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Owner/Operator LMIA

Owner/Operator LMIA

Owner/Operator LMIA

Owner/Operator LMIA is a special class of applications within the TFWP whereby a self-employed/qualified individual wishing to enter Canada can do so by establishing or purchasing a business. A foreign national would be an Owner/Operator if they establish that they have a controlling interest in the business and cannot be fired/dismissed (only answerable to themselves). Controlling interest according to guidelines and policy can be established by either:

  • Purchasing a business and be involved in its day-to-day operations (being a sole proprietor),
  • By being the majority shareholder (holding at least 50.1% shares) or
  • By providing an official document confirming that they hold the majority interest (even if they do not hold 50.1% of total shares).

There is no specified minimum percentage of shares to be held by a foreign national to be considered an Owner/Operator. In cases, where there are multiple owners of a business, the largest shareholder or the equal shareholder designated as the “employer” must apply for LMIAs to Service Canada for the other co-owners as “workers”. Individuals who only receive shares (less than to establish the controlling interest) as part of a compensation package are not subject to the term Owner-Operator. The foreign nationals must demonstrate that they have the controlling interest prior to submitting their application and for the duration of their employment in Canada.

The burden of proof in owner/operator LMIA application is on the foreign national/investor to provide information/documents to prove their shareholding/ownership status.

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Key scenarios and considerations in owner/operator LMIA application

New start-up business

This scenario is applicable to a foreign national where the individual is 100% owner of a start up business not in operation in Canada yet but dependent on a positive LMIA and Work Permit (WP). The owner/operator guidelines considerations state that the TFW can be considered owner/operator for the purposes of the LMIA if they can demonstrate that they have considerably prepared to open and operate the business (e.g., have incorporated the business, applied for a business license, entered into a lease agreement, securing contracts, etc.), have a viable business plan, have the intent and plan to retain/hire Canadian citizens and permanent residents within a reasonably short timeframe.

Complete purchase of a business

When a 100% purchase has been completed and documentary evidence is provided (e.g., share purchase agreement, share certificate, notice of articles, central securities register, shareholding/ownership documents, CRA business number), reflecting purchase/ownership change application, the burden of proof is less onerous. However, requirement on creation or retention of Canadian jobs and knowledge transfer to Canadians in the form of transition plan, still needs to be satisfied.

Pending complete purchase of business

When the current owner intends to sell 100% of the Canadian business to the foreign national/ investor, but completion of purchase/ownership change is contingent on an LMIA and WP, immigration authorities will broadly assess if the anticipatory project is genuine. Key factors include how advanced the transaction is (e.g., signed share purchase agreement, monies in escrow), how sound the foreign employee/investor’s business plan is to acquire 100% ownership the shares of the business as principal owner are and, whether the intent to hire or retain Canadian workers can be established? The existing owner could also submit the LMIA application to hire the foreign national/investor into a specific management position in the business pending purchase, in which case the regular program requirements will apply. The investor can work in that position until the purchase is completed. Once the purchase takes place in the future, the new owner as employer will submit a new LMIA to support an owner/operator management-based work visa/permit.

Partial purchase of a business

When the foreign national/investor has partially purchased a Canadian business but is still not a 100% owner, then the officer will assess who has the largest share in the business to determine if the investor be considered a principal owner or co-owner. Another important consideration is if existing owners/directors will continue to be involved in the business operation and management, why the foreign national’s involvement is required? Is the transaction genuine or in other words is their reasonable employment need?

Advantages of owner/operator LMIA

  • The advertisement requirements to advertise the position to the Canadian labour market is exempted under owner/operator provisions.
  • The processing time for owner-operator LMIA application is less but it varies according to the circumstances.
  • There is no requirement of having a certain total net worth or making any non-guaranteed investment in a Canadian government designated investment fund.
  • Foreign national/investor can apply for a work permit based on positive owner/operator LMIA.
  • Owner/operator LMIA award 200 points under comprehensive ranking system (CRS) and, foreign national/investor can apply for permanent residency through express entry program.

LMIA FAQ’s

If there is a minimum investment requirement for Owner/Operator LMIA?

The owner must be financially prepared to support start up operations, including but not limited to cover expenses associated with the office lease, salaries and wages, marketing, and cost of goods or services. There is no set threshold of what is considered a “minimum investment” for the Owner/Operator LMIA. The officer will assess whether the available funds are sufficient with the view to business and financial forecast detailed in the business plan. 

For a “running” business that is operating for than a year, the owner will require to provide T2 Schedules 100 and 125 of the tax returns. Business profitability is not as important and its operation, and, consecutively, what is even more important is the ability to employ Canadians, pay taxes, and bring economic benefits to Canada.

Can I buy a business in Canada while on a tourist visa?

Yes! You can purchase 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 you buy as well as the province in which it will operate.

Do I have to relocate to Canada once I purchase a business in Canada?

As a business owner, 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 outside of Canada.

Do I have to receive a salary from my business in Canada under the Owner/Operator LMIA based Work Permit?

Under the Owner/Operator LMIA based work permit, as a manager of your business in Canada, you must pay yourself a salary that meets the Canadian median wage standards.

Can I buy a business with a partner in Canada and get a work permit under the Owner/Operator LMIA Work Permit?

Yes! You can buy a business with a partner or buy shares in an existing business in Canada. However, the partner who has at least 51% shares in the business can only apply for the Owner/Operator LMIA and receive a work permit to manage the Canadian business. The minority partner (if not a Canadian citizen/permanent resident) will have to apply for a regular LMIA if he/she wants to relocate to Canada as a business partner as well.

Does the Owner/Operator need to be in Canada to apply for LMIA?

No! However, if it is your second application for Owner/Operator LMIA to extend a work permit or support application for permanent residence, then you may need to provide proof of your work in Canada.

What type and size of business should I select if I want to buy a business in Canada to further apply for Owner/Operator LMIA?

The Owner/Operator program generally exists for small and medium business owners. It does not refer to individuals who simply receive shares as a compensation package. The size of a business can be defined in many ways, by the value of its annual sales, annual gross/net revenue, the size of its assets or the number of its employees.

Do I have to prepare a business plan for Owner/Operator LMIA application?

It is not mandatory to submit a business plan if the business is in operation since many years. Business plan is required for start up businesses.

Can I buy shares in the running business & apply for the Owner/Operator LMIA?

Yes! This is possible, but make sure that you buy at least 51% of shares in the running/existing business.

Do I need to commit to hire Canadians?

One of the primary objectives of the Owner/Operator LMIA program is to create job opportunities for Canadians. Your inability to meet your hiring commitment plans may negatively affect your work permit extensions and/or permanent residence applications in the future.

Can I work for another company while running my own 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.

Can I sell my business after I receive my permanent residency?

When supporting your permanent residency application, your company must guarantee to IRCC that your position will remain 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.

How Can X can help?

  • We can help you in identifying a suitable business to purchase. We help you form the corporation and start the buying of business process.
  • We can help you in preparing a sound business plan.
  • We can help you for applying LMIA application.
  • Once LMIA is approved we can help you in your work permit & permanent residency application.

If you need professional help in LMIA application!

Simply fill our online form and we will contact you to discuss your options!