Carrying on Business in Canada is a general overview of, and introduction to, Canadian legislative and business considerations involving starting and operating a business, and investing in Canada.
Carrying on Business in Canada was written by lawyers from Heenan Blaikie with significant experience and knowledge in the area of the law which each lawyer covered. The commentary herein is intended to be a general overview and should not be regarded as advice or legal opinions of Heenan Blaikie and its practitioners.
Changes to the law can occur at any time. This document reflects the law at a moment in time, but depending on when the document is read, may not reflect recent changes in the Canadian legal and business systems. Qualified advice should be sought when considering investing or starting a business in Canada. Unless otherwise provided, all money amounts are in Canadian dollars.
2. About Heenan Blaikie
Heenan Blaikie is one of Canada's top national law firms. We deliver strategic legal advice and innovative business solutions under six broad sectors: labour and employment, litigation, business law, tax, intellectual property and entertainment. Our clients range from Canada's largest firms to regional start-ups, public institutions and government bodies. We also represent multi-national and international clients seeking to protect and expand their interests in Canada.
Our lawyers are regularly called upon to play key roles in policy setting, decision making and transactions of all kinds. Our expertise covers banking and financial services, construction, energy, entertainment and media, forests and mines, insurance, life sciences and technology, manufacturing and distribution, professional services, real estate, retail, sports, telecommunications and transportation.
The firm is now more than 550 lawyers and professionals strong with offices in Ontario, British Columbia, Alberta, Quebec, and internationally in Paris and Singapore.
3. General Information
3.1 Location and Area
Canada is located principally above the 49th parallel in North America. Canada is a constitutional, federal state consisting of 10 provinces and three territories. The country has an abundance of natural resources including forests, oil and gas, various mineral deposits, and water. Much of Canada is sparsely populated and a large percentage of Canada's population of more than 33 million people live within 160 km of the border with the United States. Ontario and Quebec, with approximately 12.8 million and 7.7 million people respectively, are the two largest and most populous Canadian provinces. The powers of the federal and provincial governments are set out in the Constitution Act, 1867. Matters that cross provincial borders such as immigration, banking, the national currency, international trade and intellectual property are within the exclusive jurisdiction of the federal government. The provinces are responsible for private property rights, commerce, education and a number of social programs. The political head of the government of Canada is its Prime Minister. The system of government is similar to that of the United Kingdom, in that the House of Commons is the source of legislative authority in Canada. The Prime Minister is the head of the political party with the most members in the House of Commons. The Supreme Court of Canada is the country's last court of appeal. Below it are two separate court systems, that of the federal government and that of the provincial government, each with its own trial and appellate divisions. Each court system hears cases on issues within either the federal or provincial jurisdiction, although all criminal matters are heard in the provincial courts. The Supreme Court of Canada is the final court for both the federal and provincial court systems.
3.2 Population and Language
Canada has two official languages: English and French. Although most Canadians consider English their mother tongue, French is the mother tongue of most people living in Quebec. The federal and provincial governments have a number of legislative initiatives to ensure the use of both English and French is promoted in Canada. This includes the general requirement to display all information on retail product labels in both English and French. Quebec has its own legislative initiatives promoting the use of the French language, including rules relating to the use of French in business.
Canada's currency is the Canadian dollar. As of June 24, 2011, the exchange rate of one Canadian dollar is set out in the following table (current information on exchange rates is available at www. bankofcanada.ca):
4.1 Work Permits And Permanent Residency
4.1.1 In General
Immigration to Canada is generally overseen by the federal government and administered under the Immigration and Refugee Protection Act. Certain provinces, particularly Quebec, have control with respect to the selection of immigrants. Generally, people who are neither Canadian citizens nor permanent residents of Canada are not allowed to work in Canada without obtaining a work permit.
Generally, hiring a foreign worker in Canada requires the employer to obtain a "labour market opinion" from Human Resources and Skills Development Canada (HRSDC); the worker must also apply for a work permit, either to a Canadian visa office or at a port of entry. There are specific exemptions from the requirements of obtaining a labour market opinion such as where Canada is a signatory to an international agreement, such as the General Agreement on Trade in Services (GATS) to which most European countries are signatories, or the North American Free Trade Agreement (NAFTA) to which both the United States and Mexico are signatories. In addition, there are exemptions from the requirements of obtaining work permits for certain categories of individuals such as "business visitors."
4.1.2 Business Visitors
"Business visitors" are people who stay in Canada on a temporary basis, They come to Canada principally to attend business meetings, establish business contacts, sell foreign manufactured goods, provide after-sales service, supervise installation of specialized merchandise purchased or leased outside Canada, or provide familiarization or training services to prospective users and sales persons for goods and services manufactured and developed outside of Canada.
Business visitors are employees of a foreign enterprise who continue to be paid by that entity throughout their time spent in Canada. At the completion of their visit to Canada, these individuals return to their employment with the foreign entity. Business visitors can facilitate their entry into Canada by carrying a letter from their employer confirming their employment with the foreign entity. This letter should set out the reasons for their visit, and certify that their remuneration will remain outside of Canada and that the profits of the company will accumulate outside of Canada. Throughout Canada, the federal government has set up Temporary Foreign Worker Units (TFWU) to pre-clear certain types of applications, including business visitors.
Business visitors may request a Visitor's Record to facilitate multiple entries into Canada, particularly if they have to spend several days a month in Canada. As a general rule, business visitors stay in Canada for less than 90 days on each visit.
4.1.3 Intra-Company Transfers
People in certain categories, such as senior managers, senior executives and individuals with specialized knowledge, may be transferred from a foreign enterprise into Canada. Previously, these individuals were required to spend at least 25% of their time in Canada but this restriction was eliminated in July 2007 as a result of consultation with employers. Applications for work permits for senior managerial or executive intra-company transferees can be granted initially for up to three years. Previously there had been no time cap on the number of renewals that could be obtained, but a cap of seven years was implemented as of July 2007. Specialized knowledge workers are initially issued permits for one year and have a cap of five years.
To qualify as an intra-company transferee, the individual must have been employed by the foreign entity for at least one of the three preceding years and the entity's business must be international in nature. To qualify as a senior manager, the individual must supervise and control the work of other managers and supervisors or manage an essential function within the organization and have the authority to hire and fire individuals. To qualify as an individual with specialized knowledge requires a demonstration that the worker possesses an advanced level of knowledge or expertise critical to the well-being of the enterprise in Canada. This cannot be knowledge generally held throughout the industry. Employers who seek to hire foreign workers from visa exempt countries are required to have these types of applications pre-cleared at TFWUs in British Columbia, Alberta, Ontario, Quebec and New Brunswick. Fax confirmation is provided to show the confirmation of eligibility of exemption from the requirement of obtaining a Labour Market Opinion from the TFWU. If the foreign worker is from a country that requires a visa to enter Canada, an application for the work permit is made to a Canadian consulate and the Consular Officers in turn may apply to the Temporary Foreign Worker Unit for confirmation of eligibility from the requirement of obtaining a Labour Market Confirmation. If the foreign worker is from a visa-exempt country, the application for a work permit may then be made at the portof- entry. Some types of employment and residents of more than six months of certain countries also require the foreign worker to obtain a medical examination prior to entry to Canada.
Both NAFTA and GATS specify occupations that are exempt from the requirement to obtain a labour market opinion. The list of exempted professions under NAFTA, which is far more extensive than under GATS, includes more than 60 occupations such as management consultants, accountants, computer systems analysts, hotel managers, physicians, dentists, and urban planners. These individuals must have the necessary credentials and, in some instances, will need to be licensed to practice in Canada. Under NAFTA, a work permit may be issued for one year, and may be renewed; under GATS, the maximum period is three months or 90 consecutive days in any one year period.
4.1.5 Labour Market Confirmation
Where there is no applicable exemption, an application for labour market opinion / confirmation must be made by an employer to HRSDC. In most instances, the employer must establish that it has attempted to hire a Canadian citizen or permanent resident and that an exhaustive search has not revealed a suitable candidate. For example, these types of applications generally see an employer advertising the position nationally on the Canada Job Bank and in a relevant industry publication for varying periods of time depending on the National Occupation Classification of the occupation, as an application for a work permit can be made once the confirmation is obtained or concurrently. As a result of recent changes to government policies effective April 1, 2011 a Labour Market Confirmation is now capped at four years. A foreign worker who has a work permit pursuant to a Labour Market Confirmation will only be permitted to work in Canada for four years. At the expiry of the four year period the foreign worker will be required to remain outside Canada for four years before being permitted to reapply for a Labour Market Confirmation.
4.1.6 Work Permits
Applications for work permits must either be made at a Canadian visa office outside of Canada or in some circumstances may be made directly at a port of entry. Applications made at a Canadian visa office may be made by mail or in person. Individuals from certain countries that are not visa exempt must apply for the work permit at a Canadian Consulate as they also require visa (single or multiple).
4.1.7 Permanent Residence
There are several ways for a foreign national to obtain the status of permanent resident in Canada. The most used category is that of "skilled worker," where an individual is scored based on certain criteria including education, age, work experience, job classification, languages spoken and ties to Canada. Provided the individual's score meets the threshold, he or she may apply for permanent residence. In more recent times the federal government introduced a new category entitled the Canadian Experience Class. For Individuals to qualify in this category they must either be a temporary worker or a foreign student who has graduated in Canada. To qualify, a temporary foreign worker is required to have at least two years of full-time (or equivalent) skilled work experience in Canada or be a foreign graduate from a Canadian post-secondary institution with at least one year of full-time (or equivalent) skilled work experience in Canada. Further, individuals must apply under this category while working in Canada or within one year of leaving their job in Canada. In addition to the skilled worker category, individuals can become permanent residents in Canada under a business immigrant category, which includes self-employed persons, entrepreneurs and investors. Each of these categories has a different set of criteria. Once an individual has been a permanent resident of Canada for a period of three consecutive years, the individual may apply for citizenship in Canada provided residence requirements have been met.
4.1.8 Province Nominees
Most provinces in Canada have an agreement with the federal government allowing them to nominate foreign workers who wish to settle in their provinces. These programs are referred to as Provincial Nominee Programs (PNPs). For example, Alberta's PNP is employer-driven and targets skilled and select semi-skilled professions as determined by the province. The province approves these individuals and the federal government then expedites their permanent residence application. PNPs are given priority processing to other types of permanent residency status. An example of a semi-skilled worker category would be in the food and beverage processing industry.
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