This program lets global investors buy a Canadian business — then hire themselves as foreign workers. Proposed changes will kill it, some say

Would be helpful to have a formal IRCC/ESDC evaluation of this “loophole” and the outcomes of those availing themselves of it (IRCC’s evaluation of the investor immigrant program resulted in the program being killed under the previous government given its limited contribution to the economy):

With years of experience managing a travel agency in Saudi Arabia, Asgar Khan spotted an investment opportunity in Canada’s home-care sector.

So he purchased a franchised senior-care agency and applied for a special government approval document — an owner/operator LMIA.

The document is designed to attract migrant investors who want to start a business in Canada then come to this country on a temporary work permit so they can run it.

Now, almost two years after he opened his first Right at Home Canada location in Ajax, Ont., Khan has bought the right to open a second outlet in Kingston. He says he has 57 employees, from personal support workers to nurses, between his two locations.

“The owner/operator LMIA is a great program for people who want to run their own businesses in Canada,” says the 38-year-old native of India, who is in Canada on a work permit. “The (foreign) investment can create jobs and be a huge economic boost for Canada, especially during the pandemic. … It’s a win-win for immigrants and Canada.”

However, some immigration consultants and lawyers say they fear proposed changes by Employment and Social Development Canada, the federal department that approves the LMIA, or labour-market impact assessment, will essentially kill the program.

In recent consultations with lawyers and consultants, federal officials said they’re considering changes that would include requiring that a business be bought and in operation for at least one year before a person could apply for a LMIA and that the owner/operator position be advertised to ensure all attempts are made to fill that job with a Canadian first.

That could mean someone like Khan would need to advertise for someone to do his job and only get approval for an owner/operator LMIA — and a work permit — if a Canadian can’t be found.

“Which investor in their right mind will invest hundreds of thousands of dollars in a business that they cannot oversee?” said immigration consultant Sharmila Perera, who has experience helping clients in the program.

“Why would a person invest so much money in a business in Canada if they are not allowed to come and work in their own business? They can’t run it from overseas.”

The program has become increasingly popular in recent years. The number of the owner/operator LMIA applications skyrocketed from 228 in 2016 to 505 last year. In 2019, there were 372 applications approved, according to Employment and Social Development Canada.

What makes the owner/operator LMIA attractive is that, in some ways, it offers a loophole in the immigration system.

It lets someone buy a business in this country, then essentially hire himself or herself as a temporary foreign worker. Then, they use that job offer in a bid to become a permanent resident.

Under Canada’s immigration system, applicants are awarded points for attributes such as language proficiency, educational achievements and professional experience.

Typically, work experience gained through self-employment is ineligible for points under the immigration point grid.

Yet someone applying for permanent residence can qualify for as many as the 200 bonus points through employment arranged by a Canadian employer.

Those with jobs under an LMIA qualify. They receive bonus points, ranging between 50 and 200, depending on the level of their positions. Senior managers and CEOs can claim the maximum points.

“To get 200 points, you need to be a senior manager with at least six or more employees, which will cost you ideally at least $250,000 to buy or start a business. Jobs must be created or saved, so it is perfect” as an economic stimulant during the pandemic, Immigration consultant Phil Mooney said.

An applicant’s fate can hinge on the job they’ve created for themselves.

“If the business fails before you get it, you are only a temporary foreign worker, so you have to leave Canada” because one would no longer have a job,” Mooney said. “Once you get your permanent residence, there are no terms and conditions to be met.”

Not everyone is convinced this is how the system is meant to work.

Immigration lawyer Ravi Jain, president of the Canadian Bar Association’s immigration division, said these individuals should be ineligible for the bonus points for permanent residence because they are essentially self-employed.

“The program has been heavily marketed around the world as a pathway for immigration. But people are being misled. I don’t think it is (a clear pathway). That’s a grey area,” Jain said, speaking on behalf of his own law practice.

“There is a tremendous amount of room for discretion (from immigration officials evaluating an application). I think they are responding to that and are essentially looking to kill the program.”

There are also concerns in some quarters that the program might be abused.

Immigration lawyer Colin Singer said he can see how people might abuse it, by buying a business and flipping it back a year later after they obtain the coveted permanent residency in Canada.

But Singer said the program works well for those applicants who do not fit squarely into other immigration programs.

“Every program, no matter what it is, is subject to abuse. Why? Because there are so many people who want to come to Canada and they are willing to do anything,” said Singer. “That being said, there are other ways to control it. You don’t kill the entire program.”

The new rules, in particular the need to advertise the jobs to for a Canadian first, might very well spell the program’s demise, Singer predicted.

“I don’t think people are going to be able to prove that the advertising wasn’t able to capture qualified managers (in Canada) for a gas station or a Starbucks. You are not talking about the highest skills that are needed.”

Employment and Social Development Canada said the owner/operator LMIAs is not a formal stream of the temporary foreign worker program. It would not say when the new changes would take effect.

A department spokesperson said the proposed changes are all part of its ongoing program reviews.

However, it appears the newly proposed, one-year operational requirement has already been used to assess some applications.

Sanya Kalra, 37, along with her husband, Sunny Kalra, bought a franchised pizzeria in Brampton with their own savings but her owner/operator LMIA was refused in October, the same date she received her building permit for the George Street location. She was told she’s only eligible after the shop is opened and in operation for a year.

The couple from India have already paid the bulk of the money but are unable to oversee the project themselves and must count on the help of her brother-in-law in Canada, who has a full-time day job himself in human resources.

“We have invested so much money in it. It’s just so difficult to manage it due to our different time zone here,” said Karla, who stays up in the wee hours to remotely administer and supervise the restaurant opening, now scheduled for mid-December. “It just doesn’t make any sense to me.”

Source: This program lets global investors buy a Canadian business — then hire themselves as foreign workers. Proposed changes will kill it, some say

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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