November 28, 2017 – Canada’s provinces are moving away from a direct path to Canada for wealthy immigrants and turning to two-step immigration programs aimed at entrepreneurs looking to establish businesses and be granted Canadian permanent residence.
Increasingly, provincial entrepreneur programs require candidates to spend up to two years in Canada on a conditional temporary work permit, before being issued a nomination for permanent residence.
The latest province to switch to the two-step format is Manitoba, following the introduction of a new Business Investor Stream which will begin operation at the start of 2018. The new stream replaces the one-step MPNP-Business stream, which required a deposit refundable once the candidate’s business was satisfactorily established.
Prince Edward Island and New Brunswick both still operate one-step entrepreneur programs, while Alberta’s Self-Employed Farmer Stream is directed specifically at agriculture specialists. Newfoundland & Labrador does not operate a business category of any description.
Meanwhile, the popular Quebec Immigrant Investor Program remains the only outright passive investment program offering a direct route to Canadian permanent residence.
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Under the one-step format, provinces were finding the programs exploited by candidates with little intention of establishing a business and willing to forfeit the deposit and take a shortcut to permanent residence.
Once permanent residence is issued, Canada’s Charter makes it difficult to enforce cases where applicants have failed to establish businesses and choose to live in other provinces. Freedom of mobility is a central right of a Canadian permanent resident.
Prince Edward Island’s 100% Ownership Stream came under the spotlight recently after it was revealed the province had withheld $18 million from entrepreneurs who had failed to meet the admission requirements and starting a business.
Some 177 candidates had up to $150,000 withheld under the terms of the agreement signed with the province. The vast majority of those P.E.I. immigration candidates failed to open a business, despite it being the central requirement of the stream.
The belief is those candidates had no intention of operating a business, but were happy to hand over their $150,000 deposit in exchange for Canadian permanent residence.
P.E.I. 100% Ownership Stream: Key Requirements
- Minimum personal net worth of $600,000. This net worth must have been acquired legally.
- At least a high school education.
- Be aged between 21 and 59 years of age at the time of application.
- Previous experience and significant talent in business management.
- Minimum of 4.0 on the IELTS within the last 2 years.
- Detailed business plan. The plan must involve the applicant owning 100 per cent of a P.E.I. business.
- Provide active and on-going management of the business from within P.E.I.
- Sign an escrow agreement committing to give a deposit of $200,000 to the P.E.I. government until all program requirements are met. After all requirements are met, the money will be returned to the applicant.
- Make a total investment in a P.E.I. business of at least $150,000.
Under the program, candidates must sign an escrow agreement committing to give a deposit of $200,000 to the PEI government until all program requirements are met. After all requirements are met, the money is returned to the applicant.
Of the $200,000, $150,000 is linked to the starting of a business, while the remaining $50,000 is linked to residency.
For the business portion to be refunded, candidates must meet requirements including investing $150,000 in a local business that incurs minimum $75,000 operating expenses in the first year. The business must also be managed from on the island.
For the $50,000 residency portion to be refunded, candidates must live on the island for 12 consecutive months.
Expression of Interest
P.E.I.’s Business Impact Category, which includes the 100% Ownership Stream, will move to an Expression of Interest system from 2018. However, there is no indication the core terms of the stream will change except that a deposit will no longer be required.
While the New Brunswick Entrepreneurial Stream has escaped the scrutiny the P.E.I. stream has come under, its terms appear similarly open to exploitation.
In fact, the New Brunswick stream requires a deposit of only $100,000, refundable after three years provided the terms of a Business Performance Agreement have been met.
New Brunswick Entrepreneurial Stream: Key Requirements
- Legally-acquired personal net worth of at least $600,000, of which $300,000 must be available in available in unencumbered liquidity.
- Invest at least $250,000 in a New Brunswick business, taking ownership of at least 33 per cent.
- Show business experience – either three years of ownership or five years of senior management experience in the last five years.
- Be aged between 22 and 55.
- Minimum two years post-secondary education degree or diploma.
- Score at least level 5 on the Canadian Language Benchmark exam for speaking, listening, reading and writing in English or French.
- Sign a Business Performance Agreement with provincial officials.
- Pay a refundable $100,000 deposit.
Establishing whether a business plan is genuine can be a difficult undertaking for provincial officials. Despite signing a business agreement, once permanent residence is issued, provinces would face a long legal battle to see it rescinded by Ottawa. The only real power is to withhold the deposit, which is not meaningful when candidates are already prepared to lose the amount.
Retention rates under such programs are believed to be low, with candidates looking to move to Canada’s major metropolitan areas such as Toronto, Vancouver and Montreal once their permanent residence is secured.
Similarly, low retention rates are seen in the Quebec QIIP, which is different only because it is set up as a passive investment program from the outset. Candidates with a net worth of $1.6 million are asked to invest $800,000 in a government guaranteed bond for five years. They must declare their intent to reside in Quebec, but this is difficult to enforce once permanent residence has been activated.
Quebec Immigrant Investor Program: Key Requirements
- Have a legally acquired personal net worth of $1.6 million CAD;
- Possess two years of suitable management or business experience within the five years preceding the application;
- Commit to making an investment of $800,000 CAD into a passive government guaranteed investment for a period of five years bearing no interest;
- Intend to settle in the province of Quebec;
- Quota: 1900 applications during subscription period.
The policy of choice for the other provinces is becoming clear: devise a much smaller program and require candidates to show evidence they have launched an active business which meets program objectives, before inviting them to apply for permanent residence.
This replaces the need to demand deposits and other enforcement conditions and should significantly raise retention rates, thus meeting the objective of such immigration programs.
Under the Entrepreneur Pathway of the new Manitoba Business Impact Stream, candidates with a net worth of $500,000 must invest either $250,000 or $150,000 depending where their business is located.
Candidates are initially issued with a temporary work permit. They are nominated for permanent residence after establishing a business meeting the conditions of a Business Performance Agreement.
Other Provincial Programs
In both B.C. and Ontario, candidates are given 24 months to implement a business plan outlined in a similar Performance Agreement. Nomination only comes once the terms of that agreement have been met.
Saskatchewan also requires the terms of a Performance Agreement to be met, but allows candidates to apply permanent residence from six months after arriving in Canada. In Nova Scotia candidates and dependents must have resided in the province for at least a year and met the terms of a Performance Agreement.
With controversy likely to continue to surround the provinces who still run one-step programs, the pressure will grow for them to move to two-step programs, as so many of the others have done.
The exception remains Quebec, which maintains complete control over its immigration policies as a result of the 1991 Canada-Quebec Accord. While Ottawa has previously confirmed it does not plan on challenging Quebec over its retention rates, efforts have been made by the Quebec government, through approved financial intermediaries, to ensure applicants have reasonable ties to the province.
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