Regulatory Amendments to the Canadian Real Estate Ban–Impacts on Workforce Mobility - ISS Relocations

Regulatory Amendments to the Canadian Real Estate Ban – Impacts on Workforce Mobility?

MICHAEL T. JACKSON, SHRM-CP & CRAIG ANDERSON – APR 19 2023

PUBLISHED IN: PUBLIC POLICY

Canadian government has eased restrictions affecting non-Canadian workers, but RMCs are still affected. 

Ahmed Hussen, the Minister of Housing and Diversity and Inclusion, announced on 27 March 2023 that amendments had been made 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 became effective on 1 January 2023. Worldwide ERC, its partner the Canadian Employee Relocation Council (CERC), and other constituencies have advocated for revisions to the Act to address negative and unintended consequences.

The amendments accomplish the following: 

A number of changes have been made as a result of the amendments, including: 

1. Non-Canadian workers can now purchase a residential property with a lower threshold:  

Non-Canadians with a valid work permit or work authorization may purchase one residential property if they have 183 or more days left on their permit or authorization at the time of purchase. Prior to this change, non-Canadian workers could only purchase a residential property if they had been in the country full time for three out of the last four years. 

2. The Foreign Control Threshold should be raised slightly: 
Through the amendments, the definition of “control” by non-Canadians was modified by increasing the ownership threshold from 3% to 10% of the value of equity in non-listed Canadian corporations.

3.  Non-Canadians may purchase land for development:
The amendments allow non-Canadians to purchase vacant land zoned for residential or mixed use. Non-Canadians can also purchase residential property for development. 

How Will the Amendments Impact Workforce Mobility? 

Non-Canadian workers on longer-term assignments who want to buy or sell a residential property directly will benefit most from these changes. A broader number of non-Canadian workers can now qualify to buy one residential property due to threshold changes.   

Unfortunately, employers seeking to achieve the tax benefits of a properly structured home sale program for U.S. bound employees or assistance from a U.S.-controlled relocation management company for intra-Canada moves will find very little practical relief through the amendments. Non-Canadian RMCs or those under non-Canadian control are still prohibited from acquiring residential property from transferees – a critical component of a successful home sale. 

Together with CERC and other key partners, Worldwide ERC will continue to engage in this matter. The organization will advocate for solutions to the remaining challenges affecting workforce mobility.

Craig Anderson is a past chair of Worldwide ERC’s Tax Policy Forum. Michael T. Jackson is tVice President ofMember Relations and Operations at Worldwide ERC. 

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