Federal Court Rejects Start-Up Business Class Permanent Residence Claim

Date: 20260319 Docket : IMM-467-25 Citation: 2026 FC 369 Toronto, Ontario, March 19, 2026 PRESENT: Mr. Justice Diner BETWEEN: [NAME] AND [NAME] Applicants and THE MINISTER OF CITIZENSHIP AND IMMIGRATION Respondent

JUDGMENT AND

REASONS I. Overview [ 1 ] The Applicants seek judicial review of a decision dated December 5, 2024 [Decision], in which an officer of Immigration, Refugees and Citizenship Canada [Officer] refused their applications for permanent residence under the Start-Up Business Class [SUBC]. The Officer concluded that the Applicants had not demonstrated that their business met the definition of a qualifying business under section 98.06 of the Immigration and Refugee Protection Regulations , SOR/2002-227 [IRPR]. Specifically, the Officer determined that [NAME] had failed to establish that an essential part of the business operations would be conducted in Canada or intent to actively manage the business from within Canada. [NAME] was designated as the essential member of the business team, his refusal resulted in the refusals of the three other Applicants pursuant to subsection 98.08(2) of the IRPR. [ 2 ] The Applicants now collectively argue that the Officer misunderstood the legislative scheme, imposed an unreasonable evidentiary burden, and improperly relied on the refusal of [NAME]’s work permit extension. I disagree, and for the reasons that follow, will not interfere with the Decision. A brief background of the pertinent details follows.

II. Background [ 3 ] The Applicants, four citizens of Iran, applied for SUBC-based permanent residence on August 4, 2021. They sought to control and run a common business venture, named [COMPANY]. [[NAME]], which had previously been incorporated in British Columbia on December 29, 2020. The Applicants received an SUBC Class Commitment Certificate and a SUBC Commitment Letter of Support from [COMPANY]., operating as [NAME], a designated business incubator under subsection 98.03(1) of the IRPR. [ 4 ] Under their business proposal, [NAME] was identified as an essential member of the team and served as the Chief Operating Officer responsible for the overall management of the business. The Commitment Certificate indicated that [NAME]’s presence in Canada was required prior to permanent residence to assist with establishing the business, including contacting potential partners, negotiating with laboratories, and facilitating product testing and regulatory certification. [ 5 ] [NAME] subsequently obtained a temporary work permit under paragraph 205(a) of IRPR which allowed him to enter Canada while the permanent residence application was pending. [NAME] later applied to extend his work permit, but that application was refused on April 2, 2024. Justice Allyson Whyte Nowak of this Court dismissed [NAME]’s judicial review of that decision in [NAME] v Canada ( Citizenship and Immigration ), 2025 FC 662. [ 6 ] During the assessment of the permanent residence applications, the Officer issued a procedural fairness letter [PFL] dated June 24, 2024, to another of the Applicants associated with the business, [NAME], expressing concerns regarding whether the Applicants had demonstrated a qualifying business within the meaning of section 98.06 of the IRPR. The Officer raised concerns regarding the absence of documentary evidence demonstrating meaningful business progress in Canada since the company’s establishment, including the lack of evidence of collaboration with Canadian laboratories or partners. [ 7 ] Counsel for the Applicants responded to the PFL on July 15, 2024, submitting that the Applicants had satisfied the requirements of the SUBC program, and asserting that [NAME] was managing the business from within Canada, while the other three members participated remotely. [ 8 ] On July 26, 2024, a second PFL was issued, this time to [NAME]. The Officer indicated that the prior PFL response had not addressed the concerns regarding the lack of documentary evidence demonstrating that any active business progress had taken place in Canada. [NAME] responded by describing his qualifications and explaining that product development and quality testing had largely been completed abroad, including testing conducted at institutions in Iran. [NAME]’s response to his PFL also referenced outreach to potential partners and manufacturers, including a Canadian company, though limited documentation was provided in support of these assertions. [ 9 ] On December 5, 2024, the Officer refused [NAME]’s application for permanent residence, finding that he had not satisfied the requirements of section 98.06 of the IRPR. The Officer determined that the evidence did not demonstrate that an essential part of the business’s operations would be conducted in Canada, or that the Applicants intended to actively manage the business from within Canada. As [NAME] had been designated an essential member of the business team, the Officer also refused the remaining three Applicants pursuant to subsection 98.08(2) of the IRPR. [ 10 ] The parties agree that the applicable standard of review is reasonableness. Under the framework articulated in Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 [ Vavilov ], a reviewing court must determine whether the decision is justified, transparent, and intelligible in light of the legal and factual constraints that bear on the decision.

III. Analysis [ 11 ] As a preliminary point, the Respondent objected to the attempted admission of certain evidence, arguing that the Applicants rely on additional materials in their Application Record that were not before the Officer, including a business progress report dated after the Decision, attached as Exhibit D-3 of the Applicants’ Affidavit sworn on March 25, 2025. As such, the Respondent submits that the Court should disregard the evidence. [ 12 ] As a general rule, judicial review proceeds on the basis of the evidentiary record that was before the administrative decision-maker, subject to exceptions ( Association of Universities and Colleges of Canada v [NAME] (Access Copyright) , 2012 FCA 22 at paras 19-20). As none of the exceptions apply in the matter at hand, I agree with the post-decision evidence submitted by the Applicants will not be considered. A. Legislative Framework and the Applicants’ Burden [ 13 ] The SUBC program was suspended at the end of 2025. Although it appears that no new SUBC applications are being accepted, I will continue to address the program as it existed at the time of the applications. [ 14 ] To qualify for permanent residence under the SUBC, applicants must satisfy the criteria set out in subsection 98.01(2) of the IRPR, including the requirement that they have started a qualifying business. Subsection 98.06(1) of the IRPR defines a qualifying business as follows: Qualifying business [NAME] admissible 98.06 (1) For the purposes of paragraph 98.01(2)(d), a qualifying business with respect to an applicant is one 98.06 (1) Pour l’application de l’alinéa 98.01(2)d), est une [NAME] admissible à l’égard d’un [NAME] l’[NAME] : (a) in which the applicant provides active and ongoing management from within Canada; a) dont le [NAME] assure la gestion de façon active et suivie à partir du Canada; (b) for which an essential part of its operations is conducted in Canada; b) dont une part essentielle des activités est effectuée au Canada; (c) that is incorporated in Canada; and c) qui est constituée en personne morale au Canada; (d) that has an ownership structure that complies with the percentages established under subsection (3). d) qui affiche une structure de partage de la propriété conforme aux pourcentages établis en vertu du paragraphe (3). [ 15 ] Subsection 98.06(2) of the IRPR provides an exception for businesses that fail to meet the qualifications outlined in subsection 98.06(1): Exception — intention Exception — intention (2) A business that fails to meet one or more of the requirements of paragraphs (1)(a) to (c) is nevertheless a qualifying business if the applicant intends to have it meet those requirements after they have been issued a permanent resident visa. (2) L’[NAME] qui ne satisfait pas aux exigences prévues aux alinéas (1)a) à c) est néanmoins une [NAME] admissible si le [NAME] a l’intention, après s’être vu délivrer un visa de résident permanent, de faire en sorte que l’[NAME] satisfasse à ces exigences. [ 16 ] The Applicants rely heavily on the exception set out in subsection 98.06(2) of the IRPR, arguing that the Officer erred in requiring proof that the business was already operational in Canada. However, they point out that subsection 98.06(2) does not eliminate the requirement that applicants demonstrate a credible intention to establish a qualifying business even if that has not yet been done; rather, it allows officers to assess whether the applicant’s past conduct, present circumstances, and future plans demonstrate that the regulatory criteria will be met. [ 17 ] Turning to the facts at hand, the Applicants argue first that [NAME] was paid, remitted taxes, had meetings, and made contacts – all indicia of conducting his business in Canada. They further assert that [NAME], given the refusal of his work permit extension, did not have sufficient time to establish the business in Canada, and was forced to continue to do so from Iran, but certainly held the constant intention to establish in Canada from its formation in 2020. [ 18 ] I agree with the Applicants that the regulatory scheme clearly allows for intention to play a key role to qualify the business pursuant to subsection 98.06(2). Having said that, the burden rests with the Applicants to satisfy the Officer that they meet the statutory requirements. Indeed, this forms part of the broader context of the legislation: under subsection 11(1) of the Immigration and Refugee Protection Act , SC 2001, c 27 [IRPA], a foreign national must establish that they meet the requirements of the IRPA and the IRPR in order to be granted permanent residence. [ 19 ] Accordingly, the question before the Officer was not whether the Applicants had merely established a functioning business in Canada. Rather, the Officer was required to determine whether the Applicants had demonstrated, on a balance of probabilities, that they had established or had demonstrated the intention to establish – a qualifying business of which the essential operations and management would still take place in Canada. B. The Officer’s Assessment of Business Operations [ 20 ] The Applicants argue that the Officer failed to properly consider the evidence demonstrating their efforts to establish their business in Canada. They submit that the Officer focused excessively on the absence of existing or completed operations, rather than on the Applicants’ intention to conduct such operations after permanent residence was granted. [ 21 ] I disagree that the Officer erred. On the contrary, the Officer’s reasons clearly demonstrate the consideration of the documentary evidence submitted by the Applicants in support of their applications, along with the two PFL responses provided by the Applicants. The Officer’s principal concern was that the evidence provided did not demonstrate either that essential business operations were being conducted in Canada, or that the Applicants had taken concrete steps toward establishing such operations. In particular, the Officer noted that the Applicants’ responses to the [NAME] did not include documentary evidence demonstrating collaboration with Canadian laboratories or commercial partners. The Officer had specifically raised these concerns in both the June and July 2024 [NAME]. [ 22 ] Despite being afforded these two opportunities to address the concerns, the Applicants provided only limited documentation, including screenshots of meetings and references to communications with potential partners, without concrete evidence of any progress, reciprocated interest, negotiation, collaboration, or deals from or with the purported business contacts. The Officer was entitled to find that the scant supporting documentation provided and materials referenced, given insufficient evidence of any meaningful progress toward establishing business operations in Canada, and/or intention of such future establishment. Indeed, in their second PFL response, the Applicants stated that product development and testing had already occurred in Iran. In their response to the second PFL, the Applicants explained that the product had undergone rigorous testing at internationally recognized institutions outside Canada, and that it was unnecessary to repeat these tests in Canadian laboratories. [ 23 ] The SUBC qualifying criteria – absent evidence of progress in Canada that has taken place – are forward-looking. As with all immigration applications, the onus rests with the applicants to put their best foot forward, both initially in the application, and subsequently in any responses to [NAME]. Instead of providing evidence to allay the Officer’s concerns, the Applicants here largely repeated what had been said previously and doubled down on what appeared to be very limited progress abroad. [ 24 ] The Officer, for instance, observed that the evidence consisted primarily of one-way communications or generic inquiries and did not demonstrate the existence of concrete partnerships, agreements, or commercial arrangements. The Officer’s transparent responses in both [NAME] and refusal letters are unassailable given the factual and legal constraints that confronted the Officer. I find the Officer reasonably concluded that the Applicants’ explanation undermined their claim that essential business activities would occur in Canada. The Applicants did little to demonstrate that the core operational activities contemplated in the business plan would occur in Canada, and the Officer’s reasons were justified. [ 25 ] It was open to the Officer to conclude, given the dearth of supporting material of any substantive progress, that evidence was insufficient to establish either that the Applicants had taken meaningful steps toward establishing those operations, or that essential operations would occur in Canada. Despite the two PFL opportunities to address the concerns raised by the Officer, the Applicants did not provide any additional documentation addressing the Officer’s concerns to buttress the scant material documentation provided with their applications. Instead, the PFL responses largely reiterated the Applicants’ intentions and described past product development activities that had occurred outside Canada and were thus unsatisfactory to meet SUBC criteria. [ 26 ] In short, the Officer was entirely justified to conclude that the Applicants had failed to discharge their evidentiary burden. C. Assessment of Intent [ 27 ] The Applicants argue that the Officer failed to properly assess their intention to establish a qualifying business in Canada. They submit that subsection 98.06(2) requires officers to focus on future plans rather than past business activities. [ 28 ] However, intention cannot be assessed in isolation from an applicant’s past conduct and present circumstances. [ADDRESS] has recognized, and I agree, that an officer may consider an applicant’s past actions and current efforts in assessing whether their stated intentions are credible ( [NAME] v Canada (Citizenship and Immigration) , 2025 FC 104 at para 21; see also [NAME] v Canada (Citizenship and Immigration) , 2020 FC 1126 at paras 37, 51, 53-4). Here, the Officer reasonably considered the Applicants’ past conduct, including the activities undertaken during the period when [NAME] was present in Canada on his work permit. The Officer observed that there was little evidence demonstrating that the activities described in the business proposal had been carried out during that time. [ 29 ] Specifically, the business proposal contemplated activities such as negotiating with laboratories, establishing partnerships with potential customers, and advancing product testing and certification in Canada. However, the documentary record contained limited evidence demonstrating that these steps had been undertaken while [NAME] was present in Canada. Once again, the Officer was entitled to conclude that the Applicants had not demonstrated a credible intention to establish a business for which essential operations and management would occur in Canada. D. Work Permit Refusal [ 30 ] The Applicants argue that the Officer improperly relied on the refusal of [NAME]’s work permit extension in assessing the permanent residence applications. Yet the record does not support this contention. The [NAME] notes, which form part of the reasons for the Decision, indicate that the Officer acknowledged the prior work permit refusal and found that it did not result in any ineligibility. There is simply no evidence that the Officer based his refusal in whole or in part on the work permit refusal.

IV. Conclusion [ 31 ] I am not persuaded that the Applicants have demonstrated any reviewable error. The Officer considered the Applicants’ submissions, the documentary record, and the responses to the [NAME] before concluding that the Applicants had neither established nor demonstrated a credible intention to establish a qualifying business. The Officer reasonably found that the evidence provided did not demonstrate that an essential part of the business operations would occur in Canada or that the Applicants intended to actively manage the business from within Canada. The Decision is therefore reasonable. The application for judicial review is dismissed. Neither party proposed that a question be certified for appeal, and none arises.

JUDGMENT in IMM-467-25 THIS COURT’S

JUDGMENT is that : The application is dismissed. No questions for certification were argued, and I agree none arise. There is no award as to costs. "Alan S. Diner" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: IMM-467-25 STYLE OF CAUSE: [NAME] v MCI PLACE OF HEARING: TORONTO, ONTARIO DATE OF HEARING: March 10, 2026

JUDGMENT and

REASONS: DINER J. DATED: March 19, 2026 APPEARANCES : [NAME] For The ApplicantS [NAME] For The Respondent SOLICITORS OF RECORD : [NAME] and Solicitors Toronto, Ontario For The ApplicantS Attorney General of Canada Toronto, Ontario For The Respondent