Sponsorship SBS

 
 

The criteria for sponsorship is defined by Reg 2.59 which reads:

 

2.59  CRITERIA FOR APPROVAL AS A STANDARD BUSINESS SPONSOR

For subsection 140E(1) of the Act, the criterion that must be satisfied for the Minister to approve an application by a person(the applicant) for approval as a standard business sponsor is that the Minister is satisfied that:

  • the applicant has applied for approval as a standard business sponsor in accordance with the process set out in regulation 2.61; and
  • the applicant is not a standard business sponsor; and
  • the applicant is lawfully operating a business (whether in or outside Australia); and
  • if the applicant is lawfully operating a business in Australia, and has traded in Australia for 12 months or more—the applicant meets the benchmarks for the training of Australian citizens and Australian permanent residents specified in an instrument in writing made for this paragraph; and
  • if the applicant is lawfully operating a business in Australia, and has traded in Australia for less than 12 months—the applicant has an auditable plan to meet the benchmarks specified in the instrument made for paragraph (d); and
  • if the applicant is lawfully operating a business in Australia—the applicant has attested, in writing, that the applicant has a strong record of, or a demonstrated commitment to:
  • employing local labour; and
  • non‑discriminatory employment practices; and
    • either:
    • there is no adverse information known to Immigration about the applicant or a person associated with the applicant; or
    • it is reasonable to disregard any adverse information known to Immigration about the applicant or a person associated with the applicant; and
    • if the applicant is lawfully operating a business outside Australia and does not lawfully operate a business in Australia—the applicant is seeking to be approved as a standard business sponsor in relation to a holder of, or an applicant or a proposed applicant (the visa applicant) for, a Subclass 457 (Temporary Work (Skilled)) visa, and the applicant intends for the visa holder or visa applicant to:
    • establish, or assist in establishing, on behalf of the applicant, a business operation in Australia with overseas connections; or
    • fulfil, or assist in fulfilling, a contractual obligation of the applicant; and
    • the applicant has provided to the Minister the number of persons who the applicant proposes to nominate during the period of the applicant’s approval as a standard business sponsor, and:
    • the proposed number is reasonable, having regard to the information provided to the Minister; or
    • if the Minister proposes another number of persons as part of considering the application—the applicant has agreed, in writing, to nominate no more than the other number of persons during the period of the applicant’s approval as a standard business sponsor; and
    • if the applicant has previously been a standard business sponsor:
  • the applicant:
    • fulfilled any commitments the applicant made relating to meeting the applicant’s training requirements during the period of the applicant’s most recent approval as a standard business sponsor; and
    • complied with the applicable obligations under Division 2.19 relating to the applicant’s training requirements during the period of the applicant’s most recent approval as a standard business sponsor; or
  • it is reasonable to disregard subparagraph (i).

NOT A STANDARD BUSINESS SPONSOR – REG 2.59(B)

 

Pursuant to Reg 2.59(b), the entity seeking SBS approval cannot currently be a standard business sponsor. This does not mean that a SBS holder whose SBS will be expiring shortly has to wait until the SBS expires prior to apply for further SBS approval. Instead existing SBS holders apply for a variation of their SBS under Reg 2.68.

Note the requirements for a SBS set out in Reg 2.59 are essentially replicated in Reg 2.68.

 

LAWFULLY OPERATING A BUSINESS – REG 2.59(C)

The Department is now leveraging Reg 2.59(c) as a means to drill down on businesses seeking SBS approval in order to obtain access to 457 workers. Balance sheets, P&L statements and/or letters of support from accountants are often no longer sufficient evidence of operation of a business.

The Department are often requiring BAS statements to be included with the SBS application and anecdotal evidence suggests that in some circumstances the Department has requested the PAYG summaries of all persons employed in a business!

PAM states:

40.2 Assessment of ‘operating a business’

Irrespective of whether the applicant for approval as a standard business sponsor is legally established in or outside Australia, the criterion at regulation 2.59(c) also requires the applicant to be ‘operating a business’ to satisfy the criteria.

Shelf companies which have been legally established but not operating any business activity cannot satisfy regulation 2.59(c). However, it is possible for applicants who are new or start-up businesses (which have operated for less than 12 months) to meet regulation 2.59(c) if they provide evidence to demonstrate that they are in fact operating, even if they have been doing so only for a short period of time.

The types of evidence which may be submitted by an applicant in support of their application include, but are not limited to, the following:

  • balance sheet or statement of position for the most recently concluded fiscal year (with comparative figures for previous fiscal year). See Documents associated with established businesses for further information
  • profit and loss statement (or statement of performance) for the most recently concluded fiscal year, with comparative figures for the previous fiscal year. See Documents associated with established businesses for further information
  • business tax returns for the most recently concluded fiscal year. See Documents associated with established businesses for further information
  • where the fiscal period to which the financial statements or tax returns submitted relate ended more than three months before the application was lodged – a business activity statement (BAS) for each complete quarter between the end of the fiscal period and the date of application lodgment
  • detailed business plan
  • contract of sale relating to the purchase of the business
  • lease agreement relating to business premises
  • evidence of lease or purchase of machinery, equipment, furniture etc.
  • contracts to provide services
  • evidence of employment of staff
  • business bank statement covering the period of operation
  • annual report
  • letter of support from the accountant to the business.

The writer is aware of cases where the Department has refused SBS applications for new businesses if they have not commenced trading. There is a sense that current Departmental policy is fettering the law by requiring a business to be ‘actively operating’ rather than just ‘lawfully operating’. The writer would consider taking on cases where a genuine business is refused sponsorship on the basis of being in the early stages of operating.

 

SELF-SPONSORSHIP

 

CAUTION: The Department is currently taking a strict approach to self-sponsorship applications. Self-sponsorship applications will need to be carefully prepared and ideally the business should also be employing Australian workers in order to avoid refusal.

 

TRAINING BENCHMARKS – REG 2.59(D), (E), (J)

 

The training benchmark[4] is defined in the legislative instrument IMMI 13/030 as follows:

Training Benchmarks

The business is not required to demonstrate that they are an industry leader in training.

The business is required to show that the training that has been, and continues to be, provided to employees who are Australian citizens and Australian permanent residents is related to the purpose of the business.

The training benchmarks for an established business are:

  1. A) Recent expenditure, by the business, to the equivalent of at least 2% of the payroll of the business, in payments allocated to an industry training fund that operates in the same industry as the business.

OR

  1. B) Recent expenditure, by the business, to the equivalent of at least 1% of the payroll of the business, in the provision of training to employees of the business.

Expenditure that can count towards this benchmark includes:

  • paying for a formal course of study for the business’s employees who are Australian citizens and Australian permanent residents or for TAFE or University students, as part of the organisational training strategy
  • funding a scholarship in a formal course of study approved under the Australian Qualifications Framework for the business’s employees who are Australian citizens and Australian permanent residents or, for TAFE or University students, as part of the organisational training strategy
  • employment of apprentices, trainees or recent graduates on an ongoing basis in numbers proportionate to the size of the business
  • employment of a person who trains the business’s Australian employees who are Australian citizens and Australian permanent residents as a key part of their job
  • evidence of payment of external providers to deliver training for Australian employees
  • on-the-job training that is structured with a timeframe and clearly identified increase in the skills at each stage, and demonstrating:
  • the learning outcomes of the employee at each stage;
  • how the progress of the employee will be monitored and assessed;
  • how the program will provide additional and enhanced skills;
  • the use of qualified trainers to develop the program and set assessments; and
  • the number of people participating and their skill/occupation

Expenditure that cannot count towards this benchmark includes training that is:

  • delivered on-the-job, other than on the job training which meets the requirements outlined above under the heading ‘expenditure that can count towards this benchmark’
  • confined to only one or a few aspects of the businesses broader operations, unless the training is in the primary business activity
  • only undertaken by persons who are not Australian citizens or permanent residents
  • only undertaken by persons who are principals in the business or their family members
  • only relating to a very low skill level having regard to the characteristic and size of the business.

An issue that comes up for larger companies is meeting the training requirement. As discussed below in house training does count but only if formalised.  This means there is a need for larger employers to have structured on-the-job training programmes or key staff being qualified trainers and perhaps having undertaken a ‘train the trainer’ course which are readily available throughout Australia.

What is not always understood is that paying the wages and expenses of trainers for the time they undertake to train can be counted as part of the training expenditure.

Note the exemptions to training expenditure:

 

  • only undertaken by persons who are not Australian citizens or permanent residents
  • only undertaken by persons who are principals in the business or their family members

Obviously if the training is undertaken by both Australian citizens or permanent residents AND temporary visa holders then the whole of the training expenditure counts.

Similarly if the training is undertaken by both persons who are principals in the business or their family members and other employees then the whole of the training expenditure counts.

Note pursuant to Reg 2.87B, SBS holders operating a business in Australia are required to continue to satisfy the training requirements as part of their sponsorship obligations.

 

NOMINATION CEILING – REG 2.59(I)

SBS applicants are required to provide details of the proposed number of persons whom the business wishes to nominate for the duration of the SBS approval. Where a nomination ceiling exists, it is worth noting that the SBS will expire once the nomination ceiling has been met or the term of the approval has been reached (whichever occurs first).

However, a change in policy has meant that the Department is no longer imposing a nomination ceiling on SBS approvals and SBS holders can nominate as many or as little number of persons regardless of the figure that was provided in the SBS application.

Barbara Davidson