Depends what you mean by “perfectly legal.” A firearm with a barrel length under 470 mm (18.5 inches) is a restricted weapon, as explained on the RCMP firearms website:
[QUOTE=Royal Canadian Mounted Police]
According to the Criminal Code, a restricted firearm is:
• A handgun that is not a prohibited firearm;
• A semi-automatic, centre-fire firearm with a barrel length less than 470 mm that is not a prohibited firearm;
• A firearm that can fire after being reduced, by folding, telescoping or otherwise, to an overall length of less than 660 mm; and
• Any firearm prescribed under the Criminal Code regulations to be restricted (including some long guns).
[/QUOTE]
So a 16" rifle (semi-auto, centre-fire) is in the same class as a handgun.
A private citizen needs a special class of permit to possess a restricted weapon, and there are serious restrictions on their use. In most cases, the only legal use is for target practice:
[QUOTE=Royal Canadian Mounted Police]
Permitted Purposes For Owning A Restricted Firearm
There are a few purposes for which you can be licensed to acquire and/or possess a restricted firearm, the most common being target practice or target shooting competitions, or as part of a collection.
In limited circumstances, restricted firearms are also allowed for use in connection with your lawful profession or occupation, or to protect life.
[/QUOTE]
So yes, with the right permit, 16" rifles are perfectly legal, just like handguns.
Note: not intended as legal advice, but simply to discuss a matter of public interest. If you want legal advice about gun law in Canada, talk to a lawyer who practices in the area.