Glossary of Business Visa Terms

For clarity, here’s the Department of Immigration and Border Protection’s (DIBP) glossary of business visa legislated and policy terms.

ABN

Australian Business Number (ABN) is a single, unique business identifier used for all dealings with the Australian government. Companies, under Corporations Law, are automatically entitled to an ABN. Other entities are entitled to an ABN if they are carrying on an enterprise in Australia.

Balance sheet

Also known as a statement of financial position at the end of the period. It usually shows the assets and liabilities of the business.

Bankrupt

Applies only to individuals (a business goes into liquidation) and is a person who has been declared by a bankruptcy court to be insolvent and unable to pay their debts.

Bonds

Bonds are considered an eligible investment (see below). Bonds are a form of debt financing. They are a fixed-term security that pays a fixed rate of interest during their life and repay the principal at maturity. Bonds may include securities issued by government or semi-government authorities, or by companies. Company debt securities are called debentures.

Designated investment

Security issued by an Australian State or Territory government authority. An investment in the security matures in not less than 4 years from its date of issue. Repayment of principal is guaranteed by the issuing authority and an investment in the security cannot be transferred or redeemed before maturity.

 

Eligible business

Business that results or will result in one or more of the following:

  • the development of business links with the international market;
  • the creation or maintenance of employment in Australia;
  • the export of Australian goods or services;
  • the production of goods or the provision of services that would otherwise be imported into Australia;
  • the introduction of new or improved technology to Australia;
  • an increase in commercial activity and competitiveness within sectors of the Australian economy;

Eligible investment

Each of the following is an eligible investment if a person owns it for the purpose of producing a return in the form of income or capital gain, and not for personal use:

  • an ownership interest in a business;
  • cash on deposit;
  • stocks or bonds;
  • real estate;
  • gold or silver bullion.

In this Part, a loan to a business is an eligible investment if a person makes it for the purpose of producing a return in the form of income or capital gain.

 

Financial statement / Profit and loss statement

Report on the financial performance and position of a business. A complete set of financial statements, prepared in accordance with accounting standards, should include:

  • a statement of financial position at the end of the period (balance sheet)
  • a statement of comprehensive income for the period (income statement)
  • a statement of changes in equity for the period, with all changes in owner’s equity being separated from non-owner’s equity
  • statement of cash flows for the period (cash flow statement)
  • notes, comprising a summary of accounting policies and other explanatory notes
  • if applicable, a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

Fiscal year

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.

DIBP should approve the period if:

  • 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.

Fiscal years must be full. If a fiscal year ends on 30 June, an application that falls before 29 June cannot include the most recent fiscal year.

Gold and silver bullion

Appears in the regulatory definition of eligible investment. It means gold and silver in non-monetary (or uncoined) form of specified weight. Bullion is usually cast into bars or ingots.

Liabilities

Liabilities are the opposite of assets. A business has liabilities if it is obliged to pay or provide a service in the future for a debt incurred in the past. In the financial statements the liabilities are the amount of capital that the business has borrowed from outside the business (that is, it does not include borrowings from owners). Liabilities are often divided into current and long-term liabilities.

Liquidation

The winding up of a business, by which its operations cease, its assets are realised, its liabilities paid and its remaining assets (if any) are distributed to shareholders. A business may be liquidated as the result of a court order following the declaration of insolvency, or voluntarily by its shareholders.

Main business

A business is a main business in relation to an applicant for a visa if:

  • the applicant has, or has had, an ownership interest (see below) in the business; and
  • 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; and
  • 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 is or was:
    • if the business is operated by a publicly listed company, at least 10% of the total value of the business; or
    • if the business is not operated by a publicly listed company and the annual turnover of the business is at least AUD$400,000, at least 30% of the total value of the business; or
    • if the business is not operated by a publicly listed company and the annual turnover of the business is less than AUD$400,000, at least 51% of the total value of the business; and
  • the business is a qualifying business (see below).

If an applicant has, or has had, an ownership interest in more than 1 qualifying business, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.

 

Managed investment fund

Any of the following:

  • a managed investment scheme (whether open or close ended) based only on interests:
    • that are not able to be traded on a financial market, and
    • for which no representation has been made to any member, or prospective member, of the managed investment scheme that the interests will be able to be traded on such a financial market
  • a listed investment company (whether open or close ended)
  • a financial product (whether open or close ended) that may result in a payment from an approved benefit fund (within the meaning of the Life Insurance Act 1995 ) or a statutory fund maintained under the Life Insurance Act.

Market value

The amount that can be expected to be obtained from the sale of an item, product or service in the open and active market.

The share market will often value a company differently to the “book” value of a company in its financial statements. It may therefore be to the applicant’s advantage to use the current market value of the shareholding.

Net asset value / Net worth

is the value of the owners’ equity of a business that is, the value of the total assets of a business minus its total liabilities.

Net loss

Amount derived by deducting the total administrative, operating and financial expenses from the gross profits or loss. A business experiencing a net loss has a negative net income after tax.

Net profit

Gross profit after deducting administrative, operating and financial expenses. This amount after tax may be distributed to shareholders, reinvested or retained as accumulated profits.

Operating loss / Trading loss

A situation in a fiscal year where the expenses incurred by a business in generating revenue exceed the revenue generated. In assessing whether or not a business has suffered a trading loss, the DIBP should ensure that tax has been included in the calculation of expenditure, however, extraordinary items should not be included.

Ownership interest

Ownership interest is the legal title that a person owns in a company, partnership or sole proprietor business.

Partnership

An association of persons who join together in a business (that is, not a corporation/incorporated body). There is usually a partnership agreement formalising the association and its terms, the amount invested by each partner and the amount of each partner’s liability and share of profits.

Qualifying business

An enterprise that:

  1. is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and
  2. is not operated primarily or substantially for the purpose of speculative or passive investment.

Real estate

Appears in the regulatory definition of eligible investment. It means land and any buildings or other fixtures contained on it.

Securities

Means any of the following interests:

  • debentures, stocks or bonds issued or proposed to be issued by a government;
  • shares in, or debentures of, a body;
  • interests in a managed investment scheme;
  • units of such shares;
  • options to acquire by way of transfer any of the four interests mentioned above

but does not include derivatives other than the options mentioned immediately above.

Statement of management activity

Required of Investor visa applicants. Find Form 1139 here.

Trust

Where a person (“the trustee”) is the legal holder of property but is required to use or keep that property for the benefit of another person (“the beneficiary”)

Turnover

Revenue generated as a result of the ordinary activities of a business.

Venture capital fund

Means any of the following bodies:

  • a venture capital limited partnership conditionally registered, or unconditionally registered, under the Venture Capital Act 2002 ;
  • an early stage venture capital limited partnership conditionally registered, or unconditionally registered, under that Act;
  • an Australian venture capital fund of funds conditionally registered, or unconditionally registered, under that Act.

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