Owner-Operator LMIA Program
LEARN HOW TO BECOME A PERMANENT RESIDENT AND/OR CANADIAN CITIZEN BY OWNING A BUSINESS IN CANADA
Table of Contents
Chapter 1 - Why Do Business In Canada?
Chapter 2 - How Does It Work?
Chapter 3 - Own a Business in Canada
Chapter 4 - Apply for an LMIA
Chapter 5 - Get a Work Permit
Chapter 6 - Convert Your Work Permit to Permanent Residence
Chapter 7 - Getting the Canadian Citizenship
Chapter 8 - List of required documents
Chapter 9 - Frequently Asked questions
Chapter 1 - Why Do Business in Canada?
Canada is home to an ever-increasing population and a growing economy, making it the perfect location for expanding businesses. Canada, as a nation, encourages foreign investment and embraces business immigrants. Foreign companies can take advantage of various incentives offered in the country’s open and welcoming environment. Canada has much more to offer you beyond beautiful nature and free premium healthcare and education.
Canada is consistently rated by Forbes Magazine as one of the most business-friendly countries in the world, ranking it 6th on its list of the Best Countries for Business in 2019. With the recently signed Canada-USA-Mexico Agreement (CUSMA, the new version of NAFTA), businesses in Canada maintain its extensive access to the entire US market.
- Canada has a combination of attractive advantages which are not available everywhere else.
- Low Corporate tax rates and open for business policies
- Highly skilled workforce
- Wide access to the US, Mexico, Asian and European markets along with other free trade agreement countries
- Dynamic economy with a market of over 30 million consumers
- Sophisticated infrastructure and a modern transportation network
- Very low start up and operating costs for companies
- One of the strongest and most secure globally recognized banking systems
Together, these factors are why Canada is considered to be one of the most profitable places in the world for international businesses and foreign investors.
- Federal state. Parliamentary democracy. Constitutional monarchy. Economic, legal and social stability. Dual citizenship is allowed.
- 37. 59 million (Statistics Canada 2020)
- Official languages: English and French
- 321,000 new immigrants every year
- Average temperature in Toronto, Ontario:
- Spring, Summer and Fall: 17-26 °C (April-October 6 months)
- Winter: - 5.5°C (December-February 3 months
QUALITY OF LIFE
For the 4th year in a row, Canada is ranked the top country to live in when it comes to quality of life, by the U.S. News & World Report. It was recently ranked the 2nd most beautiful country in the world and is home to 3 of the world’s most livable cities: Calgary, Toronto and Vancouver.Back to Table of Content
Chapter 2 - How Does It Work?
Once you decide that Canada is the place for you, you can choose one of the immigration pathways available to you to become a Canadian citizen. One of the strategies could be citizenship through ownership of a business in Canada.
Here is how it works
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Chapter 3 - Own a Business in Canada
So, the first step in this pathway is to own a business in Canada. When it comes to owning a business, you have 3 options:
- Buying an existing business in Canada
- Buying a franchising
- Establishing your own business
Option 1: Buying an existing business:
The largest advantage is having an existing business with established customer base, defined operating expenses, and fully trained employees.
Requires large upfront investment. In addition, there is always a risk that you made a wrong investment decision and now stuck with obsolete inventory, uncooperative employees or outdated equipment.
Canadian authorities, including immigration officers, feel more comfortable dealing with a business that already has proven track record and has been operational for at least 1 year. It is easier to pass the genuineness test when it comes to applying for permanent residence.
Good businesses that generate profits usually worth at least $200,000 and above. Where to find businesses for sale:
Realtor.ca – Commercial section: https://www.realtor.ca
When purchasing an existing business, hire a team of professionals — a broker, accountant and a lawyer — to help you to identify a good business, review and verify all the relevant information about the business you’re considering. When due diligence is done, you’ll know just what you’re buying.
Option 2: Buying a Franchise:
Usually a well-known brand name, a proven system of operation and training in how to use it. Foreign entrepreneurs can avoid a lot of the mistakes that new entrepreneurs make in the first years of operating business in Canada, because the franchisor has already established a recognizable brand, customer base and has perfected daily operations through trial and error.
Franchising, however, is not for everyone. There may be strict operational requirements and specifications of a franchised business; there is also loss of control, a binding contract (usually for 5 years) and the franchisor’s problems may also become your problems.
Like with the existing business, Canadian authorities, including immigration officers feel comfortable dealing with franchising businesses. It is easier to pass the genuinenes test when it comes to applying for permanent residence.
In terms of capital investment, your franchise fee will be determined by the profitability of the business. Be prepared to invest minimum $150,000 if you plan to aquire a franchising company in Canada.
Where to Find Businesses For Sale:
Realtor.ca – Commercial section: https://www.realtor.ca
Carefully review the franchase contract; Select franchases that would refund your deposit if your immigration application is not approved (like INS stores).
Option 3: Establishing your own business:
Starting from scratch requires less capital investment than buying an existing business.
Starting from scratch presents some distinct disadvantages for foreign investors, including the difficulty of building a customer base in Canada, marketing the new business, hiring employees and establishing cash flow ... all without a track record or reputation to go on.
It is much more difficult to prove genuineness with start-ups, and strong evidence is required to show business legitimacy. In addition, the company should be just about operational to get the LMIA was approved, including having an office and customers.
In terms of capital investment, you must demonstrate a minimum of $100,000 in the corporate account before applying for the LMIA. In addition, you must rent an office/ warehouse and commit to hire at least 1 employee within the next 12 months.
Invest in a very well prepared business plan with pro forma statements and research showing how your business is expected to lead to positive local labour market impacts and contribute to the Canadian economy.Back to Table of Content
Chapter 4 - Apply for an LMIA
Apply for an LMIA as an Owner-Operator
Once you have established a business in Canada (either by buying an existing business or starting your own from scratch), the next step is to apply for the Labour Market Impact Assessment as an owner-operator of the business in Canada. This step is essential, as you can only be issued a work permit to operate
your business in Canada once you receive a positive decision from Service Canada for your LMIA application.
- Foreign applicants must own more than 51% of the shares of the company in Canada;
- The company in Canada must be operational or close to operational (for startups);
- The company must have sufficient funds to pay the owner’s wages and operate business in Canada (recommended number – minimum $200,000).
Conditions of the program:
As a business owner of a company in Canada, you must be ready to commit to the following conditions:
- You must pay yourself a salary in Canada that meets the median wage standards for your proposed position (on average, around $50-$60 per hour);
- Hire at least 1 Canadian or retain the existing staff;
- Participate in the active management of the company and perform the duties of your position.
- Work only for your own company.
IMPORTANT: The Canadian government can audit your company for compliance at any time and there are strict penalties that can be imposed for violation of the conditions of the program.
LMIA Process & Timelines
Processing times are highly specific to the office that processes your LMIA application. Below are just estimated timelines for the LMIA application:
All applicants applying for an LMIA will be interviewed by the LMIA officer regarding the intended business in Canada and what employment opportunities will be created for Canadians as result of their company’s operations in Canada.
Do not feel intimidated, by the time of the interview, you will be fully prepared for the interview and will attend the interview with you.Back to Table of Content
Chapter 5 - Getting a Work Permit
Getting a Work Permit
Once you receive a positive decision on your LMIA application, you can apply and receive a work permit to work in Canada as a business owner. Initial work permits for new companies are usually issued for 1 year, extendable up to 5-7 years (depending on the position). At the end of your first work permit, your office must have at least 1 Canadian employee.
Your family members can also accompany you to Canada as well. Your spouse will have an opportunity to work in Canada and your children can attend public schools for free.
As a an owner-operator of a business in Canada, you can get access to the following benefits:
- Free access to premium health care which is available to all Canadians;
- Free schooling for children (except post-secondary education);
- Open work permit for a spouse;
- Ability to apply for permanent residence as soon as the company is established & operational and once a positive LMIA is issued.
Chapter 6 - Becoming a Permanent Resident
Becoming a Permanent Resident
There are a number of options and pathways to transition from work permit to permanent residency in Canada. However, the most popular one is the “Executive Express Entry” program (EEE), which allows owners, executives and professionals, who hold senior managerial positions, to apply for permanent residency through a job offer from their very own company in Canada.
There are a number of requirements that must be met to become eligible for the Executive Express Entry pathway to permanent residency.
Applicants must meet the following requirements to apply for permanent residency:
- Have at least 1 year (preferably 2-3 years) of work experience in a senior managerial or executive capacity;
- Own or control a company in Canada that is actively engaged in business and is financially capable of paying the applicant’s reasonable Canadian wages;
- The applicant must hold senior executive or managerial position at the Canadian company (employer);
- The Canadian company must have a physical location (commercial office) and employ at least 1 Canadian citizen or permanent resident;
- The applicant must score at least 6 for each band in of the IELTS language test, or 7 for each band of the CELPIP test.
- Meet other requirements of the Express Entry Program, such as education and etc.
Chapter 7 - Becoming a Canadian Citizen
Becoming A Canadian Citizen
Once you become a permanent resident of Canada, and after having lived in Canada for 1095 days, you can apply for Canadian citizenship. In order to become a Canadian citizen, you must meet the following requirements:
- Be a permanent resident of Canada
- Have physically spent 1095 days in the last 5 years in Canada
- Have filed your annual income tax returns for the past 3 years
- Pass a basic test on your rights, responsibilities and knowledge of Canada
- Prove your basic language skills
Chapter 8: Required Documents
Documents Required from the Business Owner
- Passports, IDs
- Educational documents
- Family members’ personal documents
- Copies of previous visa applicaions to Canada (if any)
- Bank statements (personal and/or corporate) showing sufficient funds
- Proof of investment/funds in the Canadian company
- Any other documents showing managerial/business ownership experience
- Any marketing material for the company in Canada (if any)
- Agreement of Purchase & Sale of your business in Canada
- Business ownership documents (shareholder agreements, share certificates etc.)
- A very well-prepared business plan
- An attestation from a CPA about the company’s good financial standing,
- Canadian company’s registration documents
- Proof of ownership documents
- The CRA business number account registrations (GST/HST and payroll) for the company;
- Business registrations, licenses, permits, etc. (where applicable);
- Commercial lease agreement;
- Employee records & tax filings for the past year (where applicable);
- Services agreements, purchase orders (where applicable);
- Franchising agreements and licenses (where applicable); and
- Anything else that might be particular or needed by the business in its industry for it to undertake operations in Canada.
- Some documents may not exist or may be difficult to obtain. Discuss this list with your lawyer.
- Some applicants may be required to provide extra documents based on their unique circumstances.
Chapter 9 - FAQ
Our immigration lawyers will now answer some of the most frequently asked questions about Owner-Operator program and more.
Please note that this is not legal advice and that all the information provided here is for general guidance only. If you wish to discuss your particular situation, please get in touch with us to book a consultation.
Can I buy a business in Canada as a foreigner while on a tourist visa?
- Yes, it is possible to own a business in Canada while being on a tourist visa. However, you will have to meet certain requirements and the laws differ depending on the type of business as well as the province in which it will operate. Our team can assist you in buying an existing business in Canada or establishing your business from scratch.
Do I have to relocate to Canada once I purchase a business in Canada?
- As a business owner, working in Canada with a valid work permit, it is expected that you will actively manage your business in Canada. Therefore, your presence in Canada is generally required. However, this does not mean that you cannot travel while working in Canada, especially if your business requires extensive traveling.
Do I have to pay myself a salary? If yes, how much?
- As a manager of your business in Canada, you must pay yourself a salary that meets the Canadian median wage standards (around $58/per hour for senior executive roles). What this means is that you will be responsible for paying all payroll deductions to the Canadian tax authorities of approximately $3,000 - $4,000 (per month).
Can I buy a business with a partner in Canada?
- Yes, you can buy a business with a partner or buy shares in the existing business in Canada. However, please keep in mind that only 51% owner of the business can apply for the Owner- Operator LMIA and receive a work permit to manage the Canadian business. The minority partner (if not a resident in Canada) will have to apply for a regular LMIA if he/she wants to relocate to Canada as a business partner as well.
Can I buy shares in the existing business and apply for the Owner-Operator LMIA (and get permanent residency later on)?
- Yes, this is possible, but make sure that you buy at least 51% of shares in the existing company to benefit from the Owner-Operator LMIA program. Also, make sure that the company has been actively engaged in business for at least 12 months.
Do I have to prepare a business plan to support my O/O LMIA application?
- It is not mandatory to submit a business plan with your application for a work permit. However, we recommend having a business plan if your company is new or has not been active for the past 12 months.
Do I have to commit to hiring Canadian residents/citizens? What if I am not able to meet my hiring commitment?
- One of the primary objectives of the program is to create job opportunities for Canadian residents and citizens. Therefore, your inability to meet your hiring commitment plans may negatively affect your work permit extensions and/or permanent residence applications. Therefore, we recommend committing to hiring at least one Canadian employee to stay compliant with the objectives of the program.
Do I have to present a performance report to the Canadian immigration authorities to apply for permanent residency?
- There are no performance reports, however, 50% of companies that have received a positive LMIA decision are audited by the IRCC for compliance. Therefore, it is very important to stay compliant with the conditions of your LMIA approval (including wages payment) and keep detailed records.
- Also, one of the requirements that owner-operators must meet while applying for permanent residence is the genuineness of the job offer, since the offer of employment is coming from their own company. To pass the genuineness test, the applicants must demonstrate that their company is actively engaged in business and that the owner of the company is indeed employed at the company in the senior executive role.
Can I work for another company while running my business in Canada?
- No. Your work permit will be limited to your company in Canada, which means that you cannot work for any other company.
What if my Canadian company is not profitable in the first year?
- There is no legal requirement to be profitable. We all know that it takes time to build a profitable company.
- However, your company must be actively engaged in business, which means it must be offering services or goods to its customers in Canada or abroad. Also, your company must have a physical location (office or warehouse) and employ at least one Canadian employee.
Do I need to provide language test results to get a work permit under this program?
- Business owners are generally not required to provide any proof of language skills. However, if they wish to transfer key personnel to Canada under this program, such employees may be required to provide English or French language test results to prove their suitability for the position in Canada.
Can my work permit be refused even if I get LMIA approved?
- There is always a possibility of rejection of your permanent residency application due to various reasons, including criminality, medical inadmissibility, failure to meet the language requirements, etc. However, if you stay compliant with the requirements of the program and plan your relocation to Canada strategically, there should be no issue in getting your permanent residency approved by the IRCC.
What is the success rate of this program?
We regularly request official statistics from the government of Canada regarding the approval rates for various immigration programs. The latest statistics for 2019 looks as follows:
- O/O LMIA applications: approval rate - 95%
- Work Permit (LMIA-based): Approval rate varies, depending on the consulate/embassy handling your case. On average, we see a 70% approval rate. Please contact us to get specific statistics for your country.
- Permanent residence applications (with job offer): 80%-85%
Will you refund money if my work permit is refused?
- Unfortunately, we cannot reimburse your money if your work permit application is rejected. We get paid for our work, not for the result. Although we are ambitious and results-oriented, the ultimate decision-maker is the Government of Canada. What we do guarantee you is that with our vast experience in this area, we will prepare the strongest application possible designed to meet the criteria required by the IRCC.
Can I sell my business after I receive my permanent residence?
- When supporting your permanent residence application, your company must guarantee the IRCC that your position will be available to you for at least 1 year after you become a permanent resident of Canada. Although there is no specific limitation on selling your business, the IRCC may interpret your sale of the business as a breach of undertaking by your Canadian business.
Is it possible to obtain permanent residency in Canada if I do not speak sufficient English or French?
- In general, all applicants for permanent residence in Canada must possess sufficient language skills as set by the IRCC. However, in exceptional situations when applicants have strong ties to Canada and can demonstrate successful establishment in Canada, there is an opportunity to apply for permanent residency through other programs. The success rate in these cases is usually 60%.
Does your law firm help with company establishment in Canada?
- Yes, we assist our clients at every stage of the process starting with company registration, business plan preparation, setting up bank accounts, securing Canadian Directors, and handling immigration applications (from work permit to permanent residency) for our clients and their family members. We also provide guidance and assistance with compliance audits and entry interviews (if required) upon arrival in Canada.
What is the payment plan for your fees? Do you offer a discount for your fees?
- As licensed Canadian lawyers we follow the rules set by the Law Society of Ontario and charge the full retainer amount upfront. The entire amount will be deposited into our trust account and you will be billed once we complete working on your file.
- As for discounts, we deem our fees as reasonable given the amount of work we put into each file and the quality of service we deliver. All business immigration applications are complex, and our prices fairly reflect the value of our work.
Do you have success stories, and can you share contacts of your former clients, so we can talk to them?
- As licensed lawyers, we are obliged by law to keep all our client’s information confidential, including their names and the outcome of their applications. The LSO rules prohibit us from sharing any of our clients’ confidential information with third parties. You can review our website and read all the reviews on Google and other sources that you trust to get reviews on our services.
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