The Modification of "firearms" i.e. cutting the factory barrel IS illegal. The IUR "upper", purchased as an upper, is not a firearm. It is a part. In the "eyes" of the law, the piece on the AR15 that makes it a firearm is the lower receiver. It has the serial# and the trigger group. This is also the beauty of buying a stripped lower. No barrel size is assigned to its serial#. Build it as you will. As long as it remains semi auto, it can't get any more restricted. Take this as you will.
Copied this from the Criminal Code.
“prohibited firearm” means
(a) a handgun that
(i) has a barrel equal to or less than 105 mm in length, or
(ii) is designed or adapted to discharge a 25 or 32 calibre cartridge,
but does not include any such handgun that is prescribed, where the handgun is for use in international sporting competitions governed by the rules of the International Shooting Union,
(b) a firearm that is adapted from a rifle or shotgun, whether by sawing, cutting or any other alteration, and that, as so adapted,
(i) is less than 660 mm in length, or
(ii) is 660 mm or greater in length and has a barrel less than 457 mm in length,
(c) an automatic firearm, whether or not it has been altered to discharge only one projectile with one pressure of the trigger, or
(d) any firearm that is prescribed to be a prohibited firearm;