The Canadian Immigrant Investor Program closed its doors to 65,000 immigrant investors. 70% of the Canadian program applicants are from China. The termination of the Canadian Immigrant Investor Program has caused major panic among the Chinese investors and agents.
Compared to the US EB-5 Program, the Canadian Program is more secure for investors but less efficient in stimulating the economy. Canada offered guaranteed permanent residence in exchange for an interest-free guaranteed $800,000 Canadian dollars loan (USD$728,000). This Program, launched in 1986, has gained enormous popularity over nearly three decades among Chinese investors. The United Kingdom, Australia and New Zealand require as much as $5 to $10 million, and do not offer up-front permanent residency. The Immigrant Investor Program in Quebec has not been affected, but the program is plagued with backlogs with an average wait time of up to 4 years.
Termination of the Canadian program has become a new opportunity for the EB-5 community in the US. The authors have been approached by several investors and agents about transferring the investors to the EB-5 Program in the US.
The termination results in refunding approximately USD$47 billion to the investors, who have been waiting for years to immigrate to Canada. The termination of the Canadian program will not deter the investors to try other immigration destination countries. For these investors, US is obviously the top choice for the vitality of the economy, superiority of the education and simply the proximity to Canada.
Within less than a week since the announcement of the termination, Chinese investors have started transferring their wealth in nearby US cities, such as Seattle. It has been reported that the Seattle real estate market certainly heated up over the past week. The average price of the property purchased by Chinese investors is USD$2 million.
One of the reasons for the termination of the Canadian Immigrant Investor Program is that it provided limited economic benefit to Canada. The Program also experienced a severe backlog with a wait time of up to 12 years. Research shows that immigrant investors pay less in taxes than other economic immigrants. Over a 20-year career, an immigrant investor has paid about $200,000 less in income taxes than a federal skilled worker and almost $100,000 less in taxes than one live-in caregiver. Some wondered if Canada’s decision to terminate the investor immigrant program targets China. The Chinese agencies stated that Canada’s policy change is unfair to Chinese investors.
If the investors from the Canadian Program, as expected invest in the EB-5 Program in the US and 70% are from China, it may accelerate the EB-5 visa regression for Chinese investors. Interested investors, representatives and agents should consult experienced EB-5 attorney for details.
Yi Song is an attorney at Mona Shah & Associates focusing on EB-5 and securities law. She is admitted to practice law in New York and People’s Republic of China. She has authored many published articles on EB-5 financing and securities law. She practiced tax law in China and has experience in class action securities litigation cases. Yi is a graduate from Georgetown University Law Center in Washington, DC.
Yi’s article, written with Mona Shah, entitled “Real Estate Projects – Still the Darling of EB-5,” was published in the Winter 2014 issue of EB-5 Investors Magazine.
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