Ottawa scraps investor immigrant program

posted on February 12, 2014

By Tara Carman and Peter O’Neil, VANCOUVER SUN | Link to Article

By Tara Carman and Peter O’Neil, VANCOUVER SUN | Link to Article

Few in B.C.’s immigration community are mourning the loss of the immigrant investor program, which granted permanent residence to wealthy foreigners able to cough up $800,000 with few strings attached.

“Frankly … it was a convenient way for some people to buy their way in to Canada,” said Queenie Choo, CEO of the S.U.C.C.E.S.S. immigrant services society.

The elimination of the immigrant investor and entrepreneur programs were announced Tuesday as part of the federal budget. The changes mean the government must refund applications for 66,000 individuals at a cost of $2 million.

The immigrant investor scheme has been criticized by both the current federal immigration minister, Chris Alexander, and his predecessor, Jason Kenney, as ineffective in luring foreign investment.

“There is also little evidence that immigrant investors as a class are maintaining ties to Canada or making a positive economic contribution to the country,” the budget stated. “Overall, immigrant investors report employment and investment income below Canadian averages and pay significantly lower taxes over a lifetime than other categories of economic immigrants.”

The federal government froze applications to the national program in 2012 due to concerns about the benefits of a system that effectively allowed high-net-worth foreigners to buy permanent residence status through a guaranteed, $800,000 interest-free loan to the provincial government where they state they will reside.

Other countries have thresholds as high as $1.6 million and do not return the money.

But some, including Vancouver immigration lawyer Richard Kurland, say the changes represent a loss for B.C.

Most of the people whose applications were abandoned Tuesday were bound for this province, said Kurland, who expects the city’s high-end housing market to take a hit. He predicted between 2,500 and 3,000 fewer wealthy immigrants will arrive each year.

“Who’s going to buy those homes now?”

B.C. received 2,622 investor immigrants in 2012, 28 per cent of the Canadian total, according to Citizenship and Immigration Canada. That’s down from 5,867 in 2008, when B.C. constituted just over half of the national total.

Part of the reason for B.C.’s smaller share in recent years could be that Quebec runs its own parallel investor program, which accepts more people than Ottawa’s and has a quicker, easier approval process. Alexander and Kenney have both complained that a majority of the Quebec applicants who pay their fees and invest their money in Quebec end up living in — and using the social services funded by taxpayers from — Ontario and B.C.

It’s a perception shared by immigration experts in B.C.

“There’s a certain sentiment that it’s an unfair program because it gives Quebec a fiscal advantage which none of the other provinces have, to the same scale,” said Matthew Sell of Vancouver-based CIP Immigration Consulting.

Tuesday’s budget announcement does not affect Quebec’s program, but Kurland said the flow of immigrant investors to B.C. will nevertheless slow to a trickle because of stepped-up federal efforts to crack down on province-of-destination rules as well as new citizenship eligibility criteria.

Some of the problems with the immigrant investor stream were the lack of a language requirement and its propensity to attract “astronauts” — mainly from China — who would move their families to Canada but continue to conduct their business abroad, eluding Canadian tax authorities, Sell said.

“What you really want is a proper investment program, where the investment generates benefits for Canadian businesses … there are many innovative ways in which that money could be spent.”

The government is working on a pair of pilot projects, including a new Immigrant Investor Venture Capital Fund and business skills program, to replace the streams.

The government previously introduced a start-up visa to lure entrepreneurs to Canada with the promise of automatic residency even if their venture failed.

Kenney has long complained that the now defunct entrepreneur program merely attracted shopkeepers rather than a potential Bill Gates or Steve Jobs.

With files from Tobi Cohen, Postmedia News

Other immigration measures in the budget:

• The federal government is expected to generate $100 million in new tax revenue by the end of 2018-2019 by eliminating the five-year tax exemption that’s allowed wealthy new immigrants to avoid paying taxes on offshore assets.

• The government will commit $11 million over two years and $3.5 million ongoing to strengthen the Labour Market Opinion process to ensure Canadians get a crack at available jobs ahead of temporary foreign workers.

• The government is committing $14 million over two years, and $4.7 million a year in ongoing funding, to support the implementation of the Expression of Interest system for economic immigrants. This will allow provinces and employers to cherry-pick from a bank of vetted potential immigrants rather than assess people on a first-come, first-served basis. The program is poised to launch in January 2015.

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