As proud and happy Canadians, many of us get upset when we think that our government is selling Canadian citizenship cheaply.
The now defunct federal Immigrant Investor Program (IIP) was selling Canadian citizenship very cheaply. Individuals with a net worth of $1.6 million (all figures are in Canadian dollars) who were willing to lend $800,000 to the Canadian government for five years, interest-free, got permanent residency, a path to Canadian citizenship, and a Canadian passport.
But while the government thinks it is attracting new citizens, many of the newcomers (many from China) only applied to the Program to be able to procure a Canadian passport. Often when I am in China and say I am from Canada, I am greeted with a smile and the words, “Oh, I have a Canadian passport.”
Stories abound of immigrant investors and their families benefiting from all of Canada’s social services while not declaring or paying taxes on the income they earned outside of Canada. Reports about corruption in China also led to questions about the legitimacy of the sources of funds that were being brought into Canada and how law abiding the people who brought those sources were. These concerns led to the collapse of the IIP.
The new Immigrant Investor Venture Capital Pilot Program (IIVP) is not selling Canada cheaply. It requires applicants to have honestly earned financial assets of $10 million. The amount and source of funds must be documented by a recognized, major accounting firm from a short list provided by Citizenship and Immigration Canada (CIC). In case anyone doesn’t get the point, Deloitte Forensic Inc is one such firm on the list. Two million dollars is to be invested in a venture capital fund where the money would be at risk of loss.
Applicants must also pass a CIC approved test demonstrating their ability to speak, understand, read, and write in English or French. They must also have Canadian or equivalent post-secondary education, although this last requirement can be avoided by those with a net worth of $50 million.
To ensure no backlogs (another glitch with IIP), only 500 applications for immigrant investors were to be accepted. Furthermore in this pilot program, permanent residency would be granted to no more than 60 applicants, perhaps chosen by lot. Unfortunately, even with extending the application deadline, there were only six applicants.
Does the new program make Canada less competitive with other countries courting business immigrants? An investment of 35,000 Euros, just over $50,000 Canadian, will get a business person into Latvia. Somewhat more expensive but still much cheaper than Canada, is Portugal where buying a property worth 500,000 Euros or investing 1 million Euros in a Portuguese business or creating 10 jobs in Portugal will get you into that country with ready access to all the other European countries under the Schengen labour mobility agreement.
However, it is not competition with other countries that is keeping applicants away from the IIVP program. It is the fact that although CIC closed the front door to Canada by ending the IIP program the back door is still open. And that door is Quebec. For immigrant investors coming to Canada through Quebec, the old rules still apply, namely having a net worth of $1.6 million (and this can include your spouse’s assets) and lending the Quebec government $800,000 for five years with the principal guaranteed.
Although the money will stay in Quebec, there is no requirement that the immigrant does. In fact, even before CIC changed its legislation, close to 90 per cent of investor immigrants to Quebec were leaving the province, with Vancouver as a favourite destination.
And that’s a problem. Putting a roof over one’s head is not easy, especially in Vancouver where already high home prices continue to rise. New arrivals play a role in keeping the demand for housing and its price high. Many do not occupy or rent out the housing they purchase, further reducing supply.
Those who already own housing benefit from its rising value. Others wonder why the government (federal, provincial, or local) does not do more to improve affordability. Adjusting zoning and building requirements would help by increasing the housing stock. Putting well designed tax or other qualifications on non-residents has been used effectively in Australia. And, as long as Canadian residents are free to live anywhere they like in the country, perhaps our federal government, which has jurisdiction over immigration, should have a little talk with Quebec.
Troy Media columnist Roslyn Kunin is a consulting economist and speaker.
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