Shao (Migration)

[2023] AATA 498

Shao (Migration) [2023] AATA 498 (14 March 2023)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Mingbiao Shao
Ms Baoyi Shao
Master Junxi Shao

REPRESENTATIVE:  Mr Ian Walker (MARN: 1385173)

CASE NUMBER:  1932235

HOME AFFAIRS REFERENCE(S):          BCC2019/664664

MEMBER:Robyn Anderson

DATE:14 March 2023

PLACE OF DECISION:  Melbourne

DECISION:The Tribunal affirms the decision not to grant the applicants Business Innovation and Investment (Provisional) Subclass 188 visas for the Business Innovation Extension Stream.

Statement made on 14 March 2023 at 3.42pm.

CATCHWORDS
MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional) visa – business innovation extension stream – main business actively operating for two years immediately before application made – no operations for most of the relevant period while caring for sick mother in home country then no sales while developing business – no provision for mitigating circumstances – current business successful – members of family unit – decision under review affirmed

LEGISLATION

Migration Act 1958 (Cth), ss 65, 134(10)

Migration Regulation 1994 (Cth), rr 1.03, 1.11(1), Schedule 2, cl 188.232(1)(a)

CASES

Drake v MIEA (1979) 2 ALD 60

Kushner v MIAC [2009] FMCA 390

Li v MIBP [2015] MRTA 807

Shahpari v Minister for Immigration [2016] FCCA 513

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 25 October 2019 to refuse to grant the applicants Business Skills (Provisional) (Class EB) visas under s 65 of the Migration Act 1958 (Cth) (the Act).

2. Class EB contains the Subclass 188 (Business Innovation and Investment (Provisional)) visa. The criteria for the grant of a Subclass 188 (Business Innovation and Investment (Provisional)) visa are set out in Part 188 of Schedule 2 to the Migration Regulations 1994 (Cth) (the Regulations), which includes the Business Innovation Extension Stream.

3. The primary criteria must be satisfied by at least one applicant. Other members of the family unit who are applicants for the visa need satisfy only the secondary criteria. The primary criteria include common criteria, and criteria set out in streams.

4. In this case, after being granted a Subclass 188 provisional visa on 11 March 2015, the applicants then applied for a Subclass 188 visa in the Business Innovation Extension Stream on 27 February 2019.  

5. The delegate in this case refused to grant the visas on the basis that the first named applicant (the applicant) did not satisfy the requirements of cl 188.232 of Schedule 2 to the Regulations. More specifically, the delegate was not satisfied that for at least two years immediately before the application was made, the main business nominated by the applicant, Decheng Universal (Australia) Pty Ltd (the Business), was actively operating.

6. The matter was constituted to a Tribunal Member on 26 October 2022. The Tribunal wrote to the visa applicant on 28 October 2022 requesting further financial information and evidence that 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 prior to 27 February 2019, that the business was “actively operating” throughout the period 27 February 2017 to 26 February 2019 and that it continues to do so.

7. The Tribunal granted an extension of time for provision of the requested material and received further submissions and evidence on 25 November 2022.  The Tribunal then wrote to the applicants on 2 December 2022 and invited them to attend a hearing by video conference using Microsoft Teams on 19 December 2022.

8. The applicants appeared before the Tribunal on 19 December 2022 by Microsoft Teams video conference.  Mr Shao gave evidence and presented arguments on affirmation. The applicants were represented at the hearing by Mr Walker, who also appeared by Microsoft Teams video conference. The Tribunal hearing was conducted with the assistance of an interpreter in the Cantonese and English languages.

9. On 19 December 2022, the Tribunal deferred making a decision, allowing 28 days for Mr Shao to provide further evidence and submissions, including a submission in relation to the case of Shahpari and Ors v Minister for Immigration & Anor [2016] FCCA 513 (Shahpari), as discussed at hearing.  Further information was received by the Tribunal on 17 January 2023.  For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

10. Mr Shao told the Tribunal that he had travelled extensively and found Australia to be the most suitable place for his family to settle.  He believed that he could advance his business here and it was also preferable to provide a good level of education for his children.

11. He further stated that at the time of his initial application he was self-employed in China, in the family operated business dealing in trading and in the provision of building materials.  The family business had been involved in trading and the building industry in China for more than 20 years. He had been involved since working there after school.

12. Clause 188.232 provides as follows:

    (1)  Either:

    (a)for at least the 2 years immediately before the application was made, the applicant had an ownership interest in one or more main businesses that were actively operating in Australia; or

    (b)if the applicant holds or held a Subclass 188 visa in the Business Innovation stream (the innovation stream visa ) or a Subclass 188 visa in the Business Innovation Extension stream (the extension stream visa ) during a concession period and the innovation stream visa that the applicant holds or held was granted before 1 July 2019--the applicant had an ownership interest in one or more main businesses that were actively operating in Australia for a cumulative period of at least 2 years while the applicant was the holder of the innovation stream visa or the extension stream visa.

    (2)  The applicant continues to have the ownership interest mentioned in subclause (1).

13. Concession period is defined in reg 1.15N of the Regulations as commencing no earlier than 1 February 2020, noting that the Minister may determine later commencement dates. On 1 February 2020, Mr Shao held a bridging visa and was not holding a Subclass 188 visa in the Business Innovation stream or a Subclass 188 visa in the Business Innovation Extension stream. Consequently, cl 188.232(1)(b) of Schedule 2 to the Regulations is not applicable.

14. As noted above, the issue in the present case is that Mr Shao must have an ownership interest in one or more “main businesses” that were “actively operating” for at least the two years immediately before the application was made, and that Mr Shao retains the ownership interest in the same “actively operating” main business/es at the time of decision. 

15. As the application was lodged on 27 February 2019, it is undisputed that the relevant two-year period is 27 February 2017 to 26 February 2019 (the relevant period).  In this case it is common ground that the Business was actively operating from 30 October 2018 and continues to do so.  The issue of contention is in respect of the period 27 February 2017 to October 2018, which represents more than half of the relevant two-year period.

16. It is evident from the documents before the Tribunal that despite being granted a Subclass 188 visa in March 2015, Mr Shao did not register the Business with ASIC until 10 November 2016.  According to departmental records, Mr Shao was only in Australia during the relevant period prior to 30 October 2018 from 8 July 2017 to 23 July 2017.

17. The Tribunal must first be satisfied that the Business can be considered to be a “main business” during the relevant period.

    Does the Business meet the “main business” criteria in the relevant period?

18. The meaning of “main business” is set out in reg 1.11(1) of the Regulations (as defined in reg 1.03). The four criteria are not mutually exclusive and must all be met before a nominated business can be considered as the “main business”.

19. The first of the criteria under reg 1.11(1)(a) requires that the applicant has or has had an ownership interest in the Business. Regulation 1.03 provides that ownership interest has the meaning given to it in s 134(10) of the Act. The definition of ownership interest in relation to a business, as relevantly defined in s 134(10) of the Act, means, amongst other things, “a shareholder in the company that carries on the business”.

20. According to ASIC records before the Tribunal, the Business was registered from 10 November 2016.  It is clear that the Business is operated through a company. According to ASIC documents before the Tribunal, Mr Shao has been the sole director, secretary and shareholder of the company since incorporation and continues to hold those same positions.

21. The departmental guidelines, PAM3 GenGuide M – Business Visas (PAM3), to which the Tribunal may have regard in appropriate cases, sets out detailed guidance as to the policy intention in respect of the meaning of “carrying on a business”. While the Tribunal is not bound by policy, in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 the Full Federal Court held that a Tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation. It is also noteworthy that there is judicial authority to the effect that the policy guidelines in PAM3 cannot go beyond the wording of the legislation, even where they are favourable to an applicant. In this case the Tribunal considers the policy as a useful guide to applying the legislation.

22. At 3.9.2.4 of PAM3, it suggests that to be carrying on a business, business activities must have commenced.  It further states that supporting evidence of the business operations commencing, amongst others, could be the purchase date of stock and/or assets and the date upon which business activities commenced on a day-to-day basis and the business being engaged in regular business activity.

23. While Mr Shao clearly held an ownership interest in the Business from incorporation on 10 November 2016, it is questionable whether it was in a company that was carrying on a business in the period prior to 31 October 2018, as discussed in more detail below. However, based on the financial statements of the Business before the Tribunal, the business has had consistent sales since 31 October 2018, despite the impact of COVID-19.

24. For the purposes of the first criterion under reg 1.11 of the Regulations, the Tribunal must only be satisfied that Mr Shao has or has had a shareholding in a company that carries on the business. It is not a requirement that he did so for the entire relevant period.  Mr Shao clearly did so from 31 October 2018 and therefore, the Tribunal finds that the first criterion in reg 1.11(1)(a) is met.

25. 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.

26. It is Mr Shao who is the contact for all customers and suppliers and his signature that appears on all documents associated with the Business, including credit applications, the lease of premises and Australian Taxation Office documents, signed in his capacity as director.

27. While the contentious period is prior to 30 October 2018, the Tribunal is satisfied that Mr Shao maintains 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 since October 2018. Again, it is not a requirement that he did so for the entire relevant period. Therefore, the Tribunal finds that the second criterion in reg 1.11(1)(b) is met.

28. 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 or have met certain thresholds. As the Business is not operated by a publicly listed company, the required ownership interest must be at least 30% if the annual turnover is greater than or equal to AU$400,000 and at least 51% if the annual turnover is less than AU$400,000. In this case, regardless of the turnover of the Business, as the Tribunal determined above that Mr Shao has always held a 100% ownership interest in the Company through which the Business operates, the third criterion in reg 1.11(1)(c) is clearly met and the Tribunal finds accordingly.

29. Finally, the Business must be a qualifying business. “Qualifying business” is defined in reg 1.03 as an enterprise that is operated for the purpose of making a 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.

30. Business activity statements in respect of the Business were before the Tribunal in respect of the periods commencing 1 January 2017 to 30 June 2022, of which only the business activity statement for the quarter ending 30 June 2017 and the business activity statements from 1 October 2018 recorded sales. Full financial statements in respect of the Business were before the Tribunal for the 2016/2017, 2017/2018, 2018/2019, 2019/2020, 2020/2021 and 2021/2022 financial years. The accompanying general ledger accounts record sales for the Business for the same periods of AU$2,500, AU$0, AU$213,022, AU$394,920, AU$352,602 and AU$319,935 respectively. Furthermore, the sales ledger reflects a wide variety of customers from 31 October 2018. 

31. While a net loss was recorded for 2016/2017, nil sales or expenses in 2018 and a further net loss in 2018/19, according to the financial reports, the Business has turned a net profit each year since 2019/20. 

32. PAM3 states that it is not necessary for a business to have operated at a profit to be considered a qualifying business, only that it is being operated for the purpose of making a profit. The Tribunal is satisfied the Business has operated for the purpose of making a profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public. Furthermore, there is no question that the Business was not operated primarily or substantially for the purpose of speculative or passive investment. Therefore, the Tribunal finds that the Business is a qualifying business, satisfying the criterion in reg 1.11(1)(d).

33. Accordingly, all four criteria under reg 1.11(1) are met and the Business can be considered as a “main business” during the relevant period. Furthermore, the Tribunal is satisfied that the Business continues to meet the main business criteria.

    Was the Business actively operating for at least the two years immediately before the application was made?

34. The Tribunal then turned its mind to whether the Business was “actively operating” in Australia for at least the two years immediately before the application was made.  That is, from 27 February 2017 to 26 February 2019.

35. While “actively operating” is not defined in the Regulations or the Act, the case of Shahpari provides some guidance. In that case, the Court held that it was open to the Tribunal to find that the expression “actively operating” involved a consideration of whether the business exhibited activity of a “repetitive, continuous and permanent character” 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” (Li & Ors v Minister for Immigration and Border Protection [2015] MRTA 807)(Li). It is noteworthy that these four conditions require a different consideration to that of “qualifying business”.

36. Mr Shao arrived in Australia to set up the Business some 18 months after being granted the Subclass 188 visa. He told the Tribunal that after already losing his adopted mother, he finally located his birth mother, only to find that she had been diagnosed with cancer.  Consequently, he remained in China to care for her and seek alternative medical opinions and treatments.  Sadly, she passed away in late October 2018.

37. Prior to hearing, the Tribunal received a submission on 25 November 2022, whereby Mr Shao explained why the Business did not do well in 2016 to 2018.  He went on to state as follows:

    I found my birth mother in the year of 2015 at the time of her late period of cancer stage, I had stayed back to look after my birth mother and couldn't allocate time to look after my business in Australia. I was so sad for losing my Adoptive Mother at not long ago then I was very sad again for losing my Birth Mother. I took some time to recover myself during the year she left me.

38. As noted above, Mr Shao applied for the Subclass 188 visa in the Business Innovation Extension Stream on 27 February 2019.  His application refers to the type of business operations as “Retail Trade”.  The accompanying legal submission states that Mr Shao’s original intention upon being granted the Subclass 188 (Business Innovation and Investment (Provisional)) visa in 2015 was to establish a new retail clothing outlet.

39. The submission goes on to state that Mr Shao returned to Australia in early 2018 to recommence his business.  However, based on departmental records, Mr Shao was in China from 23 July 2017 until 30 October 2018.  While there is clearly an error in relation to the dates, the Tribunal accepts that Mr Shao returned to Australia on 30 October 2018 and notes that he was to recommence his business. 

40. The legal submission states that “after some serious discussions with other business associates in China and further research”, Mr Shao decided to change his business activities to “building and construction materials purchasing and on-selling to China”.  The Amended Business Plan Proposal elaborates further on the intention of the new business, stating that the Business will be ”manufacturing building materials such as steel frame/prefab by new technology building methods and eco-friendly building materials”.  Furthermore, the intention is to “establish building material for use in the building construction industry in Australia and possible exporting materials to overseas construction companies.”  It is further submitted that at that time “Mr Shao had done extensive research with a close family friend in China and held business meetings with building/property developers.”

41. In response to a question from the Tribunal, Mr Shao stated that the Business mainly provides building materials for renovations, such as doors, floors and kitchens.  He also offers an installation service. He further stated that he commenced hiring people and renting space in 2019.  In the earlier years he didn’t retain any stock; however, since 2022 he has been retaining stock as the business has developed. He now works closely with property developers.

42. Mr Shao told the Tribunal that his first sale was the end of October 2018.  In response to a further question from the Tribunal, he stated that he did do a little bit of business in 2017, which consisted of the odd sale.  However, due to his mother’s illness “he didn’t want any distraction so he put the business operations aside”.  He was forced to make choices because of his mother’s illness.

43. The Tribunal pointed out recorded sales in the business activity statement for the quarter ending 30 June 2017 of $2,750 (including GST), as recorded in the profit and loss statement of the Business for the year ending 30 June 2017 and also in the 2016/17 tax return of the Business. Mr Shao stated that the sale was simply a one-off trial with a friend. He then returned to China, so sales did not continue. The sale was clearly not arms-length and the Tribunal finds that it does not represent a legitimate sale for the purposes of meeting cl 188.232 of Schedule 2 to the Regulations.

1. It is noteworthy that the only expenses recorded in the 2016/17 profit and loss statement are costs associated with the sale, accounting fees (unpaid) and the company formation cost.  The same sale and expenses were recorded in the tax return of the Business for the year ending 30 June 2017. The sole asset of the Business was a bank balance of $97.50.

2. The Tribunal had requested a copy of the sales ledger account for the Business from 1 January 2017 to date prior to hearing.  The sales journal provided commenced on 1 July 2018 with the first sale recorded on 31 October 2018.  The Tribunal also requested a copy of the Business bank statements from 1 January 2017 to 30 June 2019. The Tribunal received Westpac bank statements from 31 October 2017.  According to the Westpac bank statements of the Business before the Tribunal, there was no movement in the balance of the account from 31 October 2017 until late October 2018 and no transactions were apparent.

3. The Tribunal expressed its concern in relation to the fact that it appears that the Business was only operating for the last four months in the relevant two-year period, being from 31 October 2018 to 26 February 2019.  With the exception of the 2016/17 tax return of the Business, all other documents provided to the Department in support of an actively operating business were limited to post October 2018.  Furthermore, the submissions received prior to hearing also focused on the Business operations from October 2018 and provided no new evidence in support of the Business actively operating between February 2017 and October 2018. Rather, an explanation was given as to why it had not.

4. Mr Shao gave oral evidence that while he was in China, before returning to Australia in October 2018, he was still developing the business by exploring new products to meet Australian standards and approaching manufacturers.  He also stated that he was advertising online in 2017. The Tribunal allowed time for Mr Shao to provide further evidence in support of his claim. However, no evidence in respect of the online advertising was provided.  While various photographs were provided, they were undated and did little to support Mr Shao’s oral evidence. It was also submitted that video evidence was available of Mr Shao working with the suppliers to get products to reach Australian Building Standards; however, this was not provided.

5. After the hearing, Mr Shao provided a submission in which he set out the business activities he had conducted between February 2017 and October 2018 as follows:

   Period from February 2017 to July 2017

   1)   During 1 February 2017 to 6 July 2017, I was in China with non-stopping to visiting suppliers, sourcing innovated and technology products for Australia market, joining all kind of exhibitions relating to Building industry. At the same time, I had been instructed to my accountant in Australia to lodge Business Activity Statements, Financial Report and Tax Return even it was difficult to get successful sales as a new business to tap into the market; At the same time, I had been communicating with builders, developers and members in Chinese Building  Association in Australia by phone to match their orders and requirements.

   2)   During 8 July 2017 to 22 July 2017, I was in Australia to meet with builders/developers to show them samples from China, negotiated prices; visited some hardware stores in Victoria to understand what the local market is. I confirmed the warehouse location in Box Hill South and signed up a head of agreement to rent the space of the warehouse at Unit 19, 277-289 Middleborough Rd., Box Hill South VIC 3128. Attached pictures are for visiting Bunnings Store. I was wondering that why builders have been suffered about the cost and ways of assembling material. I believed that I could help them to improve those issues. At the same time, I interviewed couple candidates of full-time staff for my business. I signed the Employment Contract with Xianting GU on 15/07/2017. I received a big order from a Building Company on 17/07/2017.

   3)   During 24th July 2017 to 28th October 2018, I was in China. as per agreement by the builders and developers, through multiple products corrections and upgraded by the suppliers which I needed to work with them to get succeed, we passed test procedures and reports by the appointed Australian Government bodies. After months and months waiting period, we were finally allowed to import and bring the quality products into Australia. I am proud of myself to provide our great products into Australia finally.

6. After hearing, Westpac bank statements in respect of the Business were provided from 30 June 2017 to 31 July 2017, as was a sales journal from 1 February 2017 to 31 October 2018.  Both the bank statement and the sales journal reflected the sales of $2,750 (including GST), received in three credit transactions of $550, $990 and $1,210 on 27, 28 and 31 July 2017.  It is apparent that the sale of $2,750 (including GST) was accounted for on an accruals basis at 30 June 2017.  However, the balance sheet does not reflect a corresponding debtors amount.  Furthermore, it appears that there was no test procedure required to import these goods to Australia.

7. There is no record of any deposit in the bank statements that corresponds to the purchase order from the building company (Jade Star Homes Pty Ltd), dated 17 July 2017.  Nor was there any mention of this order at hearing or to the Department.  One would also expect to see a deposit received when placing an order in excess of $100,000. According to a supply contract before the Tribunal between the Business and Well and Able Holdings Pty Ltd, dated 8 January 2019, a 5% deposit was required. The CBA Business bank statements on 19 January 2019 record a credit entry in the amount of AU$12,379, notated as “30PC Deposit JadeS”.  Further credit entries are recorded on 14 March 2019 and 26 April 2019 in the amount of AU$20,000 each, notated as “JS HOMES DECHENG N JADESTAR”.  While the Tribunal acknowledges that this is likely a different order, Jade Star Homes Pty Ltd have clearly paid a deposit.  However, there is no evidence of a deposit in relation to the purchase order of 17 July 2017. 

8. There is also no evidence of any associated costs in relation to the purchase order of 17 July 2017.  In fact there are no recorded purchases until the quarter ending 31 December 2018, more than 12 months later. It is noteworthy that there was no tax return lodged for the Business in respect of 2017/18, as the Australian Taxation Office was advised that “no return was necessary”.  This generally occurs when there are no sales and no expenses, as a result of there being no business operations. One would at least expect to see a minimal level of expenses associated with Mr Shao working to fulfil the purchase order from July 2017 with Jade Star Homes Pty Ltd. This was not the case. Furthermore, the 2017/18 balance sheet recorded no assets. 

9. Given that the purchase order was produced after the hearing, despite having the opportunity to provide it as evidence prior to hearing, and the lack of substantiating evidence corresponding to the validity of the purchase order, the Tribunal places little weight on it. 

10. The Tribunal is not satisfied that the Heads of Agreement and the Employment Agreement  support the Business actively operating prior to October 2018, as both documents are in relation to a future time.

11. No evidence was provided to the Tribunal in respect of applying for and passing test procedures of any appointed Australian Government body, nor in respect of any communication between the Business and the relevant Australian Government body.

12. The Tribunal raised the case of Shahpari at hearing and allowed an opportunity for the applicant and/or representative to provide submissions in respect of what the Tribunal saw to be similarities between Mr Shao’s case and Shahpari.  No such submission was received. 

13. While Shahpari is in respect of a Subclass 892 visa, the wording in cl 892.211(1) of Schedule 2 to the Regulations refers to the applicant, for at least two years immediately before the application is made, having and continuing to have, an ownership interest in one or more main businesses that were “actively operating” in Australia. This is the same requirement as cl 188.232(1) and cl 188.232(2) of Schedule 2 to the Regulations.

14. In the case of Shahpari the relevant period was October 2010 to October 2012.  The business of the applicant effected a single export sale in 2009, while the next recorded sale was not until the quarter ending September 2011, being nine to 12 months into the relevant period. The sales continued from that time, ultimately resulting in a contract after the relevant period with the United Nations. The applicant contended that the preparation stages for export also represented the business “actively operating”.  Furthermore, the applicant was absent from Australia for some 10 months between October 2010 to August 2011. 

15. In the case of Mr Shao, the Tribunal found earlier that the first sale in July 2017 was not at arms-length and was not a legitimate sale for the purposes of meeting the criteria under cl 188.232 of Schedule 2 to the Regulations. Therefore, sales commencing on 31 October 2018 are some 21 months into the relevant period. As in the case of the applicant in Shahpari, Mr Shao contends that the Business was actively operating while he was sourcing products and developing relationships with suppliers. Furthermore, with the exception of 17 days in July 2017, Mr Shao was absent from Australia between 16 November 2016 and 30 October 2018, and again between 18 and 23 December 2018, equating to him being absent for more than 600 days of the relevant period.

16. In Shahpari, the AAT (differently constituted), found that the lack of sales prior to September 2011 and the extended absence of the applicant from Australia weighed heavily against the applicants.  The applicant submitted to the Court that it was illogical and unreasonable for the Tribunal to find that the preparation stages for export were not a period when the business was “actively operating” simply because sales were not being made at the same time. The representative for the Department submitted that the Tribunal made findings of fact that were open to it in concluding that the relevant business, Karamadan, was not “actively operating”. Ultimately, Wilson J concluded that it was entirely open to the Tribunal to consider that sales of the magnitude that Karamadan revealed were consistent with a business that was not “actively operating”. Such a factual finding was open to the Tribunal.

17. Similarly to Karamadan in Shahpari, the Business has had continued sales since 31 October 2018.  The Tribunal accepts that this is so and that the Business is now operating successfully.  However, that is a separate issue to whether the Business was an actively operating main business prior to 31 October 2018. In fact, Wilson J found in Shahpari that had the delegate or the Tribunal considered matters beyond the visa application date in relation to the relevant period, the delegate or the Tribunal would have been at risk of committing jurisdictional error.

18. The Tribunal notes the similarity to Shahpari in respect of the period 27 February 2017 to 30 October 2018.  For the reasons discussed above, the Tribunal places little weight on the evidence provided after the hearing in the form of photographs, a significant purchase order, a Heads of Agreement in respect of premises and an Employment Agreement. Furthermore, there is no written evidence from any suppliers to corroborate Mr Shao’s submission of seeking to forge relationships in China.  In any event, it is also questionable as to whether activity occurring consistently in China for such an extended period of time would meet the criterion of a business actively operating “in Australia”.

19. Mr Shao was in Australia for only three weeks in July 2017.  While the Tribunal accepts that he may have visited some potential customers and researched the local market, the Tribunal is of the view that such activity in a three-week period in Australia does not constitute an actively operating business during the period from February 2017 to October 2018. 

20. According to Mr Shao’s own oral and written evidence he “put aside” the Business to care for his birth mother until her passing in October 2018.  It is difficult to accept the evidence later in the hearing and post hearing that the Business was “actively operating” during the time he was caring for his birth mother, noting that the written submission to the Department was that Mr Shao returned to Australia in 2018 to recommence his Business.  This is not a term one would use to refer to a business that was continuing to actively operate throughout the relevant period.

21. While the Tribunal accepts that Mr Shao may have met with a few suppliers and maybe explored some products and sought some custom throughout the period 27 February 2017 to 30 October 2018, the Tribunal views this activity as minimal in the scheme of things. 

22. In the case of Kushner v MIAC [2009] FMCA 390 (28 May 2009) Driver FM considered that an identified indicator of a business was to include continuity and repetition of trading activity over a reasonable period. While this view was in the context of “carrying on a business” in respect of s 134(10) of the Act, it is reasonable for it to also apply to the term “actively operating”, which is of similar meaning. In fact, as noted above, in Shahpari Wilson J agreed with the definition of “actively operating” as set out in Li, that it involved a consideration of whether the business exhibited activity of a “repetitive, continuous and permanent character”, going further to state that it also requires that 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”. It is clear that the Business did not continually and repeatedly engage in trading activity prior to 31 October 2018, nor did it generate trade or derive some financial gain prior to 31 October 2018.

23. It is noteworthy that the legislation requires the Business to be actively operating for at least two years immediately before the application was made.  Actively operating for only a part of the two years immediately before the application was made is not sufficient.  Given Mr Shao’s oral evidence in respect of his caring responsibilities for his birth mother and the lack of substantive evidence in support of active business operations in the period prior to October 2018, the Tribunal finds that the Business was not actively operating for at least the two years immediately before the application was made and consequently, the criteria under cl 188.232(1)(a) cannot be met.

24. The Subclass 188 visa allows a period of four years for a successful applicant to establish an ownership interest in an actively operating main business.  While the Tribunal acknowledges that a lead time may be involved in establishing relationships with suppliers and purchasers, the Tribunal does not accept that a lead time in these circumstances of almost two years since incorporation of the Business is reasonable, noting that the Business was not incorporated until some 18 months after Mr Shao was granted the Subclass 188 visa. It is unfortunate that Mr Shao’s personal circumstances disrupted his plans to establish an actively operating business within the required timeframe. 

25. The Tribunal acknowledges the successful business that Mr Shao has developed since October 2018 and his strong commitment to the community.  The Tribunal also sympathises with the difficult choice he faced between caring for his birth mother and actively operating the Business prior to October 2018.

26. The time limits are legislated for a reason and there is no provision in the legislation for the Tribunal to take into account any mitigating circumstances. 

27. Given the above findings, the Tribunal finds that the criteria for the grant of a Subclass 188 (Business Innovation and Investment (Provisional)) visa are not met. Accordingly, the decision under review must be affirmed.

    DECISION

28. The Tribunal affirms the decision not to grant the applicants Business Innovation and Investment (Provisional) Subclass 188 visas for the Business Innovation Extension Stream.

    Robyn Anderson
    Member