with the original application. The assets are unremarkable and consistent with those expected for businesses such as those operated by Avakas; similarly the liabilities. The director’s loan is correctly added back in accordance with departmental policy.
The net equity in the Atwell property is based on a purchase price of $635,000[16] less the loan balance as at 9 December 2015 as per the Westpac statements provided. Funds are held in a Westpac mortgage offset account (Westpac #4832) and the balance as at 9 December 2015 has been cross checked to the relevant Westpac statement. Similar calculations were made and checked as at 9 December 2014.
[16] Settlement statement from West End Settlements dated 29 April 2013.
The funds used to purchase the property and to invest in the businesses operated by Avakas were transferred into bank accounts with Westpac and HSBC held in the names of the Applicant and the Applicant with her spouse respectively. The Tribunal is aware the Applicant and her spouse have an established business in Malaysia, apparently similar to the businesses of Avakas, and has no evidence before it to doubt the source of the funds so transferred.
Accordingly, the Tribunal finds the criteria set out in cl.892.212(b)&(c) are met.
The Tribunal then considered cl.892.213(1) which requires the Applicant to satisfy one or the other of subclauses (2) or (3).
Annual turnover
Clause 892.213(2) requires the applicant’s main business or main businesses in Australia together, had an annual turnover of at least $200,000. As shown above, the GST exclusive turnover for the four quarters ended 31 December 2015, being the four most recent quarters prior to the date of the Application, was $179,222. Even allowing for interest income of say $2,000[17] during that period, the turnover would still not reach the requisite threshold.
[17] The financial statements for the 12 months ended 31 October 2015 show interest income of $1,176 with a comparative amount of $785 for the 12 months ended 31 October 2014.
The Representative’s submission of 13 January 2020 points out the wording of the Procedures Advice Manual (PAM) accommodates financial statements can be submitted dated up to three months prior to the visa application. The Representative’s quote from the PAM is correct however the PAM is only Departmental Policy, which the Tribunal is not bound by. That said the purpose of submitting financial statements is to assist with the determination of net business assets not turnover. Turnover is determined from the four most recent BAS prior to the date of the application. As the application was lodged on 22 January 2016, the four most recent quarterly BAS prior to that date are March 2015 to December 2015 as set out above.
Given the findings above, the Tribunal is not satisfied that cl.892.213(2) is met and so cl.892.213(3) must be tested.
An applicant meets the requirements of cl.892.213(3) if the applicant meets at least two of the requirements set out in paragraphs 892.212(a), (b) and (c); and the applicant resides in, and operates the applicant’s main business or businesses in Australia in, an area specified in an instrument in writing made by the Minister for this paragraph; and the appropriate regional authority has determined that there are exceptional circumstances for this subclause.
As set out above, the Tribnal has determined the criteria set out in cl.892.212(b)&(c) are met. The Applicant resides in and operates Avakas from the metropolitan Perth suburb of Atwell which is postcode 6164. The Tribunal has checked the relevant Ministerial instrument (LIN 19/217) and found that postcode 6164 is in an area specified in the instrument.
However, there is no evidence before the Tribunal to confirm the appropriate regional authority has determined that there are exceptional circumstances for this Applicant.
Accordingly, the Tribunal cannot find that cl.892.213(3) is met.
The Tribunal has considered cl.892.214 which requires neither the applicant nor his or her spouse or de facto partner (if any) has a history of involvement in business activities that are of a nature that is not generally acceptable in Australia.
It is important then to consider the elements of this criterion which are:
· history
· involvement in business activities
· not generally acceptable in Australia.
The courts have concluded that a history of involvement in business activities means an elaborate, prolonged and consistent period of conduct in activities which are likely to be offensive to a large section of the Australian population and which are unlawful. That conclusion indicates that the activities must first be characterised as being “likely to be offensive to a large section of the Australian population”, and secondly, as being “unlawful”.[18]
[18] Lee v Minister for Immigration and Citizenship [2009] FCA 977, [39].
Relevantly, Departmental policy on this criterion, which is in the GenGuide M, states; This criterion should generally not be considered satisfied if the applicant (and/or their spouse or de facto partner) has been involved in business activities or business practices that are:
· outside the generally accepted social or cultural norms of most persons in Australia
· likely to be offensive to large segments of the Australian community or
· otherwise likely to give rise to controversy were the applicant to enter Australia as the holder of a Business Skills Class of visa.
Some examples of business activities or practices that may not be considered acceptable include:
· contravention of government laws (for example, quarantine, tax evasion)
· criminal convictions relating to business activities
· serious disregard of industry, licensing and regulations
· fraudulent trade practices
· Foreign Investment Review Board violations or
· not providing ‘fair pay’ for employment.
The unacceptable business activity or practice should be more than a minor, one-off event for such activities or practices to constitute ‘a history’.
The history of the Applicant insofar as this criterion is concerned is that Avakas as an entity has arranged for all necessary tax lodgments to be made with the ATO at all relevant times. There is no evidence before the Tribunal showing a history of continued failure to lodge BAS and income tax returns.
There is no other evidence before the Tribunal to suggest the Applicant and her spouse has a history of involvement in business activities that are of a nature that is not generally acceptable in Australia.
Given the findings above, the Tribunal is satisfied that cl.892.214 is met.
The Tribunal has gone on to also consider cl.892.221(a).
Clause 892.221requires at the time of this decision, the applicant continues to satisfy the criteria in clauses 892.211 and 892.214 and as cl.892.212(b) has been relied on, continued satisfaction of that subclause as well. However as financial statements for Avakas for the 2016 to 2019 financial years were not provided to the Tribunal, no assessment can be made of the continued compliance with cl.892.212(b).
Continuing business and change of business
The BAS for the eight quarters from September 2017 to June 2019 show the only income of Avakas during that period was $66 in the September 2017 quarter and $144 in the June 2019 quarter. Those BAS did not provide for capital and non-capital purchases to be shown however the total input credits claimed bring that two year period was $722, which indicates business expenses during that two year period in the order of $7,942.
In any event, the Tribunal has already found the businesses operated by Avakas do not meet the criterion in cl.892.211(1) as there is insufficient connection of those businesses with Australia. This is consistent with the findings of the delegate. As cl.892.211(1) is not met, it is not possible for Avakas to meet cl.892.221(a).
Even if the businesses of Avakas did have sufficient connection with Australia to satisfy cl.892.211(1), the Applicant stated at the Hearing the oil and gas industry in which Avakas operates is subject to substantial periods of downturn when little or no activity occurs. She went on to advise that substantial downturns had occurred in the past in a similar business operated by the applicant and her husband in Malaysia. After the hearing and at the request of the Tribunal the applicant provided a statutory declaration dated 30 October 2019 (statutory declaration of 30 October 2019) with supporting financial statements for the Malaysia business to support her assertion that a substantial downturn occurred during the 2006 and 2007 years and again in the 2017 and 2018 years. The Tribunal accepts that periods of substantial downturn can and do occur in a number of industries and it seems particularly so in the oil and gas industry. Nonetheless, to be considered ‘actively operating’ 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 (emphasis added) in the relevant period.
The evidence before the Tribunal is at the businesses were operating and generating turnover in some quarters from at least 1 July 2013 to 30 June 2017 albeit there was a period of six months from 1 October 2016 to 31 March 2017 when there were no sales at all.[19] What is also clear is that since 1 July 2017, Avakas has been unable to generate any trade or custom of substance and so did not derive any financial gain from either of its businesses.
[19] Annexure 2 to the submission by the representative dated 31 October 2019.
Further, the applicant advised at the hearing and also in her post-hearing submission, she has been able to generate the first of what she hopes will be many sales of alternative products such as caustic soda to be used as a cleaning agent in shipping industry. She provided copious documentation showing communication between her and the shipping company, Genting Cruise Lines, including the invoice for the first sale. Whilst that sale and any future sales of such products may well help to fill the void in generating trade or custom caused by the downturn in the oil and gas industry, it also points to a change of business the part of Avakas.
The statutory declaration of 30 October 2019 mentions at paragraph 18 the applicant has recently sourced an anti-slip flooring system known as Stepsolve. Mention of this is also made of this in the representative’s submission dated 31 October 2019 (representative’s submission of 31 October 2019) at paragraph 5 and annexure 13.
Case law has established that 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.
In Zhu & Ors v Minister for Immigration & Anor [2016] FCCA 1874 the court upheld a decision of this Tribunal which found there had been a change of business. In Zhu, the business nominated on the visa application was owned and operated by one entity, then sold to a second entity which continued its operations, then later sold to a third party. The second entity then bought an entirely different business and continued with the new business. The applicant in Zhu held an appropriate ownership interest in the first and second entities and argued they were the same business.
In this case, the entity is Avakas and it continues from prior to the Application Period to today. However, the businesses it operates now, that is, sourcing product for the shipping industry and other products, is not one of the businesses it nominated, which were recruitment services to the oil and gas industry and sale of B&T Oil Products.
As mentioned above, the form 1217 lodged with the application clearly stated that the business of Avakas was recruitment services to supply manpower to overseas markets especially to Asia and the Middle East. Mention is made in the documentation supporting the application of the B&T Oilfield Product franchise as also part of the business of Avakas. However the connection with that franchise appears tenuous at best particularly given that in describing her duties and in describing the business of Avakas, no further mention of the B&T Oilfield Product side of the business is made.
The Tribunal cannot see any connection between the sales of caustic soda to the shipping industry or the sales of Slipsolve, if and when they happen, with recruitment for the oil and gas industry or sales of oil and gas industry specific tools under the B&T Oilfield Product franchise, even if the latter is considered to be one of the businesses of Avakas for the purpose of the application.
Whilst the Applicant has no doubt tried without success for the past three years to generate recruitment business in the oil and gas industry, she appears to have now turned to two different businesses in an effort to resurrect the fortunes of Avakas.
Given the findings above, the applicant does not continue to satisfy the criteria in cl.892.211. Accordingly, the Tribunal is not satisfied cl.892.221(a) is met.
Summary of findings
Considering all the criteria examined by the Tribunal the following were met; 892.211(2), 892.212(b), 892.212(c) and 892.214. Ultimately, the Tribunal has found the following criteria are not met; 892.221(1), 892.212(a), 892.213, 892.221(a).
DECISION
The Tribunal affirms the decision not to grant the visa applicants Business Skills (Residence) (Class DF) visas.
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, 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).
(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
….
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.
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