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Canadian Government » The Investor Program | |
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A. The Federal Investors Class The Federal Investor program is passive in nature and requires an investment of $400,000 CAD which is deposited with the Receiver General of Canada and a personal net worth of $800,000 CAD with two years of suitable management or business experience. The investment bears no interest and must be maintained for five years. Applicants may state a desire to live anywhere in Canada except Quebec. The investment is government guaranteed and the proceeds are allocated to the Provinces excluding Quebec. The intention is to attract business acumen and investment to Canada. A qualified applicant has typically owned and/or managed an active trade or business, which may include professional practices, rather than merely managing investment activities. In this context gray areas include professionals that don’t manage the business, passive real estate investors and investment managers. For example developing real estate may qualify where as merely owning real estate may not qualify. Gifts and inheritances only qualify where the applicant parlayed the gift or inheritance into a business that he or she actively manages. The regulations require management of five or more full-time employees or compliance with two of four bright light tests, designed to define the scale of the underlying business, for at least two years in the period beginning five years before the date of the application and ending on the day a determination is made on the application; ◦ Percentage of ownership in the enterprise times number of full time employees, not less than two; ◦ Percentage of ownership times total annual sales not less than $500,000; ◦ Percentage of ownership times net income not less than $50,000; ◦ Percentage of ownership times year end net assets not less than $125,000. The Federal program permits applicants to finance the bulk of their investment through designated banking institutions. Typically the financing schemes require a down payment of $120,000. The bank loans the applicant the balance of $280,000. The applicant deposits the sum of $400,000 with the Receiver General. The Canadian government guarantees repayment of the bank loan not the investor’s down payment. The bank takes fees and interest from the down payment, the immigration agent takes their commissions from the down payment. The Federal government disburses the net proceeds to the Provinces for use in a variety of public projects. The net cost to the investor is the down payment. The five year investment period begins following visa issuance. B. The Quebec Immigrant Investor Program The Quebec program is virtually the same as the Federal program with the following important distinctions: the investment is guaranteed by the Province of Quebec; professionals such as doctors, dentists, accountants and lawyers do not qualify as management experience; one must state an intention to settle in Quebec; the investment proceeds are allocated to the Province of Quebec rather than the English speaking provinces and the five year investment period begins following Quebec approval, even before the investor comes to Canada. If the investor is refused by the Federal authorities for a medical or security inadmissibility, the investment is refunded. A Quebec investor is defined as a foreign national with three years of management experience in a lawful and profitable agricultural, industrial or commercial enterprise, in a government body or an international body and who possesses a personal net worth of $800,000 CAD accumulated through lawful economic activities. The investor must also undertake to invest $400,000 CAD for five years, in a prescribed (government guaranteed) investment. When assessing applications, the definition of management experience is strictly followed and given a narrow interpretation by the Quebec government authorities. It states: "The actual assuming on a full-time basis of responsibilities and duties related to the planning, managing and control of material, financial and, where applicable, human resources, provided that such responsibilities and duties are not assumed in the context of an apprenticeship, training, or specialization process attested to by a diploma". One may finance the investment in a manner similar to the Federal program except that the Province of Quebec designates securities brokerage firms and investment banks to finance the investment rather than banks. The Quebec program has been more popular than the Federal program because they process the applications much faster and pay brokers higher commissions. It’s that simple. The final result is no different than the Federal program except that an applicant must land in the Province of Quebec. But the Canadian Constitution allows Canadian permanent residents to land in Quebec and move elsewhere later. Once approved the Quebec destined applicant will undergo Federal security and medical background checks prior to visa issuance, which generally takes place within 3-6 months following Quebec approval. Some Useful Hints (Quebec and Federal): There is no advantage in investing until one’s application is approved in principal (either Quebec or Federal). Processing delays under the Federal program regularly exceeds 2.5 years. This reduces the incentive of the Federal program. Rumor has it that the Federal government wants to increase usage of its program and will reduce processing delays. But such rumours have come and gone in the past. The Quebec program generally offers processing times in the area of 18 months or less to visa issuance and 12 months to begin the five year investment period from application submission. Applicants who are able, can attend their selection interview in Montreal which can further shorten overall processing time. As a result of the above factors, the majority of applicants use the Quebec program. Applicants who require early entry status may consider alternative methods of entering Canada on a non-immigrant basis while waiting for permanent residence processing to conclude. Under the Canadian immigrant investor program, management experienced applicants may move to Canada for as little as $120,000 CDN. The down payment effectively becomes the cost of acquiring Canadian permanent residence. |
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