Backgrounders - Changes to the 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 business people 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) is proposing changes to the program that will position it to make 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. These changes are anticipated to take effect this fall.

Benefits of the IIP

Investments made through the program take the form of a five-year, zero interest loan to the Government of Canada. These funds are distributed to participating provinces and territories to fund economic development and job creation initiatives in their regions. While investment strategies vary by region, 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), loans to small and medium-sized Canadian businesses, and specialized job training for newcomers. The provinces and territories must guarantee repayment of the investments received.

The provinces and territories are currently managing almost $2 billion of 5-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 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 investing in, acquiring and managing businesses here in Canada. They also bring important links to global economies and an understanding of international markets.

Proposed Changes

The Government of Canada is proposing new eligibility criteria for the IIP. These proposed regulatory changes would 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 current IIP criteria have remained unchanged since 1999 and are the lowest in the world compared to other countries that have similar programs (see the chart below: International Immigrant Investor Programs). The new criteria will 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

*Currency equivalents based on Bank of Canada nominal exchange rates, January 11, 2010

Managing Application Intake

Under Canada’s current criteria, the volume of applications submitted under the IIP has grown exponentially in recent years (see “Federal Immigrant Investor Application Intake” below). This recent surge in applications has resulted in a rising inventory and processing times are increasing. As a result, the Department will temporarily stop accepting new applications until the changes are finalized. Only applications postmarked or received before June 26, 2010, will be accepted. This will prevent a flood of applications before the new criteria take effect, which would stretch processing times even further. With the limit on investor applications, we will be able to focus on those we already have in process. When the new criteria are in place, new applications will be processed alongside the old ones. In this way, Canada can begin to benefit from the changes immediately.

The province of Quebec has its own IIP, and the processing of applications for permanent residence for investors selected by the province will continue as usual.