On This Page You Will Find
- Why IRCC is applying stricter scrutiny to pending Start-Up Visa applications
- What the active and ongoing management requirement means
- How IRPR 98.06 defines a qualifying Start-Up Visa business
- How the IRPR 89(b) primary purpose test affects applications
- What Federal Court decisions say about business activity and due diligence
- How one co-founder’s refusal can affect the entire founding team
- What evidence SUV applicants should maintain in 2026
- How founders can demonstrate genuine commercial traction in Canada
The Canadian Start-Up Visa (SUV) landscape has fundamentally shifted. As of January 1, 2026, the program is entirely suspended to new applications. With an inventory of over 43,000 pending files and annual levels currently limiting admissions to just 500 individuals per year – (this will likely substantially increase in future years), processing times have theoretically, but only temporarily, stretched beyond a decade. Consequently, Immigration, Refugees and Citizenship Canada (IRCC) has drastically altered its assessment posture, imposing stricter requirements. Officers are aggressively, strictly enforcing the legislative requirements of the program.
The Core Mandate: IRPR 98.06(1)
The cornerstone of the SUV program is Section 98.06(1) of the Immigration and Refugee Protection Regulations (IRPR). To be considered a “qualifying business,” applicants must conclusively prove that the enterprise is one:
- In which the applicant provides active and ongoing management from within Canada;
- For which an essential part of its operations is conducted in Canada;
- That is incorporated in Canada; and
- That complies with prescribed ownership requirements.
Historically, IRPR offered some leniency for founders waiting outside the country. However, officers now expect applicants – especially those holding SUV-supported work permits – to actively demonstrate tangible, continuous operational traction and physical business footprint inside Canada.
Under IRPR 98.06(1), the requirement is technically that the business will be actively managed from within Canada once you receive PR. However, to pass the “primary purpose” test (IRPR 89(b)) today, you must prove you are doing everything legally and commercially possible from abroad to anchor the business in Canada right now.
The “Primary Purpose” Test and IRPR 89(b)
Beyond the structural requirements of a qualifying business, the most frequent pitfall for pending applications is IRPR 89(b) (whether the transaction was genuine). This regulation empowers visa officers to refuse an application if they determine the commitment with the designated entity (incubator, angel group, or venture capital fund) was entered into primarily to acquire immigration status, rather than to genuinely carry on the business.
In the current climate, IRCC is looking for “artificial transactions” – start-ups that exist on paper but show no real-world commercial viability or effort.
Guidance from the Federal Court of Canada
Recent Federal Court jurisprudence underscores the strict lens through which IRCC and the judiciary evaluate the SUV program. The courts have consistently upheld IRCC refusals where applicants fail to show substantive business progress or rigorous governance.
Due Diligence and Market Viability (Yang v. Canada, 2019 FC 130): The Federal Court ruled that a lack of seriousness in pre-launch research, business planning, and due diligence by either the applicant or the designated entity is a strong indicator that the primary intent was immigration, rather than entrepreneurship. Boilerplate business plans and superficial market surveys furnished by a plethora of consultants are fatal to an application.
Work Permit Execution (Kwan v. Canada, 2019 FC 92): While applicants are technically permitted to wait for PR before launching, the Court noted that if a founder obtains an early work permit and comes to Canada, their operational progress – or lack thereof – is heavily scrutinized. Securing a work permit but failing to hit commercial milestones, without explanation, is viewed as evidence of non-compliance with IRPR 98.06(1).
The Chain of Co-Founder Dependency (Damangir v. Canada, 2024 FC 599): Under IRPR 98.08(2), the Start-Up Class is built on collective dependency. In Damangir, the Federal Court upheld the refusal of an entire five-person founding team because a single co-founder (who was identified essential), failed to disclose a previous temporary resident visa refusal. If one essential member is refused for failing to meet their active management duties, all associated co-founder applications attached to that business are automatically refused.
The Cumulative Perspective (Punjwani v. Canada, 2026 FC 1033): The assessment is not based on an isolated concern but rather on the entirety of the evidence considered by an officer. As well, a party cannot raise an argument of breaching procedural fairness that was not in their written submissions.
What Applicants Must Demonstrate in the Current Landscape
To survive the rigorous assessments of 2026, founders must move far beyond simply incorporating a business and attending occasional virtual incubator seminars. They must generate a documented, continuous paper trail proving that their “essential operations” are rooted in Canada and experiencing reasonable incremental progression, consistent with a Start-Up enterprise.
Visa officers expect to see evidence of:
- Documented Product Development: Concrete evidence of building the Minimum Viable Product (MVP), including software development sprints, hardware prototypes, and engineering logs.
- Genuine Commercial Traction: Validated Letters of Intent (LOIs) from Canadian customers, localized market research data, and active supply-chain negotiations.
- Institutional Governance: Regularly scheduled board of directors meetings with formally recorded minutes, filed intellectual property (IP), and proper financial controls (e.g., maintaining a cap table and managed cash flow).
- Role Alignment: Evidence that each co-founder is executing the specific C-level duties they claimed in their initial pitch. Visa officers frequently refuse applications where founders who are supposedly engaged in high-level strategy are actually acting passively. While modern tech businesses can be remote-capable, the central management and decision-making apparatus must definitively reside in Canada.
Conclusion
The “wait and see” approach is obsolete. With approval rates declining and processing times extended, pending the clearance of the inventory of applications through the powers afforded under Bill C-12, IRCC is actively culling the SUV backlog of candidates who do not take their entrepreneurial mandates seriously. To satisfy IRPR 98.06(1) and survive the “primary purpose” test, applicants must proactively engage in the aggressive, documented, and continuous development of their start-up. Comprehensive active management is no longer just a best practice – it is the only way to safeguard an application.
Frequently Asked Questions
What are the active management requirements for Canada’s Start-Up Visa?
Start-Up Visa applicants must show that they provide active and ongoing management of their qualifying business from within Canada. They must also demonstrate that an essential part of the business’s operations takes place in Canada. Evidence of genuine, continuous business activity has therefore become increasingly important for pending applicants.
What is a qualifying business under the Start-Up Visa Program?
Under IRPR 98.06, a qualifying business must meet several conditions. The applicant must provide active and ongoing management from Canada, an essential part of the business’s operations must take place in Canada, the business must be incorporated in Canada and it must satisfy the program’s ownership requirements.
What is the Start-Up Visa primary purpose test?
IRPR 89(b) allows an officer to examine whether an applicant’s agreement with a designated organization was primarily entered into to obtain immigration status. Applicants therefore need to demonstrate that their start-up represents a genuine commercial venture rather than an arrangement created mainly to secure Canadian permanent residence.
How can applicants be expected to show the business is rooted in Canada, when they are no longer entitled to a work permit under the current rules?
Satisfying the IRPR 89(b) “primary purpose” threshold necessitates proving that all available legal and commercial avenues are being exhausted while overseas to secure the venture’s footprint in Canada immediately.
What evidence should Start-Up Visa applicants provide to IRCC?
Useful evidence can include product-development records, prototypes, software development logs, customer letters of intent, Canadian market research, contracts, financial records, board meeting minutes and intellectual property filings. Applicants should also document how each founder continues to perform the role assigned to them in the original business plan.
Can one Start-Up Visa co-founder’s refusal affect the others?
Yes. Start-Up Visa applications can be linked when applicants are designated as essential members of the same business. The refusal of an essential applicant can lead to the refusal of other applications connected to that venture. This makes compliance across the entire founding team particularly important.