Wednesday, November 10, 2010

Canada Re-Opens Immigrant Investor Program

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OTTAWA, ONTARIO--(Marketwire - Nov. 10, 2010) - Effective December 1, 2010, Citizenship and Immigration Canada will once again accept applications under the federal Immigrant Investor Program.
Under the new program criteria, investor applicants will need to have a personal net worth of $1.6 million, up from $800,000 under the old criteria, and make an investment of $800,000, up from the previous requirement of $400,000.
"These changes were necessary," said Minister Kenney. "The requirements had not been increased in more than a decade and we need to keep pace with the changing economy."
Canada's old immigrant investor criteria were the lowest when compared to other countries with similar programs. The new criteria now align it more closely with other immigrant-receiving countries.
The investor program was suspended in June, in part because the high volume of applications was leading to wait times that were too long. Raising the requirements will help reduce the flow of applications while ensuring we attract experienced businesspeople who can make a more substantial contribution to the economy. Higher personal net worth criteria mean the program is now better positioned to attract investors with valuable business links and the resources to make secondary investments in the Canadian economy.
"Higher investment amounts mean provinces and territories will receive more investment capital to put toward job creation and economic development projects," added the Minister.
Canada's Immigrant Investor Program offers several benefits to international investors, including permanent resident status up front and guaranteed repayment of the investment.
Under Canada's old criteria, the volume of applications submitted under the Program had grown exponentially and processing times had increased. By stopping applications between June 26, 2010, and December of this year, the government prevented further delays. Applications received on or after December 1 will be subject to the new criteria and will be processed alongside the old ones. In this way, Canada can begin to realize the benefits of the changes as soon as possible.
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Backgrounder
New federal Immigrant Investor Program will bring to Canada more resources to fund economic development and job creation initiatives
Canada's Immigrant Investor Program (IIP) attracts experienced businesspeople who bring significant economic benefits to Canada. In order to keep pace with the changing global economy and keep Canada's program competitive, Citizenship and Immigration Canada (CIC) has changed the program so that it makes an even greater contribution to the Canadian economy. The changes were prepublished in the Canada Gazette on June 26, 2010, for a thirty-day public comment period and will take effect December 1, 2010.
Benefits of the IIP
Investments made through the program take the form of a five-year, zero interest loan to the Government of Canada on behalf of participating provinces and territories. These funds are distributed to participating provinces and territories to fund economic development and job creation initiatives in their regions. While investment strategies vary, some examples to date include venture capital investments in clean technology, public sector infrastructure investments (e.g., expansion of broadband Internet access, and construction of post-secondary institutions), and loans to small and medium-sized Canadian businesses. The provinces and territories must guarantee repayment of the investments received.
The provinces and territories are currently managing almost $2 billion of five-year, revolving IIP capital. In 2009 alone, almost $500 million was allocated through the program. British Columbia, Manitoba, Ontario, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, New Brunswick, Saskatchewan and the Northwest Territories participate in the program. Other provinces and territories have expressed interest in joining as well.
Research has shown that the IIP has a positive impact on Canada's economy. While the program is an important source of investment capital that can be used by provinces and territories, immigrant investors also make significant economic contributions by bringing to Canada business acumen, important links to global economies and an understanding of international markets.
Changes to the Program
The Government of Canada has established new eligibility criteria for the IIP. These regulatory changes now require new investors to have a personal net worth of $1.6 million, up from $800,000, and make an investment of $800,000, up from $400,000.
Higher investment amounts mean that provinces and territories will receive a greater amount of capital to put toward economic development within their regions. Higher personal net worth criteria mean that the program is now better positioned to attract investors with valuable global business links and the resources to make secondary investments into the Canadian economy.
How Canada's Program Compares to Other Countries
Canada's old IIP criteria had not changed since 1999 and were the lowest when compared to other countries with similar programs (see the chart below: International Immigrant Investor Programs). The new criteria now align Canada's program more closely with other immigrant-receiving countries, while still offering investors the competitive advantages of up-front permanent resident status and guaranteed repayment of their investment.
International Immigrant Investor Programs
  Minimum Net Worth Minimum Investment
Canada/Quebec* (old) CAD$800,000 CAD$400,000
Canada/Quebec (new) CAD$1,600,000 CAD$800,000
Australia CAD$2,157,525 CAD$1,438,350
(CAD$719,175 regional program)
UK CAD$3,331,400 CAD$1,665,700
New Zealand CAD$765,500 CAD$1,148,250
USA Not specified CAD$1,031,700
(CAD$515,850 regional program)
NOTE: Currency equivalents based on Bank of Canada nominal exchange rates, January 11, 2010.
* Under the Canada-Quebec Accord, Quebec is responsible for the selection of immigrants destined to the province, as well as the design and delivery of its own settlement services. The regulatory changes to the eligibility criteria also apply to Quebec-selected investors.
Managing Application Intake
Under the old IIP, the volume of applications grew exponentially in recent years. This surge in applications resulted in a rising inventory and longer processing times. As a result, the Department temporarily stopped accepting new applications when the changes were first proposed for public comment on June 26, 2010. These measures were put in place to prevent a flood of applications before the new criteria took effect, which would have stretched processing times even further. Once the new criteria take effect December 1, new applications will be processed alongside the old ones. In this way, Canada can begin to benefit from the changes as soon as possible.
Quebec announced its own moratorium on investor applications on October 15, and like the federal moratorium, this suspension will be lifted on December 1 when the regulatory changes to personal net worth and investment criteria take effect.
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