Canadian Government announces amendments to ease some restrictions impacting non-Canadian workers but impacts on RMCs remain.
On 27 March 2023, Canadian Minister of Housing and Diversity and Inclusion Ahmed Hussen announced amendments to the accompanying regulations for the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which was passed by the Canadian Parliament in June 2022 and went into effect on 1 January 2023. The announcement follows months of engagement by Worldwide ERC, its partner the Canadian Employee Relocation Council (CERC), and other constituencies advocating for revisions to the Act to address negative and unintended repercussions of the regulations.
What the Amendments Do:
The amendments implement several changes, including:
- Easing the threshold for non-Canadian workers to purchase a residential property: The amendments allow non-Canadians in the country with a valid work permit or work authorization to purchase one residential property if they have 183 or more days remaining on their permit or authorization at the time of purchase. Previously, non-Canadian workers could only purchase a residential property if they had been in the country full time for three of the last four years and had submitted all required tax filings during that time.
- Slightly Increasing the Foreign Control Threshold: The amendments modified the definition of “control” by non-Canadians by increasing the ownership threshold from 3% to 10% or more of the value of equity in those Canadian Corporations who are not listed on a Canadian stock exchange.
- Permitting of Land Purchases by Non-Canadians for Development: Under the amendments, non-Canadians can purchase vacant land zoned for residential or mixed use. Additionally, non-Canadians can purchase residential property for development purposes.
What Do the Amendments Mean for the Workforce Mobility Industry?
The biggest beneficiary under these changes are non-Canadian workers on longer-term assignments looking to purchase or sell a residential property directly. Changes to the threshold now allow a greater number of non-Canadian workers to qualify for purchasing one residential property.
Unfortunately, for employers looking to achieve the tax benefits of a properly structured home sale program for any U.S. bound employees, or for assistance by a U.S. controlled RMC for employees with intra-Canada moves, the amendments provide very little practical relief, if any. RMCs that meet the definition of a non-Canadian, or fall under non-Canadian control are still banned from acquiring residential property from transferees – a critical component to a valid home sale program.
Worldwide ERC, in conjunction with CERC and other key partners, will continue to engage on this matter and advocate for solutions to address the remaining challenges impacting the workforce mobility industry.
Craig Anderson is the Past Chair of Worldwide ERC’s Tax Policy Forum. Michael T. Jackson is the Vice President, Member Relations and Operations at Worldwide ERC.