As Canada Eliminates its Immigrant Investor Program, International Investors Shift Their Focus
In a statement made on the evening of February 11, 2014, the Canadian government announced that it intends to terminate both the Federal Immigrant Investor Program (IIP) and Federal Entrepreneur (EN) program by abolishing it from the 2014 federal budget. In doing so, it plans to eliminate 66,000 backlogged applications and refund $2 million in filing fees. In 2011, approximately 10,000 immigrants entered Canada through the IIP, while almost 1,000 entered through the EN program. In recent years, it has taken an average of 54 months to issue investor visas, and even longer for entrepreneur visas. It would take an estimated six years to process the backlogged applications.
Canada’s elimination of these programs will have wide-reaching ramifications in the foreign investor community and has created renewed focus on investment-based immigration options with Canada’s North American neighbor, the United States.
The Canadian program, which granted permanent resident status to foreign investors who made an interest-free, CAD $800,000 loan to the Canadian government, was scrapped due to what the government cited as a “lack of economic benefit” to the country. According to Canadian government officials, those who utilized the program paid less in taxes and spent less time living in-country than immigrants utilizing other programs.
The required CAD $800,000 loan amount is also less than what is required in other countries, which have set investment thresholds as high as AUD $1.5 million for Australia; £1 million in the UK; and NZ$10 million for the Investor Plus Visa in New Zealand.
Canada’s loss may be the United States’ gain in terms of opportunities to harness international talent and investment. The United States has typically trailed just behind Canada as a popular destination for investment-based immigration. Now, it may be the first choice for investment in North America.
Solution: EB-5 Immigrant Investor Visa Program
Foreign nationals can obtain permanent resident status in the United States for themselves and their families using the EB-5 Immigrant Investor Program. Under this program, an investor has three options for investing legally-obtained funds in exchange for a Green Card: (1) invest $1 million in a new or existing enterprise in the United States; (2) invest $500,000 in an area designated by the US government as an area of “economic hardship”; or (3) invest $500,000 in a designated “Regional Center”. Typically, the process takes about one to 1½ years for an EB-5 applicant to get a conditional Green Card.
A “conditional” Green Card is a temporary Green Card that is valid for two years from the date of issuance. After the two year period elapses and an investor successfully applies for a removal of conditions, the investor and his or her family members are given a permanent Green Card.
$1 Million Investment in New or Existing Enterprise
Experienced investors wishing to immigrate to the United States and establish a business can invest US $1 million dollars in a new or existing enterprise. To meet the requirements of the EB-5 status, the investor must also create at least 10 jobs. This route is recommended for investors who want control of their investment and have the necessary knowledge to run a business.
$500,000 Investment In An Area Of Economic Hardship
Investors willing to take a higher degree of risk have the option of investing a reduced amount of US $500,000 in a designated “economic hardship area”. These areas have been targeted by the US government for revitalization.
This investment option is suggested only for investors who have experience in revitalization and working in areas currently deemed to be under-performing.
Regional Center Investment
Regional Centers are private investment companies that have been given permission by the US government to accept investment from foreign investors. In return for a minimum US $500,000 investment, the foreign investor is awarded permanent resident status in the United States. Regional Centers use the invested money for the purposes of establishing commercial investments such as shopping centers, technology parks, and business centers. Most regional centers have positive investment records and will provide a return on the investment.
Unlike the first two investment options, however, utilizing the Regional Center option will not allow the investor to have any direct control of the investment. Therefore, this option is suggested for foreign investors whose main goal is to obtain Permanent Resident status, and who do not have prior investment and business knowledge.
The Next Step
With the changing investment-based immigration landscape, now is a good time to explore the multiple options available to foreign investors in the United States. To explore the various options for residency based on foreign investment, schedule a complimentary 15-minute consultation with The Grady Firm attorneys by filling out a Contact Request form, or calling (949) 798-6298.
Disclaimer: This article is for informational purposes only, and should not be construed as legal advice. Results and processing times by USCIS may vary. Similar results are not guaranteed. Always consult a licensed attorney to review the facts that are specific to your case.