Yao & Ors v Minister for Immigration & Anor [2016] – Subclass 890 Business Skills (Residence) Visa – Proper Interpretation of “Net Assets”


In this case before the Federal Circuit Court (FCC), we successfully challenged a decision of the Administrative Appeals Tribunal (AAT) to refuse to grant our clients a subclass 890 Business Skills (Residence) visa. Notably, this case discussed the proper interpretation of a “net asset” within cl.890.212 in sch.2 to the Migration Regulations 1994 (Cth), which forms one of the main requirements that applicants must satisfy in order to obtain a subclass 890 Business Skills (Residence) visa.

Prior to appearing before the FCC, the AAT refused the application on the basis that our clients had not satisfied cl.890.212, which requires that applicants must hold at least $100,000 in net assets in a business throughout the 12 month period immediately before an application is made. Although there was evidence to show that the applicants had advanced a $490,000 loan to their business, the AAT concluded that this amount could not be counted as the applicants’ net asset as they did not hold a majority shareholding in the business, and further, because the money could not be used to meet the business’ cash flow or financial requirements.

Before the FCC, we assisted the applicants in submitting the argument that the AAT misconstrued the term “asset” for the purposes of cl.890.212. Judge Smith was satisfied with our submission and declared that the AAT’s reasoning was “affected by several errors.” On the subject of the loan, Judge Smith noted that nothing in the ordinary meaning of “loan” turns on the actual use of the money once it has been lent. Further, Judge Smith determined the interpretation of “net asset” in cl.890.212 to be “deliberately broad” in order to attach to any number of possible types of asset. In line with the broad purpose of these provisions, Judge Smith held that the applicants’ loan was a type of net asset, regardless of whether or not that loan was used for the day-to-day operation of their business.

Judge Smith raised a further “critical error” in the AAT’s reasoning, being the reasoning that the loan could only be counted as the applicants’ net asset if the applicants held a majority shareholding in the business. On this point, Judge Smith held that the AAT misunderstood the term “asset” in that the applicant’s asset was not the loan, but in fact “the right to enforce the company’s promise to repay” that loan. Therefore, what constitutes an “asset” does not turn upon whether the applicants have complete control of the business.

Due to the AAT not taking the loan into proper consideration, Judge Smith ultimately found the AAT’s decision to have been affected by jurisdictional error. The AAT was found to have “misapprehended the limits of its functions” by having “cut short its consideration of a method of valuing the ‘asset in the main business’”. The decision was set aside and remitted to the AAT to be reconsidered according to the proper interpretation of “net asset” as was reached in this judgment.

The link to the case on Austlii can be found at:

  1. http://www.austlii.edu.au/au/cases/cth/FCCA/2016/3164.html
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