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JAN MACPHERSON
RE/MAX  Salt Spring

 

Immigration

Canada has a generous immigration policy. This country is a second home to many. Non-Canadians may purchase property in Canada. There is usually no problem with purchasing property if one has the intention of being here for six months or less. There are implications with taxation as well to be considered. Tax treaties are in place with varying countries. Professional counsel is advised. A half hour telephone consultation usually may clarify most people's requirements.

The following was prepared by Morahan & Aujla, Barristers & Solicitors  and is presented here with permission. Legal counsel is recommended and may be found with Canadian Immigration Lawyer, S. David Aujla at www.VictoriaLaw.com 
 (604 630-2244) in Victoria, British Columbia or with Immigration Canada
 or any other legal body.

INFORMATON ON IMMIGRATING TO CANADA*

There are five main categories under which individuals may apply for permanent residence to Canada:

I.                     Skilled Workers:  (formerly the independent category) are persons who qualify under a point system of immigration selection based primarily on education and work experience that are deemed to benefit the Canadian economy.

II.                   Economic Class:  (formerly the business class) immigrants are considered against modified selection criteria.  There are separate requirements for entrepreneurs, investors, and self-employed persons 

III.                  Provincial Nominee Class:  are persons who have a specific skill or business which is in high demand for a particular Province and are nominated because of their specific skill under a Provincial Nomination agreement between the Province and the Minister of Citizenship and Immigration

IV.               Family Class:  immigrants are those persons who are immediate family members (i.e. common-law spouses, same sex spouses, spouses, unmarried dependent children, parents, grandparents, or siblings under twenty-two years of age and unmarried) of Canadian citizens or permanent residents.

V.                 Refugees:  are accepted on the basis of Canada’s commitment to protection of persecuted peoples pursuant to its obligations as a signatory to the United Nations Convention on Refugees.

  I.            SKILLED WORKERS

Canada’s point system of immigration selection means that it will be easier for you to get into Canada if you meet Canada’s designated skilled labour needs.  The selection criteria points system considers your application on ten factors to determine if you are likely to be successful in establishing yourself and adapting to Canadian society.  The score emphasizes education, practical work experience and your previous experiences in Canada.

If you have a post-secondary education and advanced skills which are in demand in Canada, you will find it easier to qualify.

You must get at least 75 points to be successful.  The maximum points available for each of the selection criteria are as follows:

 

Factor
Points

Note 

Education

25

Maximum points for Master’s or Ph.D.

Work experience

21

For occupations which qualify

Arranged employment

10

Only for HRDC approved positions

Age

10

Between 21 and 49 years of age

English/French fluency

24

A person fluent in both languages will receive the maximum number of language points (24) and diminishing points depending upon fluency.

Spousal or common-law partner’s education

5

Maximum points if spouse or partner has Master’s or Ph.D.

Minimum of one year of full-time authorized work in Canada for applicant, applicant’s spouse, same-sex or common-law partner

5

 

Minimum 2 years full-time post-secondary study in Canada for applicant, applicant’s spouse, same-sex or common-law partner

5

 

Family relationship in Canada for applicant, applicant’s spouse, same-sex or common-law partner

5

Could be spouse, common-law partner, child, sibling, parent, aunt, uncle, niece or nephew, or grandparent

Skilled workers must supply documentation of their educational background and work experience.

Some, but not all, of these selection criteria also apply to immigrants under the economic class.

Self-Sufficiency

Skilled worker immigrants must provide evidence that they have sufficient funds available for transfer to Canada to support themselves and their dependents for at least six months after landing in Canada.  This is to ensure that the applicant does not apply for financial assistance from Social Services upon arrival in Canada.  This requirement is not stringently adhered to by Visa Officers if there is a job waiting for the applicant or his/her spouse in Canada or if there is a relative with whom the applicant will make his/her home until locating employment.

II.            ECONOMIC CLASS

Canada has one of the world’s most comprehensive business immigration programs. 

The point system assessment used for skilled worker applicants is only partly applied for economic applicants

The business program is divided into entrepreneurs, investors and self-employed individuals.

Qualifying Conditions for Entrepreneurs and Investors

For entrepreneurs and investors, business experience is an absolute essential criterion to determine if you are eligible for Canadian immigration.  For self-employed individuals different qualifications apply.

What is business experience for entrepreneurs and investors?

Business experience is defined by one of two ways:

1.                  You have either owned a qualifying business of sufficient size; or

2.                  You have managed a business or a portion of a business (without the need to run it) with at least five employees.

  What is a Qualifying Business?

As an investor or entrepreneur, you will be required to provide documentation for which proves that within two of the last five years you have owned and managed a business that meets any of two defined requirements with regards to jobs, sales, net income and equity.  For example, the following chart shows how your business can qualify and thus showing that you have business experience. All figures in Canadian dollars. 

OWNERSHIP

Attribute

100%

50%

33.33%

 

Employment

2

4

10

Sales ($)

500,000

1,000,000

2,500,000

Net Income ($)

50,000

100,000

250,000

Equity ($)

125,000

250,000

625,000

What is Management Experience?

If you have managed at least five individuals in a business over the last two of the five years prior to your application being filed, you could also qualify under the economic class even though you have not owned the business yourself.

Specific Conditions for Entrepreneur

Once you have qualified as an entrepreneur and entered Canada, the Visa issued to you is a Conditional Visa.

You must demonstrate to Citizenship and Immigration Canada that for at least one year out of three after you have landed in Canada, you have successfully owned and managed a qualifying Canadian business that meets any of the two defined requirements for job sales, net income and equity.  The following chart sets out the chart for a qualifying Canadian business at various percentages of ownership. All figures  are in Canadian dollars.

  OWNERSHIP

Attribute

100%

50%

33.33%

Employment

2

4

6

Sales ($)

250,000

500,000

750,000

Net Income ($)

25,000

50,000

75,000

Equity ($)

125,000

250,000

375,000

 

You must create at least one full-time equivalent job for someone other than yourself and/or your dependents.

Investors and entrepreneurs must first meet their respective definitions and then obtain a minimum of 35 points according to the following assessment:

Factor
Points

Business experience

35

Age

10

Education

25

English/French fluency

24

Business exploration trip to Canada within five years of application

6

Participation in joint federal-provincial business immigration initiative

6

 

(A)         Investor Program

The Immigrant Investor Program (IIP) seeks to attract experienced businesspersons and capital to Canada.

The Canadian government’s requirements for an investor are as follows:

1.                  The investor must have operated, controlled or directed a financially successful business or commercial undertaking.

2.                  The investor must have accumulated, by his/her own endeavours, a net worth of $800,000 Canadian.

3.                  The investor must make an irrevocable investment of a minimum of $400,000 for at least five years which will contribute to the creation or continuation of employment opportunities for Canadian citizens or permanent residents other than the investor and his/her dependents.

All investments are to be made in projects which have been approved by the federal government in consultation with the particular province.  The projects are promoted by private enterprise and the federal government monitors compliance with the guidelines of this program only and does not guarantee a return.

The investor may choose to commit the funds to a business, private investment syndicate or government capital venture fund which is identified by the provincial or federal government as being of significant economic benefit and which results in the establishment, expansion or maintaining of a business or commercial venture, either solely or in conjunction with other investors.

The investor does not have to settle in the province of investment.

(B)       Self-Employed

The self-employed category is reserved for those who are and have a proven ability and have the intention to make artistic, cultural or athletic contributions to Canada.  In addition, farmers who have self-employed experience and intend to become self-employed in this avenue will be considered under the self-employed category.

Any other economic class immigrant with more generic business abilities will be required to either meet the entrepreneur or investor definitions, qualify as a skilled worker or be selected as a Provincial Nominee.

III.            PROVINCIAL NOMINEE CLASS

Canada and the Provinces of Canada have entered into the various Provincial Nomination agreements between the Province and the Minister of Citizenship and Immigration.  These agreements allow a person to be nominated by the Provincial Government and to be issued an Immigrant Visa without having to meet the pass mark that is required for skilled worker immigrants.

As a result, individual Provinces are responsible for issuing nomination certificates.  If you are successful in convincing a Province that you have a skill or business which is in high demand for that particular Province, a certificate will be issued to you by the Province provided that you meet all other statutory and admissibility requirements of Citizenship and Immigration Canada and that you can become economically established.  You will then be issued an Immigrant Visa for entry into Canada.  The requirements and procedures for the Provincial Nominee Programs differ from Province to Province depending upon the needs and experience.

Our firm will automatically assess you for the Provincial Nominee Program whether you apply under the skilled worker category or the business category.

If we deem that your skill is in high demand, the Provincial Nominee Program will be recommended to you at the time.

IV.            FAMILY CLASS

The purpose of the family class category is to facilitate the reunion in Canada of Canadian citizens and permanent residents with their close relatives from abroad.  A Canadian citizen or permanent resident can sponsor, as members of the family class the following persons:

1.                  Spouse

2.                  A common-law partner which includes a person who is cohabiting in a conjugal relationship with a person (whether of the same sex or not), having so cohabited for at least one year.

3.                  A dependent son or daughter under the age of twenty-two or, if over twenty-two, unmarried and a full-time student or mentally or physically disabled and dependent on parents.

4.                  Father or mother.

5.                  Grandfather or grandmother.

6.                  Brother, sister, nephew, niece, grandson or granddaughter who is an orphan and is under twenty-two years of age and unmarried.

7.                  One relative regardless of age or relationship, where the Canadian citizen or permanent resident does not have a spouse, son, daughter, father, mother, grandfather, grandmother, brother, sister, uncle, aunt, nephew or niece.

A family class application is initiated by the Canadian citizen or permanent resident (the “sponsor”) by filing an Undertaking of Assistance Application inside Canada.  The Undertaking of Assistance must include proof of the sponsor’s ability to assist the intending immigrant financially, proof of the sponsor’s Canadian citizenship or permanent resident status, proof of the sponsor’s relationship with the intending immigrant and the required processing fee.  Only in the case of a spousal sponsorship is a sponsor not required to meet the financial requirements.  In every other case, the sponsor must prove his/her ability to provide for the needs of the intending immigrant once permanent residence is granted.

 

GENERAL INFORMATION

(A)            Documentation Requirements

All intending immigrants must be able to present to a Canadian Consular office proof of the following:

·                    employment or business background – by way of letters of reference from employers or business associates.

·                    educational credentials – must be proved by degrees, diplomas, certificates.

·                    financial net worth – must be proved by bank references attesting to funds on deposit, share and stock certificates, official valuations on property, etc.

 

All applicants will be required to submit certified (notarized) copies of all of the following:

·                    birth certificates issued by an official government body or institution

·                    marriage and/or death certificates, if applicable

·                    divorce decrees and custody orders, if applicable

Every applicant for permanent residence must hold a valid passport.

 

(B)            Applications and Fees

Every intending immigrant must submit an application for permanent residence and supplementary application forms for his/her spouse and dependent children along with the requisite processing fees.

Processing fees are as follows (amounts are quoted in Canadian dollars):

 

Principal Applicants:

Skilled Worker applications  $550.00

Business Class applications  $1,050.00

Family Class  $550.00

Dependent family member (all immigration categories):

Spouse or common-law partner  $550.00

Each child 22 years of age and older  $550.00

Each child under 22  $150.00

Right of Landing Fee (for each person over 22)  $975.00

            Permanent Resident Card (each person immigrating)             $50.00

The Canadian Consular office will initially approve the application and, if approval is successful, will schedule the applicant and his/her spouse and dependent children over 18 for an immigrant interview.

 

(C)            Medical and Criminal Clearance

All immigration applicants and their dependent family members must undergo an immigration medical examination to ensure that no member of the family is likely to be a danger to public health or public safety or cause excessive demands on the health or social services in Canada.  If any member of the family is found to be medically inadmissible to Canada, the entire family will be refused on medical grounds.

All immigration applicants and their dependent family members over the age of 18 (in some cases over 16) must submit police certificates attesting to no criminal convictions.  An intending immigrant with a police conviction record will be determined criminally inadmissible to Canada and the entire family will be refused.

The above materials have been compiled by the Law Firm of Morahan & Aujla, at 4th Floor – 777 Fort Street, Victoria, British Columbia, Canada.

Last updated June 28, 2002.

FOREIGN OWNERSHIP OF PROPERTY

Other than the usual tax considerations affecting all owners of real property, there are two areas of particular concern to non-resident purchasers.

There is no requirement in British Columbia that the purchaser of real property have any particular residency or citizenship. To occupy residential premises, the non-resident must comply with immigration requirements. These vary depending upon the nationality of the individual involved. U.S. citizens are relatively free to occupy residential premises in Canada on a temporary basis.

If the non-resident property owner wishes to rent out the property the first tax situation will be encountered. Under the Income Tax Act s. 215 a person paying rent to a non-resident is required to withhold 25% of the gross rent paid and remit it to the Receiver General for Canada. Section 216(4) provides an alternative to this holdback. It is possible for the non-resident to elect to file Canadian income tax returns. A property manager can then become responsible for filing the Canadian income tax returns and is exempt from the withholding requirement mentioned above. The property manager can withhold and remit 25% of the net income derived from the property in question.

The main difficulty to a non-resident owner of real property in Canada occurs when they go to dispose of the property. This situation is not limited to selling the property. When a person dies, they are deemed to dispose of it at fair market value. As well, the transfer from a person to his or her company or relative is also a disposition despite the fact that there may be no money paid. Section 116 of the Income Tax Act requires the purchaser of real property from a non-resident vendor to withhold a portion of the purchase price and to remit it to Revenue Canada within 30 days of the end of the month in which the purchase and sale took place. The amount to be withheld is one third of the gross purchase price for non-depreciable property and half of the gross purchase price in the case of depreciable property. Generally speaking, residential property is dealt with on the basis of withholding one third of the gross purchase price. The purchaser need not remit this money to Revenue Canada if the vendor can present them with a clearance certificate. Usually, the clearance certificate is not received until after the closing of the sale. For this reason, arrangements are made between the lawyers for the vendor and the purchaser to withhold the appropriate amount of the purchase price until the clearance certificate is obtained. This can easily take several weeks.

The non-resident can apply before the sale to Canada Customs & Revenue Agency (CCRA) stating the name and address of the purchaser, the description of the property, the estimated or the actual sale proceeds and the adjusted cost base of the property of the non-resident. CCRA will issue the clearance certificate only after all Canadian taxes of that non-resident have been paid. This would include any taxes on rental revenue. If the application is made on the basis of an estimated sale price, then the clearance certificate will set a certificate limit. In order to obtain the certificate, however, tax at the appropriate rate (one third or half) must be paid on the capital gain without deduction for sale costs. If the vendor does not have the money for the tax until the sale proceeds are received then arrangements must be made with CCRA to secure that payment. Usually the undertaking of the vendor's lawyer to pay the amount upon receipt of sale proceeds is sufficient.

Once the property is sold and the clearance certificate obtained, the vendor may file a Canadian income tax return claiming the cost of sale. CCRA will process this tax return and eventually issue a refund of the tax paid on closing costs. This takes approximately ten months.

While it is not a problem for people who are non-resident of Canada to acquire property here, the effect of the tax withholding provisions can cause hardship if they are not aware of them. It is important that non-resident owners receiving rental revenue be aware of the election under Section 216 of the Income Tax Act permitting taxation of 25% of the income rather than the gross revenue derived from the property. If the section 216 return is not filed within two years from the end of the year in which the rental income was paid or credited to then it is too late with respect to that period of time. It is also important that non-resident owners be aware of the withholding provisions that occur on disposition. They can be grossly inconvenienced in the event that they are relying on sale proceeds to purchase another property and have not made advance arrangements with CCRA for a Clearance Certificate. Worse still, the vendor may have a mortgage to discharge with a balance of over 66% of the sale price. Here, a clearance certificate or alternate financing is essential to completing the sale.

*Please note that this information is subject to change in legislation that the web owner may not be aware of. RE/MAX or Jan Macpherson disclaim legal responsibility and the reader is requested to verify with Immigration Canada or with legal advice if important to them.