Subclass 188

Management Skill And Eligible Investment Activity

The Subclass 188 Investor Stream is now closed to new applicants, but existing applicants must still meet strict criteria. This guide explains management skill requirements, designated investment rules, asset sources, losses, and residence obligations.

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High management skill in eligible investments is demonstrated by actively evaluating asset performance and making informed buy, sell, or hold decisions based on that evaluation.

For real estate specifically, the Department expects an annual portfolio performance report showing the percentage return for each property. Valuations must come from credible, independent sources — estimates from websites, personal inspections, or informal sources are not acceptable. Evidence cannot be created by the applicant or their family members.

While using a broker or financial adviser is permitted, the applicant must still demonstrate their own strategic decision-making — simply relying on an adviser's recommendations will not satisfy this criterion.

Active Management Is Required

Passively holding assets over time without regularly evaluating their performance against other investment options will generally not satisfy this criterion.

Long-Term Investments

Long-term investments can still demonstrate high management skill, provided the decision to retain them was an active, informed choice based on regular market evaluation — not simply inaction.

Management Skill: Qualifying Business Activity

To demonstrate high management skill in business, you must show responsibility over employees, strategic influence over profits, production, major expenditure, and staffing, and skills adaptable to the Australian business environment. In most cases, generating sufficient profit to fund a designated investment is accepted as evidence of high management skill.

However, if business value came primarily from asset appreciation rather than active management — such as property appreciation, prime real estate farms, or appreciated taxi licences — this will generally not satisfy the criterion.

Business and Investment Record and History

Under 188.243(1), you must demonstrate an overall successful record across your entire career. Officers review your full business and investment history using your application details and supporting documentation. Additional historical evidence is only required if officers have doubts about your overall success. Officers may consult Austrade or Invest Australia and will scrutinise more closely if any of the following apply:

A business or investment was sold for significantly less than its original value

Declining profitability or market share coincided with your involvement

An investment portfolio shows consistently declining returns

A business has a history of trading losses

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Trading and Investment Losses

Any losses must be fully explained, including contributing factors. Short-term losses will not automatically fail the criterion if recovery is likely. However, visa eligibility is generally barred if you have experienced bankruptcy, insolvency, receivership, or liquidation, or if recent trading losses are unlikely to recover. Officers consider external factors beyond your control, frequency of failures, and your history since any failure. If losses resulted from legitimate asset transfers, officers must be satisfied the business would otherwise have been profitable.

Designated Investment Criteria

A designated investment is a government security with a minimum 4-year maturity, guaranteed principal repayment, and no financial liability to the Commonwealth. It must be held in the applicant's name alone or jointly with their spouse or de-facto partner. The investment term is at least 4 years and up to 4 years and 30 days. A completed Form 1031 from the relevant Treasury Corporation is sufficient confirmation of the investment.

Ownership and Source of Assets

Under 188.246, designated investment funds must be generated through qualifying business or eligible investment activities, free from illegal sources, and personally owned and unencumbered — meaning no third-party claim exists over them. Officers may investigate the source of funds if concerns arise. Applicants must identify which assets will fund the investment (documented in the SALP form) and demonstrate those assets were liquidated for this purpose.

Funding the Designated Investment

You are not required to use the exact assets listed in the SALP, but alternative funds must be evidenced as legally owned, unencumbered, and accumulated through qualifying business or investment activity. Funds from gambling or pure financial windfalls are excluded. Inherited assets may be accepted depending on their proportion of total assets, how long ago they were inherited, and value added since. Any returns generated on inherited assets since receipt may still be counted.

Making the Designated Investment: The Process

The investment invitation is always the final processing stage. Officers issue a standard letter with Form 1031 — this letter must not imply visa grant is guaranteed. The applicant then has 28 days to provide evidence the investment has been made. The applicant contacts a State or Territory Treasury Corporation, selects an investment product, completes Part 2 of Form 1031, and submits it with the investment application. Faxed or scanned copies are accepted as interim documents, with originals required within 14 days.

The Treasury Corporation allots bonds or stock, issues a certificate, completes Part 3 of Form 1031, and returns it to the processing office. Case officers play no role in investment decisions and provide no advice on returns, performance, or tax. Once the completed Form 1031 is received, officers must finalise the application promptly. The visa allows the applicant to enter and remain in Australia for 4 years and 3 months from the date of grant.

Investor Stream: Intentions and Residence

Under 188.248(1), applicants must genuinely commit to continuing business or investment activity in Australia after the designated investment matures. A signed declaration in form 1397 satisfies this — a detailed long-term plan is not required. Under 188.248(2), you must genuinely intend to reside for at least 2 years in the nominating State or Territory. Officers consider your plans for establishing residence, existing links with Australia, and any exploratory visits made. Note that the permanent EC-888 visa requires proof of actually having lived there for at least 2 years in the 4 years before applying. The Schedule 7A points test also applies, scored across Parts 7A.2–7A.4, 7A.6–7A.10 (Part 7A.5 is reserved for the Business Innovation stream). All family members must satisfy health PIC 4005.