Business Legitimacy in Canadian LMIA Applications

business legitimacy in LMIA

Maya, a 31-year-old woman from Indonesia, excitedly accepts a job offer in Canada. However, she learns her employer needs a positive LMIA first. To get this, they must prove business legitimacy. Eager to understand, Maya sits down with a cup of tea and starts researching. Each website she visits offers pieces of the puzzle. Still, she feels unsure about the exact requirements. Determined, Maya decides to dive deeper into the details. Join her journey as we explore the essential documents needed for business legitimacy in Canada.

Understanding LMIA

A Labour Market Impact Assessment (LMIA) is crucial for hiring foreign workers in Canada. Most employers need a positive LMIA before their workers can apply for a work permit. This assessment ensures that hiring a foreign worker will not negatively affect the Canadian job market. For a deeper exploration of LMIA types, refer to my other article: LMIA Types in Canada for Employers and Workers. Understanding LMIA is the first step in navigating the process.

What Does Business Legitimacy Mean?

Business legitimacy ensures that an employer and their job offer are genuine. Employers must prove that their business provides goods or services in Canada. They also need to show the job offer meets a reasonable employment need. Additionally, employers must demonstrate the ability to fulfill all terms of the job offer. Compliance with federal and provincial laws is essential, too. Meeting these criteria ensures the LMIA application is legitimate and credible. Failure to meet any factor can result in a negative LMIA decision. Thus, understanding these requirements is vital for successful LMIA applications. Here is the list of these factors. However, most employers only need to focus on the first two items on this list.

  • Proof of providing a good or service
  • Ability to fulfill terms of the job offer
  • Reasonable employment need
  • Compliance with federal or provincial/territorial laws

Proof of Providing a Good or Service

Proving your business provides a good or service is essential. This ensures the legitimacy of your LMIA application. The Canadian employer must provide at least one document from the following list. Nonetheless, I highly recommend at least two documents from this list. Sometimes, the ESDC officers do not accept a document you share. Therefore, providing a second document could prevent delays or refusals.

  1. Valid Business License: Submit a valid municipal, provincial, or territorial business license. This license confirms your business’s legality.
  2. Recent T4 Summary: Provide your most recent T4 Summary (T4SUM) of remuneration paid. This shows you have employees and pay wages.
  3. Recent PD7A Statement: Include your latest PD7A Statement of account for current source deductions. This document highlights your compliance with payroll requirements.
  4. Attestation of Business Operations: Obtain an attestation confirming your business provides a good or service. This must be from a qualified professional. You may ask your business lawyer or Chartered Accountant for an attestation letter. However, CPA British Colombia and Quebec have advised their accountants to preferably not issue such letters.
  5. For Foreign-Based Employers: Submit a contract or invoice for goods or services provided in Canada. This applies if your business operates outside of Canada.
  6. Permanent Residency Applications: Prove your business has been operational for at least one year. This requirement does not apply to positions in Quebec.
  7. Positive LMIA Exemption: In some cases, a positive LMIA from the past two years can exempt businesses from needing to prove they provide a good or service.

These documents help establish your business’s legitimacy, making your LMIA application stronger and more credible.

Ability to Fulfill Terms of the Job Offer

Simply put, the employer must show that they can pay the salary to the foreign national and fulfill any other obligations they have. Like the previous section, you must submit at least one document from this list. However, I highly recommend submitting at least two documents. Moreover, ensure the documents you provide for this requirement are not the same as the previous one.

  1. Recent T2 Schedules: Submit your most recent T2 Schedule 100 Balance Sheet and T2 Schedule 125 Income Statement. These documents provide a detailed overview of your business’s financial health. Remember, you must include both documents.
  2. Recent T2042 Statement: Provide your latest T2042 Statement of Farming Activities, if applicable. This shows your business’s income and expenses related to farming.
  3. Recent T2125 Statement: Include your most recent T2125 Statement of Business or Professional Activities. This document outlines your business’s income and expenses.
  4. Recent T3010 Return: If applicable, submit your latest T3010 Registered Charity Information Return. This proves your compliance with charitable regulations.
  5. Recent T4 or Payroll Records: Provide T4 slips or payroll records for at least six weeks before submitting your LMIA application. This demonstrates your ability to pay wages consistently. Please redact sensitive information such as SIN numbers from those documents.
  6. Financial Attestation: Obtain an attestation confirming your business’s good financial standing. This should be from a qualified professional, such as a lawyer or a CPA. However, as mentioned earlier, CPA British Colombia and Quebec have advised their accountants to preferably not issue such letters.

Exceptional Circumstance

  1. For Foreign-Based Employers, include contracts or invoices for goods or services provided in Canada. This will show your business operations within the country.
  2. Positive LMIA Exemption: In some cases, a positive LMIA from the past two years can exempt businesses from needing to prove their ability to fulfill the terms of the job offer.

Reasonable Employment Need

Demonstrating a reasonable employment need is essential for your LMIA application. However, ESDC only expects documents under this requirement for the following businesses.

Affected Businesses

  1. In-home Caregiver Applications: Provide proof of the individual requiring care. This includes:
    • Proof of age if the person is under 18 or over 65.
    • Proof of disability or chronic illness if the person has high medical needs.
  2. Trucking Applications: Always submit these documents:
    • A copy of your current carrier profile or public profile report is needed.Copy of your current National Safety Code (NSC) certificate.Copy of your current fleet insurance.
    Note: Document names may vary by province or territory. Check with your local transportation department.
  3. Foreign Vessel Applications: Submit a copy of the Coasting Trade Act letter of authority from the Canada Border Services Agency. This is necessary for positions on foreign vessels in Canadian waters.
  4. Foreign-based Employers: If you operate outside Canada without a CRA business number, submit your contract or invoice for goods or services provided in Canada. This applies to every LMIA application.

Compliance with Federal or Provincial/Territorial Laws

Compliance with relevant laws is crucial for your LMIA application. Adhering to these regulations ensures your business operates legally.

Compliance Requirements

  1. Federal and Provincial Laws: You must comply with all laws regulating employment and recruitment in the applicable province or territory. This compliance is essential for a valid LMIA application.
  2. Inspection and Documentation: During the LMIA assessment, Service Canada will check for any compliance issues. These issues can negatively impact your application. In case of inspections, be prepared to provide relevant proof or documentation demonstrating your compliance.

Specific Provincial Requirements

  1. British Columbia:
  2. Manitoba:
  3. Saskatchewan:

ESDC/Service Canada could update the requirements in the future. Moreover, other provinces may also require registration in the future. Please book a consultation session to know your options.

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    Al Parsai

    This article has been expertly crafted by Al Parsai, a distinguished Regulated Canadian Immigration Consultant (L3 RCIC-IRB – Unrestricted Practice) hailing from vibrant Toronto, Canada. Al's academic achievements include an esteemed role as an adjunct professor at prestigious Queen's University Law School and Ashton College, as well as a Master of Laws (LLM) degree from York University. A respected member of CICC and CAPIC organizations, Al's insights are further enriched by his experience as the dynamic CEO of Parsai Immigration Services. Guiding thousands of applicants from over 55 countries through the immigration process since 2011, Al's articles offer a wealth of invaluable knowledge for readers.