Zhang (Migration)

[2017] AATA 1662

Zhang (Migration) [2017] AATA 1662 (5 September 2017)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANT:  Mr Shusheng Zhang

CASE NUMBER:  1516340

DIBP REFERENCE(S):  BCC2015/1221202

MEMBER:Wan Shum

DATE:5 September 2017

PLACE OF DECISION:  Sydney

DECISION:The Tribunal remits the application for a Business Skills (Provisional) visa for reconsideration, with the direction that the applicant meets the following criteria for a Subclass 188 visa:

·cl.188.252 of Schedule 2 to the Regulations.

Statement made on 05 September 2017 at 4:04pm

CATCHWORDS

Migration – Business Skills (Provisional) visa – Subclass 188 Business Innovation and Investment (Provisional) – Complying significant investment – Investment unencumbered and lawfully acquired – Genuine intention to hold the complying investment for at least 4 years – Personal assets from real estate development – Lack of financial documents not detrimental

LEGISLATION

Migration Act 1958, s 65

Migration Regulation 1994, r 5.19, r 5.19B Schedule 2, cl 188.252

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 16 November 2015 to refuse to grant the visa applicant a Business Skills (Provisional) Subclass 188 visa under s.65 of the Migration Act 1958 (the Act).

2. The applicant applied for the visa on 27 April 2015. The delegate was not satisfied that the assets nominated for making the complying investment were unencumbered and lawfully acquired and refused to grant the visa on the basis that cl.188.252(1) was not met.

3. The applicant sought review of that decision and was represented in relation to the review by a registered migration agent. The applicant appeared before the Tribunal on 9 August 2017 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages. The representative attended the Tribunal hearing.

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

   CONSIDERATION OF CLAIMS AND EVIDENCE

5. The issue in the present case is whether the applicant meets cl.188.252 which provides:

   188.252

   (1) The applicant has made a complying investment of at least AUD5,000,000.

   Note A complying investment may be based on one or more investments.

   (2) The applicant has a genuine intention to hold the complying investment for at least 4 years.

6. ‘Complying investment’ is defined in regulation 5.19B as follows:

   Reg 5.19B      Complying investment

   (1)   An investment by a person (the investor) is a complying investment if all of the requirements in this regulation are met.

   Description

   (2)   The investment must consist of one or more of the following:

   (a)      an investment in a government bond (however described) of the Commonwealth, a State or Territory; or

   (b)      a direct investment in an Australian proprietary company that meets the following requirements:

   (i)      the company is not listed on an Australian stock exchange;

   (ii)      the company has not been established wholly or substantially for the purpose of creating compliance with this paragraph;

   (iii)      the investment is an ownership interest in the company; or

   (c)      an investment in a managed fund (directly or through an investor directed portfolio service) for a purpose specified by the Minister in an instrument in writing for this paragraph.

   (3)      The funds used to make the investment are:

   (a)      unencumbered; and

   (b)      lawfully acquired.

   Investor

   (4)      The investor must be an individual.

   (5)      The investor must make the investment:

   (a)      personally; or

   (b)      with the investor’s spouse or de facto partner; or

   (c)      by means of a company that has issued shares and in which:

   (i)      the investor holds all of the issued shares; or

   (ii)      the investor and the investor’s spouse or de facto partner hold all of the issued shares; or

   (d)      by means of a trust:

   (i)      that is lawfully established; and

   (ii)      of which:

   (A)      the investor is the sole trustee; or

   (B)      the investor and the investor’s spouse or de facto partner are the sole trustees; and

   (iii)      of which:

   (A)      the investor is the sole beneficiary; or

   (B)      the investor and the investor’s spouse or de facto partner are the sole beneficiaries.

   (6)      If:

   (a)      an investor withdraws money from a complying investment, or cancels the investment; and

   (b)      the investor makes an investment of at least the value of the withdrawn money or cancelled investment in one or more other investments mentioned in subregulation (2); and

   (c)      no more than 30 days passes between the events mentioned in paragraphs (a) and (b).

   the investment is taken not to have ceased to be a complying investment during the period between the events mentioned in paragraphs (a) and (b).

7. On the visa application form, it was indicated that the applicant had made a complying investment in Australia by investing $5,000,000 into an Australian private company, named Grand City International Development Pty Ltd.

8. The delegate requested and was provided with some additional information but, after considering the statement from the applicant in which he explained that he had accumulated his personal assets in real estate development in China since 1997, was not satisfied that the assets nominated for making the complying investment were unencumbered and lawfully acquired.

9. The applicant has now provided to the Tribunal a submission with a large number of documents to support his claim of being involved in real estate developments in China for over 20 years. This includes contracts (with translation) from 1997, when the applicant developed his first commercial and residential complex in Jinzhou City, Liaoning Province, China. He claims to have earnt around RMB 3 million from this project alone. The applicant claims that he accumulated around RMB 160 million from the various projects undertaken between 1997 to 2009, which included the development of an office tower, student dormitory and a residential community project known as the Hengsheng Grand City project. The contract and agreement documents for each of these projects were submitted, some of which refer to the applicant by name while others refer to company names. The Tribunal raised with the applicant at hearing that, while some of the contracts and agreements specifically named the applicant, there were some that did not. He explained that in the early days, property development was not so regulated in China and that some of projects were under his company’s name and others were with affiliated companies. He would sign an affiliation agreement with the other company such that he had responsibility for all the debts and payments and that any profit generated belonged to him. The Tribunal accepts that the applicant was involved in these various projects and has sighted the original contract documents. 

10. However, the applicant has not provided evidence in the form of financial reports or bank statements to substantiate the amount of profit earnt from the projects in Jinzhou city. He has submitted an assessment made by a consultation company that he engaged to estimate the net profit from the Hengsheng Grand City project, Jinzhou Zhongheng Corporation Management Consultation Co., Ltd. It was estimated that the net profit of that project which was undertaken from 2003 to 2006 was RMB 73,507,700. It was explained that due to the time that had passed since the Jinzhou city projects were completed, it was no longer possible to obtain relevant financial reports. The Tribunal is prepared to accept this noting that the report from the consulting company refers to the inability to trace the accounting information of the applicant’s company, Jinzhou Liaoxi Real Estate Development Co., Ltd, which carried out the Hengsheng Grand City project because the registration had been cancelled a long time ago. Taking into account also that there was a less regulated system in China for property development during that period, the Tribunal considers that in this case, the lack of such financial and banking documents is not detrimental. In terms of the claimed profits from these projects, the Tribunal has had regard to the assessment by the consultation company which was made based on materials provided by the applicant (which appear to be the agreements and sales contracts), the relevant policies in place (such as taxation policy) and empirical data gathered such as sale prices of the property. It is prepared to accept that the applicant was able to accumulate personal wealth in the manner claimed through successful development projects. The applicant also gave evidence that his business acumen was recognised by the government and that he was named an outstanding entrepreneur in Jinzhou district and he was a Top 20 taxpayer there for many years.

11. The Tribunal has also before it additional material relevant to his property development projects after 2009 in Beijing, and documents showing his shareholding in Great May Holding Group Co. Ltd (GM Holding Company). The documents demonstrate that the applicant and his family, his wife and son, invested RMB 100 million into the company in June 2011. The documents evidence the ownership and investments from the GM Holding Company into four other companies, including Beijing Great May Real Estate Development Co., Ltd. An ISRS 2400 report for GM Holding Company, which was identified on the visa application form as the qualifying business, confirms that the Holding Company made long term equity investments in 3 of the 4 companies referred to, and the Tribunal notes that the fourth company was established on 28 January 2015 near the end of the period assessed for the ISRS 2400 Report.

12. While the ISRS 2400 Report on the Holding Company indicates that there was no turnover or profit for the relevant assessment periods, it is claimed that the subsidiary companies including Beijing Great May Real Estate Development were profitable and that the net profit of the Holding Company at the end of 2015 was RMB 121,003,989. The Tribunal has before it various documents in the forms of financial records, bank statements, developing permits and tax payment receipts of GM Holding and its subsidiaries as evidence of the business activity.

13. The applicant gave evidence that he moved to Beijing in 2009 to undertake bigger projects there and said that there was even an article written about his acquisition of a land lot in Beijing referring to him as the “land king”. A copy of this internet based article dated 19 March 2010 was provided with translation, which refers to the land being acquired by the applicant on 14 April 2009 and his registration of a company Beijing Great May Real Estate Development Co., Ltd shortly after. The project was named as the Great May Mansion and it is stated in that article that the project is expected to start in March with an estimated completion date in December. The applicant provided evidence of the planning permits and told the Tribunal that this project was also a success and profitable.

14. Since 2014, the applicant has been engaged in property development in Australia through Grand City International Development. The applicant has transferred the equivalent of $5 million in September 2014 from China and the Tribunal notes that large amounts of money have been deposited and transferred into his two ANZ Bank accounts. It also notes the large amounts were held by Grand City Holdings Pty Ltd and Grand City International Development from the bank statements provided for these companies.

15. A further ISRS 2400 report dated 21 February 2017 by Sydney Tax of factual findings in connection with the applicant’s personal asset position as of 31 December 2015 has been submitted, referring to some of the documentation that has also been provided on review. It was concluded by the reporting accountant that the applicant’s personal asset position was well above the AUD 5 million and that it was reasonable for him to make the transfers based on his estimated asset position at that time as well as prior estimated project profit distributions.

16. The applicant confirmed at the hearing that the AUD 5 million investment was from his personal account as opposed to being money held by the companies that he has registered in China. When asked about his personal bank accounts and evidence of the funds held prior to the transfer in 2014, the applicant said that he did have personal bank accounts from around 2009 or 2010 but explained that his son, Xu Zhang, manages his funds for him.  The Tribunal requested copies of the applicant’s bank account statements for his personal bank accounts in China as far back as possible and a current and historical company extract of Grand City International Development Pty Ltd. Copies of these additional documents (with translations) have been provided, with the earliest bank statements from 2011.  

17. While the applicant has not provided evidence that clearly reflects accumulation of funds from his property development projects from 1997, he has provided other documentation to demonstrate his involvement in these projects including contracts and agreements. The applicant has also provided bank statements for 5 different bank accounts with banks in China in his name from 2011 to 2015 with account balances ranging from 0 to RMB 100,000,000. Having regard to the additional information before it, the Tribunal accepts the applicant’s oral and written evidence that he developed his property development businesses such that he was in a position to accumulate funds sufficient to enable an investment of AUD 5 million. Given the time that has passed since the projects were undertaken, and noting that some of these companies have been de-registered, the Tribunal is satisfied on the information provided that the funds used for the investment were lawfully acquired and unencumbered. It finds that the applicant has made a direct investment in an Australian proprietary company, being Grand City International Development Pty Ltd, that is not listed on an Australian stock exchange based on the most recent ASIC company extract.

18. The Tribunal has considered whether the company was established wholly or substantially for the purpose of creating compliance with r.5.19B(2)(e). It notes that since the Subclass 188 visa was refused and following the lodgement of this application for review, Grand City International Development Pty Ltd has attempted to sponsor the applicant under the 457 program as a Corporate General Manager. While this may suggest that the applicant is attempting to secure a visa by any means necessary, the Tribunal has had regard to the information provided regarding the progress of property development in Australia. Given that there is evidence of active development of a residential apartment complex at Cahill Gardens in Wolli Creek, which the applicant advised was 70% sold, the Tribunal has formed the view that the company was not established wholly or substantially for the purpose of creating compliance with r.5.19B(2)(e). It considers that the applicant has demonstrated a commitment to investing in business in Australia.

19. The Tribunal further finds that the investment is an ownership interest in the company as the applicant is a shareholder in the company. In addition, the Tribunal finds that the investment is made by the applicant and was made personally. There is no evidence before the Tribunal that r.5.19(6) is applicable. The investment is therefore a complying investment as defined in r.5.19B.

20. As at the time of its decision, the Tribunal is satisfied that the applicant has made a complying investment, as defined, of at least AUD 5,000,000. Although it is not entirely clear from which date the intention to hold the complying investment commences and noting that over two years have now passed since the application was first made, based on the commitments made by the company and the future plans for property development, the Tribunal finds that the applicant has a genuine intention to hold the complying investment for at least 4 years from now. It follows that the applicant meets cl.188.252.         

21. On the basis of the above findings, the Tribunal finds that the applicant meets the requirements of cl.188.252 of Schedule 2 to the Regulations. The appropriate course is to remit the visa application to the Minister to consider the remaining criteria for the visa.

    DECISION

22. The Tribunal remits the application for a Business Skills (Provisional) visas for reconsideration, with the direction that the applicant meets the following criteria for a Subclass 188 visa:

    • cl.188.252 of Schedule 2 to the Regulations.  

    Wan Shum
    Member