– BREAKING NEWS -
THE FEDERAL GOVERNMENT HEARS PUBLIC CRITICISM AND AMENDS REGULATIONS IN FULL FORCE
Nothing can surprise us anymore in the saga of the ban on the purchase of residential buildings by non-Canadians. This controversial Act, adopted in June 2022 and followed by a Regulation published in extremis 10 days before its coming into force on January 1, 2023, for a maximum period of 2 years, has not ceased to captivate our attention.
In fact, against all odds yet following sharp criticism from the general public since early January, the federal government published yesterday, on March 27th, 2023, an amendment to its Regulations that replaces, adds, and repeals several sections. There will be substantial changes that will be in effect from its adoption, i.e. March 27, 2023, until December 31, 2024.
Presented as wanting to “increase the flexibility of newcomers and businesses seeking to increase the supply of housing in Canada,”¹ the amendment is one page long:
Temporary residents with a work permit: don’t leave!
The message is clear for temporary residents with work permits. Gone is the condition of having worked full time for three years prior to the purchase. The condition of having filed income tax returns for the four years preceding the purchase is also gone. The buyer only has to prove that at the time of purchase, his permit is still valid for at least 183 days, while maintaining the condition of having purchased a single residential building.
Vacant land reopened for purchase by all
The prohibition that had been created for vacant land has been repealed. It is therefore once again possible for a non-Canadian to buy a vacant lot and develop what they wish, in compliance with the municipal zoning.
If it is to develop, no more ban!
One of the exceptions in the Act is new: “acquisition by a non-Canadian of residential property for the purposes of development“. This means that a non-Canadian will be able to purchase a prohibited property (e.g., a house or duplex in a census agglomeration) if the acquisition is “for the purposes of development“. This is a generic formula that will also cause a lot of discussion… Especially since in its press release of March 27, 2023, the government, by error or clumsiness, does not use the same term “development“, referring instead to “planning” purposes. The debate is therefore launched on the exact nature of this exception.
Control of companies by a non-Canadian
The decision to set at 3% of the value of the capital conferring 3% of the voting rights to establish the “control” of a non-Canadian in a company had been received as a shock. The amendment increases this participation from 3% to 10%. We are still not at 50%, but this increase must be noted, although in reality we are not convinced of the real impact of this change.
Finally, the exception currently applicable to publicly traded companies controlled by a non-Canadian is extended to publicly traded entities incorporated under federal or provincial law and controlled by a non-Canadian.
Written by Me Ludovic Le Draoullec