Once upon a time (last year), if you were worth $1.6 million and willing to make a $800,000 five-year, interest-free loan to Canada, you could have been on your way to a fabulous life in a Canadian city of your choice—like Red Deer! Or Kamloops! Or Okotoks!
The federal Immigrant Investor Program (IIP) allowed foreigners with some business experience to make a passive investment in Canada in exchange for permanent resident status. The money invested was purportedly used by a participating province for job creation and economic growth. Five years later, the money was returned by the province or territory to the investor.
Now, it’s not so easy to buy your way into Canada.
Last July, a moratorium was placed on the IIP and new applications are currently not being accepted. Applications still in the queue are taking upwards of five years to process. In the interim, all those offshore millionaires are forced to find other ways to spend their money.
So what options are available to rich foreigners who just want to live in Canada?
In short: not many. Both the federal and provincial governments have investment immigration programs, but both levels of governments have moved away from the passive investment schemes, and are requiring immigrant investors to not only invest in a specific business, but also to participate in its day-to-day management.
The would-be investor typically must demonstrate that he or she has the experience to run their proposed business. The focus is less on the amount of money invested in Canada, and more on the number of jobs created and the viability of the proposed business.
In British Columbia, for example, all investor immigration options require the would-be investor to actively manage the business and to create new jobs for Canadians or permanent residents. The provincial programs that require hands-on business management require a significantly smaller investment than the former IIP.
Potential immigrant investors looking to set up shop in the Vancouver or Abbotsford areas must have a personal net worth of at least $800,000 and commit to invest $400,000 into a business. The investor’s business has to create a minimum of three jobs.
Investors willing to go elsewhere in B.C. only require a personal net worth of $400,000 and a minimum investment of $200,000. The business need only create one new job.
If an investor is not interested in starting a new business, there are programs for investors willing to buy out an existing, established business. There is also a program whereby a foreign-controlled company may expand or establish operations in B.C., and may bring in as many as five key foreign staff members. Each of these programs has its own specific requirements for minimum job creation and investment.
The B.C. investor immigrant programs are more stringent than one may think. There are strict requirements with respect to the investor’s minimum equity ownership, and how much of the investment funds can go to share versus asset purchases and real estate.
B.C. even dictates the type of business that qualifies: no bed and breakfasts, pawnbrokers, cash machines, automated car washes, laundromats, insurance/real estate/business brokerages, hobby farms, home-based businesses, or porn production companies allowed. (I can only speculate as to how this list of ineligible businesses was created, but I find the strange and wonderful mix fascinating.)
While B.C. used to have a “fast-track option” whereby an investor could make a $125,000 interest-free loan to the province to get to the front of the queue, this “greasing the bouncer” option is no longer available. Investors must also prove their money was earned legally. Gangsters banking on starting a grocery store in Peachland with their drug money are out of luck.
With the launch of its new Start-Up Visa Program set for April 1, it is clear that the federal government has also shifted its focus from the passive investor to the entrepreneur immigrant. The program is geared to assist foreign entrepreneurs working with designated venture capital organizations or angel investors to receive permanent resident status on an expedited basis.
Money alone will not be enough to obtain status in Canada, nor is it simply a matter of buying an apartment building in Campbell River and skipping to the border to collect a PR card. Would-be investors immigrants now must prove they have the skills, the business-savvy, and the money to gain immigration status in Canada.