1419182 (Migration) [2015] AATA 3796 (25 November 2015)

DECISION RECORD
DIVISION:	Migration & Refugee Division
APPLICANTS:	Ms Jing Zhao
Ms Juanjuan Zheng 
CASE NUMBER:	1419182
DIBP REFERENCE(S):	CLF2012/135873 CLF2014/129688 CLF2014/130657 CLF2015/8958 
MEMBER:	Adrian Ho
DATE:	25 November 2015
PLACE OF DECISION:	Melbourne
DECISION:	The Tribunal remits the applications for Business Skills — Established Business (Residence) (Class BH) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 845 visa:
•	cl.845.215 of Schedule 2 to the Regulations 

Statement made on 25 November 2015 at 5:23pm
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 4 November 2014 to refuse to grant the applicants Business Skills – Established Business (Residence)(Class BH) visas under s.65 of the Migration Act 1958 (the Act).
2.  	The applicants applied for the visas on 29 June 2012 claiming an ownership interest in one or more established businesses in Australia. At the time the visa application was lodged, Class BH contained two subclasses: 845, and 846.  In this case, claims have only been made in respect of Subclass 845. 
3.  	The criteria for the grant of  a Subclass 845 visa are set out in Part 845 of Schedule 2 to the Migration Regulations 1994 (the Regulations). The primary criteria must be satisfied by at least one applicant. Other members of the family unit, if any, who are applicants for the visa need satisfy only the secondary criteria. 
4.  	The delegate refused to grant the visas because the first named applicant (the applicant) did not satisfy cl.845.215 of Schedule 2 to the Regulations.
5.  	The applicants were represented in relation to the review by their registered migration agent. 
6.  	For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration. 
CONSIDERATION OF CLAIMS AND EVIDENCE
The net value of assets in the main business
7.  	Clause 845.215 requires that at the time of application, the assets owned by the applicant, or the applicant and his or her spouse / de facto partner together in the main business(es) have a net value of at least AUD100,000.  The assets must have had this value throughout the 12 months immediately preceding the date of the visa application, and the assets must have been lawfully acquired.    
8.  	Much was made by the delegate and in written submissions of the parties about the nature of “goodwill” and “consolidation” asset items appearing in the balance sheet of the corporate entity which runs the business in question (for example at folio 56 of the Department file).
9.  	The question revolves around whether goodwill and other intangible assets are sufficient for the purposes of meeting cl.845.215.
10.  	The tribunal finds it unnecessary to enter into that discussion.  What is tolerably clear from the company balance sheet for the year ended 31 May 2011 (DIBP file f.221a) – before the relevant 12 month period – and from the balance sheet as at 13 October 2014 (DIBP file f.56) – after the relevant 12 month period, is that the company has reported at these times that it has outstanding loans to the applicants which total more than $250000.
11.  	The Department’s written policy states at 35.1 (PAM3):
Loans made to businesses from the applicant’s personal asset base (for example, from funds transferred from overseas) are fully attributable to the net value of the assets of an applicant in a business.
12.  	On the evidence, the tribunal accepts that the applicants have loaned more than $250000 to the company that operates the business and on the evidence that loan money is unencumbered by personal debt and was lawfully acquired and put in place.
13.  	The loan appears in the company’s balance sheet as money owed to the applicants; a liability.  Conversely, the loan is a personal asset of the applicants which they may recover from the company.
14.  	On the evidence, the company has used the loan money to acquire other assets, some of which are listed in statements as “goodwill”, and about which the parties and the delegate have written much, and about which they appear to have conflicting views.
15.  	The expenditure of the loan money by the company does not change the fact that the original loan by the applicants to the company remains an asset of the applicants.
16.  	The tribunal accepts that during the relevant 12 months, and to date, the loan made to the company has been in excess of $250000, and for each applicant separately, and both of them together, exceeds $100000.
Asset of the applicant or of the company/business?
17.  	The tribunal has some reservations that an asset of the applicant, which is a liability for the company which owns and runs the main business, can be an “asset owned by the applicant…in the main business”, to paraphrase cl.845.215.
18.  	In the tribunal’s view, there is a lack of clarity as to whether, first and foremost, the item has to be an “asset in the main business” – rather than a liability – and then secondly, “owned by the applicant”.  This would exclude all items – such as the present loan – which are properly accounted as liabilities from the company’s point of view.  On this view, the asset has to be a “frank” asset of the business, before one considers whether it is owned by the applicant or not.
19.  	The tribunal concedes that the criterion in this regard is unclear, and both opposing interpretations are open.  In light of the fact that written policy clearly supports the view that a loan to the company, which is a liability of the company, is acceptable, the tribunal differs to written policy.
20.  	For these reasons, the applicants meet cl.845.215.
21.  	Given the findings above, the appropriate course is to remit the application for the visa to the Minister to consider the remaining criteria.  
decision
22.  	The Tribunal remits the applications for Business Skills — Established Business (Residence) (Class BH) visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 845 visa:
•	cl.845.215 of Schedule 2 to the Regulations.
Adrian Ho
Member

ATTACHMENT – Relevant Legislation
Migration Act 1958
134	Cancellation of business visas
…
(10)	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;
…
Migration Regulations 1994
1.03	Definitions
…
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.
…
1.11	Main 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.