Can I start my own business while on a PGWP extension in Canada?

Question from Lux, Can I start my own business while on a PGWP extension in Canada?

Answer from AI:

Work Permit Extension and Maintained Status

You applied for a Post‑Graduation Work Permit (PGWP) on 10 September and received a six‑month work‑permit‑extension (WP‑EXT) letter. If that letter expires before IRCC decides on your PGWP application, you may continue working under maintained status (formerly “implied status”).

When maintained status applies

• You must have submitted the extension application before your current permit expired.
• You must keep working in a job that was authorized on your original permit (the PGWP is an open work permit, so any employer is allowed).
• You cannot have been refused a work permit or ordered to leave Canada.

While IRCC’s policy update (effective 2023) confirms that you may keep working until a final decision is issued, the right to work ends the moment a refusal is issued or you are otherwise found ineligible. Keep a copy of the acknowledgement of receipt (AOR) and the WP‑EXT letter as proof of status if you are asked to show it to an employer or a government officer.

Starting Your Own Company

A PGWP is an open work permit, which means you are legally allowed to be self‑employed or to start a business while the permit is valid (or while you are in maintained status). The key points are:

• Incorporation – You can incorporate a federal or provincial corporation under the Canada Business Corporations Act (CBCA) or the relevant provincial legislation.
• Business Number – Register for a Business Number (BN) with the Canada Revenue Agency (CRA) to handle GST/HST, payroll, and corporate taxes.
• Compliance – Follow provincial/territorial corporate filing requirements, keep proper books, and meet ongoing tax obligations.

Because the PGWP does not restrict the type of work you do, you may operate your own company and invoice clients, including a corporate‑to‑corporate (corp‑to‑corp) arrangement with a local pension plan.

Corp‑to‑Corp Contracts and Employment Standards

When you sign a corp‑to‑corp contract:

1. The contract is between two legal entities, not between you personally and the client.
2. Employment standards (e.g., minimum wage, vacation, overtime) generally do not apply because you are providing services as a business, not as an employee.
3. Provincial regulations – Some provinces (e.g., Ontario) have “worker‑status” tests that could re‑characterise a contractor as an employee for certain benefits. Review the specific province’s Employment Standards Act.

You will need to:

• Issue invoices that include your corporation’s name, BN, and GST/HST number (if applicable).
• Deduct and remit payroll taxes only if you hire employees; otherwise, you report corporate income on your T2 return.

Practical Steps to Take

1. Confirm your maintained‑status eligibility – Keep the IRCC acknowledgement email and the WP‑EXT letter handy.
2. Incorporate – Use a service provider or file online through Corporations Canada or the relevant provincial registry.
3. Register for a BN – Do this through the CRA’s Business Registration Online portal.
4. Draft a clear corp‑to‑corp agreement – Include scope of work, payment terms, liability, and termination clauses.
5. Seek professional advice – An immigration lawyer can verify that your self‑employment does not jeopardise your PGWP application, and a business lawyer can review the contract and corporate setup.

Where to Find Official Information

• IRCC – Maintained status for work permits – provides the official policy and eligibility criteria.
• Canada Business Corporations Act – outlines incorporation requirements and corporate duties.

Because immigration and corporate law can intersect in nuanced ways, it is strongly advisable to consult a licensed immigration attorney and a corporate lawyer before finalising the corp‑to‑corp arrangement. This ensures both your work‑permit status and your new business remain fully compliant with Canadian law.