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In June 2022, the Canadian Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which then came into effect on 1 January 2023. (‘Non-Canadian’ refers to those without Canadian citizenship; companies not incorporated under federal or provincial laws; and companies incorporated within Canada but not listed on a Canadian stock exchange, and either controlled by a company incorporated outside of Canada or controlled by non-Canadians.)

The Act was conceived in order to slow the historically high escalation rates in housing costs. On 27 March 2023, the Canadian Minister of Housing and Diversity and Inclusion announced amendments to the accompanying regulations for the Act, which had been having unintended and negative consequences.

The amendments implement the below changes:

  • They ease the threshold at which non-Canadian workers are able to purchase a residential property. Specifically, non-Canadians in the country who have a valid work permit or work authorisation with at least 183 days remaining on it, are now able to purchase one residential property.
  • They slightly increase the Foreign Control Threshold. Specifically, the amendments increase the ownership threshold for non-Canadians from 3% to 10%.
  • They permit non-Canadians to purchase land for development. Specifically, the amendments allow non-Canadians to purchase vacant land which sits within a residential or mixed-use zone. In addition, they allow non-Canadians to purchase residential property for development purposes.

The biggest beneficiaries of these changes are non-Canadian workers on longer-term assignments who wish to directly purchase or sell a residential property: a greater number of these workers now qualify to make such a purchase/sale.

The changes provide limited practical relief for a) employers looking to achieve the tax benefits of a properly structured home sale programme for any US-bound employees, or for b) employers looking for support from a US-controlled RMC with intra-Canada moves. This is because RMCs which are classified as non-Canadian or which are controlled by a non-Canadian company are still banned from acquiring residential property from assignees. Unfortunately, such an acquisition is a critical component to a valid home sale programme.

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