| Income Statement | Percentage of Equity | Qualifying Business |
| Net Worth | Personal Net Worth Statement | Qualifying Canadian Business |
| Review Engagements | Self-employed (R88) |
The income statement serves to measure a company’s sales (or revenue), expenses and earnings over a specified duration of time. In many cases, this statement will usually be for a period of one year. This statement, along with the balance sheet, provides an indication of the scope of operations of the company.
The income statement is a good indicator of a company’s financial performance. As such, the earnings and trends in earnings are useful indicators of the financial well-being of the company. The changes or trends in financial positions would help auditors understand whether the company is growing or declining.
Ideally, the income statement would enable the officers to determine the company’s net book value. For instance, by reviewing the income statement, the officers would be able to ascertain the amount the owners of the company would be able to realise, if they were to sell their business. In addition, the officers would be able to ascertain the number of the company’s employees by examining the income statement. To do this, they would need to note the wage and salary expenses specified in the statement.
Officers would need to remember that in some cases, small businesses might only be able to produce income statements generated specifically for tax purposes.
In this context, the net worth of an individual refers to the fair market value of all assets minus the fair market value of all the liabilities of the applicant and the applicant’s spouse or common-law or conjugal partner.
This refers to the varying degrees of ownership of equity in a business. Typically, this degree of ownership of equity in a business would vary based on whether the business is:
- A sole proprietorship
- A corporation
- A partnership or,
- A joint venture
For more details on this, refer to the section titled “Other Aspects of the Regulatory Definition to Consider When Assessing the Eligibility of an Entrepreneur”.
The personal net worth statement typically comprises both business and personal assets and liabilities of the applicant. It includes the business and personal assets and liabilities of the spouse or common-law partner too.
This refers to a business – other than the one operated for the purpose of deriving an investment income – for which documentary proof exists of a specific equity / full-time job equivalent / net asset relationship within a specific timeframe, as detailed in the provisions specified in R88. The term typically denotes a business that the applicant is already managing at the time of making the application. For more details on this, refer to the section titled “What is a Qualifying Business?”.
This refers to a business operated in Canada for which documentary proof exists of a specific equity / full-time job equivalent / net asset relationship within a specific timeframe, as detailed in the provisions specified in R88. For more details on this, refer to the section titled “What is a Qualifying Business?”.
According to the authorities, it is easy to distinguish review engagements from audits. Review engagements typically have a scope of review that is less than that of an audit. As such, the level of assurance provided by the review engagement usually tends to be lower. A review primarily comprises the enquiry, analytical procedures and discussions related to the information supplied by the enterprise to the public accountant. In addition, the review has a limited objective as well. Therefore, it assesses whether the information the business enterprise is reporting is plausible within the framework of appropriate criteria.
Self-employed (R88): The authorities define a self-employed person as a foreign national who:
- Has the relevant experience
- Has the intention and the ability to be self-employed in Canada and,
- Can make a significant contribution to specified economic activities in Canada
In addition, the authorities define ‘relevant experience’ in respect of:
- A self-employed person, other than a self-employed person selected by a province, as a minimum of two years of experience, during the period commencing five years prior to the date of application for a permanent resident visa and ending on the day the authorities make a determination in respect of the application, comprising:
- With regards to various cultural activities:
- Two one-year periods of experience in self-employment in cultural activities
- Two one-year periods of experience in participation at a world class level in cultural activities or,
- A combination of a one-year period of experience in self-employment in cultural activities and a one-year period of experience in participation at a world class level in cultural activities
- With regards to athletics:
- Two one-year periods of experience in self-employment in athletics
- Two one-year periods of experience in participation at a world class level in athletics or,
- A combination of a one-year period of experience in self-employment in athletics and a one-year period of experience in participation at a world class level in athletics AND,
- With regards to the purchase and management of a farm, two one-year periods of experience in the management of a farm
- With regards to various cultural activities:
- A self-employed person selected by a province with the meaning provided by the law of that particular province
It is worth highlighting that specific economic activities in respect of a self-employed person, other than a self-employed person selected by a province, denotes:
- Cultural activities
- Athletics or,
- The purchase and management of a farm
In addition, a self-employed person selected by a province continues to have the meaning provided by the law of that specific province.
