All posts by Alan Collett

Business Owners – Permanent Visas for Australia – Subclass 892

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A subclass 892 visa application is the most popular pathway for those who have been living in Australia as the holders of a provisional business visa under sub classes 160, 161, 163, and 164, and who are owning and managing a business in Australia.

Requirements for the granting of a permanent residency visa under subclass 892 are that the visa applicant:

  • Is the holder of one of the above provisional business visas, or a subclass 162 or 165 visa
  • Has been resident in Australia as the holder of one of these visas for at least 1 out of the 2 years immediately before the visa application is lodged
  • Has a genuine commitment to continue to maintain business or investment activities in Australia
  • Has never been involved in unacceptable business activities
  • Is sponsored by a State or Territory Government
  • Has had direct and continuous involvement in the day to day management of up to two businesses operating in Australia for the past two years
  • Owns at least one of the following:
    • – 51 per cent of a business where the annual turnover is less than A$400,000
    • – 30 per cent of a business where the annual turnover is A$400,000 or more
    • – 10 per cent of a business that is a publicly listed company
  • For the 12 months immediately before the visa application is submitted to the Department of Immigration the main business (or two main businesses together) had a turnover of at least A$200,000

In addition, for the 12 months immediately preceding the lodgment of the visa application with the Department of Immigration 2 out of 3 of the following requirements must be satisfied:

  • The net value of the visa applicant’s (or the applicant’s partner’s, or the applicant and his/her partner’s combined) assets in the main business (or two main businesses) in Australia was at least A$75,000
  • The net value of the visa applicant’s (or the applicant’s partner’s, or the applicant and his/her partner’s combined) personal and business assets in Australia was at least A$250,000.
  • The business/es employed at least the equivalent of one full-time employee who is:
    • – An Australian citizen
    • – An Australian permanent resident
    • – A New Zealand passport holder
    • – Not a member of the applicant’s family.

The subclass 892 visa application must be lodged before the expiry of the presently held provisional business visa, and when the visa application is lodged with the Department of Immigration an ownership interest in the Australian business/es must have been in place for at least 2 years.

Clearly there is a need to plan ahead to ensure a business in Australia is not acquired or set up too late to meet the requirement for a 2 year ownership interest, and to ensure business accounts are available and State or Territory sponsorship has been secured.

All of these requirements are to be satisfied at the time the visa application is lodged with the Department of Immigration’s Business Skills Processing Centre.

What is a “fiscal year”?

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The term “fiscal year” appears generally in the requirements relating to the pathways under visa subclass 188.

For example, in the Business Innovation stream of visa subclass 188 applicants are required to deliver: “… financial statements to cover 2 fiscal years before the applicant is invited to apply for the visa. Fiscal years must cover a full 12 month period.”

Under the Investor stream of visa subclass 188 applicants applicants must: “… have owned net assets of AUD 2,250,000 throughout the 2 fiscal years immediately before the applicant is invited to apply for the visa.”

In addition, under the Investor stream: “… if the application is made 3 months or more after the end of the most recent fiscal year, they must complete another Statement of Assets and Liabilities Position for their financial situation as of the date they apply for the visa.”

Migration legisation provides that the term “fiscal year” in relation to a business or investment, means:

  • If there is applicable to the business or investment by law an accounting period of 12 months — that period; or
  • in any other case — a period of 12 months approved by the Minister in writing for that business or investment.

According to the Department of Immigration: “Fiscal years vary in different countries, some countries keep to a calendar year but other countries prefer the tax period to be different to the busy end of calendar year period.

Officers may approve a period as a fiscal year provided it is a 12 month period, and has been accepted as applying to that business/investment for taxation or reporting purposes by authorities in the country in which the business/investment operates and reports.”

In the UK limited companies and unincorporated businesses such as sole proprietors or partnerships can adopt any balance sheet date, even though the tax year ends on the 5th of April (31st of March for companies).

As such we have found that the Department of Immigration will work with the business balance sheet as being the end of the fiscal year when an application is submitted under the Business Innovation stream.

The Managing Director of Go Matilda Visas – Alan Collett – is a qualified Chartered Accountant (Australia, and England & Wales) and is a Registered Migration Agent (MARN 0102534), with many years of experience. Fees for visa assistance are fixed in amount, and his knowledge in the areas of accounting, tax (UK and Australia), and visas are highly regarded. If you are a business owner or an investor who wants to move to Australia we look forward to having a free initial discussion.

How to convert foreign currency amounts into AUDs

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Eligibility requirements for a business visa include financial thresholds, measured in A$’s.

Most who are applying for provisional business visas under subclass 188 will have a business ownership or investments retained outside Australia, the financial aspects of which are denominated in a currency other than A$’s.

Amounts in foreign currencies must therefore be converted to A$’s to assess the requirements relating to turnover (in the case of a Business Innovation stream application) and the net value of assets or investments (for applications under the other streams of subclass 188, such as Investor or Significant Investor) using the most appropriate exchange rate.

Department of Immigration policy advises that officers should calculate the A$ equivalent value of annual turnover on the basis of the buying exchange rate in the local currency for A$ on the closing rate at the relevant reporting date, that is : “the date/s recorded on the financial statements at the beginning and end of a reporting period (for example, 1 February 2013 and 1 February 2014) or the last day of the fiscal year.

In practice we find that applying the exchange rate at the balancing date – which the Department of Immigration terms the “fiscal year” – is acceptable.

Policy guidance also advises that: “Officers should calculate the A$ equivalent value of assets on the basis of the buying exchange rate on the date used to assess the net value of personal assets. This buying exchange rate must be published by any bank holding an Australian Banking Licence, and published on an approved currency conversion web site.”

An approved currency conversion web site is defined as a website that:

  • Uses exchange rates published by any bank holding Australian Banking Licence, and
  • Provides exchange rates for the relevant currency, and
  • Supports the use of historical exchange rates, and
  • Consistently provides accurate formulated calculations.

An example of a currency conversion web site that is acceptable to the Department of Immigration is here.

New Australian Business Visa for Entrepreneurs

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The Australian Government has announced a new pathway to permanent residency in Australia for entrepreneurs.

The new pathway is the Entrepreneur stream of visa subclass 188, and is available for entrepreneurs who want to develop or commercialise their innovative ideas in Australia, and who have A$200,000 in funding from a specified third party.

Applications must be nominated by a State or Territory Government in Australia.

More specifically, applicants must:

  • Be under 55 years of age, although a State or Territory Government can waive this requirement if the proposed “Complying Entrepreneur Activity” will be of exceptional economic benefit to the nominating State or Territory
  • Have competent English, and be able to provide evidence of this at the time the visa invitation is issued
  • Be undertaking – or proposing to undertake – a “Complying Entrepreneur Activity” in Australia, and have a genuine intention to continue this activity

A Complying Entrepreneur Activity is an activity that relates to an innovative idea that will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or business in Australia.

This activity must not relate to any of the following excluded categories:

  • Residential real estate
  • Labour hire
  • Purchase of an existing enterprise or a franchise in Australia

An activity is a Complying Entrepreneur Activity if all of the following requirements are met:

  • The applicant has one or more legally enforceable agreements to receive funding with a total of at least A$200,000 from one of the following entities:
    1. A Commonwealth Government agency
    2. A State or Territory Government
    3. A Publicly Funded Research Organisation
    4. An investor registered as an Australian Venture Capital Limited Partnership, or an Early State Venture Capital Limited Partnership
    5. A Specified Higher Education Provider
  • Under the agreement at least 10 per cent of the funding must be payable to the entrepreneurial entity within 12 months of the day the activity starts to be undertaken in Australia
  • The applicant held at least a 30 per cent interest in the entrepreneurial entity when entering into the agreement
  • The applicant has a business plan for the entrepreneurial entity noting how the innovative idea will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or business in Australia.

The outcome of a successful application will be a provisional visa under subclass 188, permitting a stay in Australia of 4 years and 3 months.

In common with visas granted under the other streams of subclass 188, permanent residency for most will be secured through a subclass 888 visa.

Key requirements for the granting of a permanent residency visa under the Entrepreneur stream of subclass 888 include demonstrating a successful record of entrepreneurial activities in Australia.

A successful record of entrepreneurial activity will be measured by a combination of “key success factors” and “supporting success factors.”

Applicants for the subclass 888 visa will need to demonstrate the completion of at least two key success factors, or a combination of one key success factor and three supporting success factors.

Key success factors include:

  • Employing two or more Australians, permanent residents or other eligible persons
  • Generating an annual turnover of at least A$300,000
  • Filing a provisional patent or acquiring a standard or innovation patent
  • Receiving ongoing funding or investment in the entrepreneur activity
  • Entering into a partnership with a University
  • Selling an entrepreneurial venture for A$2,000,000

Supporting success factors include:

  • Diversifying entrepreneurial activities into other business areas
  • Receiving a statement of success from a State or Territory Government nominator
  • Receiving sponsorship from the corporate sector
  • Starting at least one other business or contributing to at least two other businesses
  • Receiving formal awards or recognition
  • Raising or contributing to social capital

As with the subclass 188 visa, for a successful subclass 888 visa application the activity undertaken must not relate to any of the excluded categories:

  • Residential real estate
  • Labour hire
  • Purchase of an existing enterprise or a franchise in Australia

We take this opportunity to remind intending applicants for a subclass 188 stream (whether under the Entrepreneur stream, or any of the other streams under subclass 188) that the 188 visa is technically a temporary residency visa, so there are also tax planning advantages available, particularly in respect of income and capital gains arising outside Australia.

Tax planning and business structuring advice is available through our partner business, GM Tax.

If you are interested in discussing your visa strategy, and/or making an application for an Australian Entrepreneur visa we will be delighted to hear from you. A free initial discussion is available.