Last Updated on November 14, 2017 by Steven Meurrens
The following is an article that I wrote for The Canadian Immigrant.
It is generally understood that small businesses are the bedrock of the Canadian economy. The entrepreneurs who start them are often considered the lifeblood of the Canadian economy. Unfortunately, it can be difficult for foreign worker entrepreneurs in Canada to use their Canadian business experience to qualify for economic immigration programs. Prospective immigrants who are self-employed or run small businesses in Canada, or want to, need to understand the immigration consequences of doing so in order to properly structure and time the establishment of their companies.
Self-employment and immigrating
Many of Canada’s economic immigration programs restrict or penalize Canadian self-employment. For example, one of the basic eligibility requirements of Canada’s largest economic immigration program, the Canadian experience class, is that applicants have at least 12 months of skilled work experience within three years of applying to immigrate. It specifically excludes self-employment from being eligible experience.
In the Express Entry application intake management system, prospective immigrants to Canada are ranked against each other. People can get points for a variety of factors, and points for Canadian work experience can be especially valuable. However, any experience that was gained through self-employment is ineligible for points.
Incorporating isn’t the answer
Many individuals assume that if their business is incorporated then they will not count as being self-employed. However, it is not this simple.
Immigration, Refugees and Citizenship Canada (IRCC) adopts a holistic approach to determining whether someone is self-employed. Relevant factors include: the degree of the worker’s control or autonomy in terms of how and when work is performed; whether the worker owns and provides their own tools, the degree of financial risk assumed by the worker; whether the worker is free to make business decisions that affect his or her ability to realize a profit or incur a loss; and other relevant factors.
The IRCC website specifically notes that individuals who own substantial ownership and/or exercise management control of a business for which they are also employed are generally considered to be self-employed. So simply incorporating a business does not shield small business owners from having their Canadian work experience determined ineligible for immigrating.
Options for the self-employed
Because of this, the best advice for temporary foreign workers in Canada who are employees and who wish to start a business is to wait. We once represented a Working Holiday Program participant who worked as a carpenter earning $25 an hour. He wanted to start his own business. We told him to wait until his permanent residency was approved. He did, got his PR status and now runs a multi-million dollar business employing more than 30 people. Incredibly, Canadian immigration requirements would have made his immigration very cumbersome and uncertain had he started his business while on a work permit.
However, foreign workers in Canada who own a small business should not be completely discouraged. There are many options to consider.
First, the federal skilled worker class permits self-employment. This means that self-employed individuals can still qualify for Express Entry.
Second, while Canadian work experience that is self-employment is not eligible for Express Entry points, small business owners can qualify for bonus points through qualifying arranged employment. They may also apply for recruitment exempt owner-operator Labour Market Impact Assessments, which also result in additional points.
Third, many provincial nomination programs contain entrepreneur programs, which vary from province to province.
Finally, the start-up visa allows certain businesses who will be participating in incubators or receiving venture capital funding to be eligible to immigrate.
None of these options, however, is completely satisfactory. What is further confounding is that while a foreign worker’s entrepreneurial experience in Canada is ineligible for Express Entry points, their foreign self-employment work experience is. As the Government of Canada looks to encourage small business growth, they may wish to address this paradox.