Risk Management-How Many Business Are You Running? Associated Entities, Sponsorship and the Department of Immigration

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Risk Management-How Many Business Are You
Running? Associated Entities, Sponsorship and the
Department of Immigration(07 February 2014)
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What is Truth?
How many businesses are you running?  Many of
our clients operate multiple business entities. 
While a single company may offer many products
and services, in many cases a business may
operate multiple different companies under
different Australian Business Numbers.  If you
are a sponsor of overseas workers operating under
a Standard Business Sponsorship care must be
taken to manage the use of employees in these
different entities.
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Previously, under the terms of a 457 visa,
employees could be sponsored by one entity, but
directly engaged by an associated entity.  As of
July 1, 2013 the sponsoring entity must now
engage the 457 visa holder as a direct employee
under a written contract of employment .  If the
sponsor lawfully operates another business in
Australia the 457 visa holder can still work in
the business of an associated entity but, cannot
be directly engaged by that business. The key
question is, are they associated business
entities?  An associated entity  is defined in
Commonwealth of Australia Consolidated Acts,
CORPORATIONS ACT 2001 SECT 50AAA as shown
below 
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Associated entities One entity (the associate )
is an associated entity of another entity (the
principal ) if subsection (2), (3), (4), (5), (6)
or (7) is satisfied. This subsection is satisfied
if the associate and the principal are related
bodies corporate. This subsection is satisfied if
the principal controls the associate. This
subsection is satisfied if(a)  the associate
controls the principal and(b)  the
operations, resources or affairs of the principal
are material to the associate.
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This subsection is satisfied if (a)  the
associate has a qualifying investment (see
subsection (8)) in the principal and(b)  the
associate has significant influence over the
principal and (c)  the interest is material to
the associate . This subsection is satisfied
if (a)  the principal has a qualifying
investment (see subsection (8)in the associate
and(b)  the principal has significant
influence over the associate and(c)  the
interest is material to the principal.
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This subsection is satisfied if (a)  an
entity (the third entity) controls both the
principal and the associate and (b)  the
operations, resources or affairs of the principal
and the associate are both material to the
third entity. For the purposes of this section,
one entity (the first entity) has a qualifying
investment in another entity (the second entity )
if the first entity(a)  has an asset that is
an investment in the second entity or(b)  has
an asset that is the beneficial interest in an
investment in the second entity and has control
over that asset.
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Complicated yes?  Here is what is important to
know-are you operating multiple business
entities?  Your accounting or legal professional
can define for you whether or not they are
associated entities. Where are your 457
workers working?  Are they correctly directly
engaged by your sponsoring entity? Note, they can
still perform work for a different associated
entity.   It is important to follow these
guidelines, as should Department of Immigration
and Boarder Protection (DIBP) come knocking at
your door, they will expect compliance with these
guidelines.  If youre not sure you have it all
put together correctly, contact us for help, get
it sorted right and eliminate unnecessary
business risks!
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