Canada’s Federal Investor Program & Entrepreneur Program Terminated
On February 11th, the 2014 Canadian Federal Budget, Economic Action Plan 2014, was released. In the budget, the Government of Canada announced the termination of the Federal Immigrant Investor Program (IIP) and Federal Entrepreneur (EN) Program, two programs that have been plagued by inefficiencies and longstanding backlogs. The programs will be scrapped, along with the 65,000 applicant backlog.
Research shows that these programs have done little to benefit Canada over the years. Under the Federal Investor program, investors were required to provide a $800,000 loan to the Canadian government, which was paid back interest free in 5 years. In actuality, these investors needed only to invest $150,000, since Canadian banks would fund the rest. They also could satisfy a lower score on Citizenship and Immigration Canada’s point system compared to other economic immigrants (35/100 vs. 67/100), which measured factors such as language proficiency, education, experience and adaptability. Once their application was approved, these investors would receive permanent residency up-front without any conditions. The capital actually invested under the Investor program was disappointing, with less than half the funds actually invested.
Canada’s Investor Program is a huge contrast to programs run by other countries, where they have been adapted over the years to meet the countries’ economic needs. In the United Kingdom, Australia and New Zealand, immigrant investors must invest as much as $5 to $10 million and are not offered permanent residency up-front.
Furthermore, research shows that investor and entrepreneur immigrants pay less taxes than other economic immigrants, up to $200,000 less, over a 20 year career. They are also less likely to stay in Canada long-term and lack the skills to contribute to the economy compared to other immigrants, such as English or French proficiency.
In place of these programs, the Government will introduce new pilot programs, such as a new Immigrant Investor Venture Capital Fund pilot project, which will require immigrants to make a real and significant investment in the Canadian economy. The Government will also conduct consultations on a potential Business Skills pilot program. The Start-up Visa Program that was launched in 2013, which is for entrepreneurs who have the support of a Canadian venture capital firm, will continue.
The announcement to terminate the Federal Immigrant Investor Program and Federal Entrepreneur Program comes at a time when currently there is 65,000 applicant backlog. The Government of Canada will be eliminating this backlog and refunding all applicants. Applicants will then need to apply under the current immigration programs.