Self-sponsorship not dead and buried
Self sponsorship is NOT dead and buried.
By Lorenzo Boccabella, BA, LLB, a specialist in migration law (16 June 2021)
Properly done and provided the application drips with authenticity, it is possible for a company to nominate an employee who is the sole shareholder and director! Legends backs this up. Type in the search term ‘self-sponsorship’ and here’s what comes up in relation to Reg 5.19:
“A company is a legal entity separate from its owners (shareholders) and officers (directors). A company is therefore able to nominate a director or shareholder for an employer sponsored visa.”
Of course the potential for fraud makes Immigration suspicious but the task for the nominating company is to make sure it is a viable business with a business plan in place to prove the job will be in tact for the term of the visa.
There is no legal reason why an employee cannot be the director and shareholder of the employing and nominating company for the subclass 186 visa, the 482, the 494 and indeed any visa which requires a nomination.
What is also useful is using a company where one is the shareholder and director to ‘employ oneself’ in order to build up work experience points post qualification while on a student visa or on a subclass 485 visa. Almost any job, in my view could be moulded to be the basis for a business. The gig economy has opened this up tremendously.
Similarly a student could be funded by the family to establish a business in Australia. Provided all funds advanced to the student are a genuine irrevocable gift such a business could be a launching pad for the subclass 188 visa.
The expansion of regional areas of Australia for the 494 visa also now creates many opportunities for the employee also being the director and shareholder of the employing business.
In all ‘self-sponsorship’ situations, applicants need to be warned that there is a real risk of refusal at the delegate stage, however at the tribunal stage, a fair case can be put to highlight the law that a company is a separate legal entity from its owners and directors.
The case which clearly established that the shareholders and directors are clearly separate from the company was the long standing UK House of Lords case called Salomon v Salomon & Co Ltd [1897] AC 22, always worth quoting to both delegates and tribunal members.
In 1995, the First Corporate Law Simplification Act amended the Corporations Act to permit a proprietary company to be set up with one or more shareholders. Under another amendment, the minimum number of directors needed to be designated in a proprietary company was cut from two to one. Moreover, the Corporations Act states that any sort of company, not just a proprietary company, may be established with only one member and may continue to exist with only one member (section 114).
Perhaps the final word on this topic is what the eminent Australian jurist, Chief Justice of the High Court Garfield Barwick said in relation to the analogous area of taxation law specifically acknowledged the right of a taxpayer to mould his or her life so as to minimise tax. He stated in Federal Commissioner of Taxation v Westraders Pty Ltd [1980] HCA 24; (1980) 144 CLR 55 words to effect that a taxpayer is entitled to organise his or her affairs in a way so as to reduce tax. He stated:
4. Parliament having prescribed the circumstances which will attract tax, or provide occasion for its reduction or elimination, the citizen has every right to mould the transaction into which he is about to enter into a form which satisfies the requirements of the statute. It is nothing to the point that he might have attained the same or a similar result as that achieved by the transaction into which he in fact entered by some other transaction, which, if he had entered into it, would or might have involved him in a liability to tax, or to more tax than that attracted by the transaction into which he in fact entered. Nor can it matter that his choice of transaction was influenced wholly or in part by its effect upon his obligation to pay tax. Of course, the transaction must not be a pretence obscuring or attempting to supplant some other transaction into which in fact the taxpayer had earlier entered. Again, the freedom to choose the form of transaction into which he shall enter is basic to the maintenance of a free society. [Emphasis added]
Applying the reasoning of Westraders to migration law, there is no reason why a person can not ‘mould’ his or her situation in order to meet the criteria for a visa. That’s where ‘self-sponsorship’ comes into play.