On March 27th, the federal government announced amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act’s accompanying Regulations to enhance the flexibility of newcomers and businesses looking to add to Canada’s housing supply, effective immediately.
The Act and Regulations came into force on January 1st, 2023, as part of the Government of Canada’s strategy to make housing more affordable for Canadians. The accompanying regulations were developed for the Act to set out specific exceptions, definitions and clarifications necessary to implement the prohibition.
The changes expand exceptions to allow Non-Canadians to purchase a residential property in certain circumstances. These amendments are intended to further support individuals and families seeking to build a life in Canada by pursuing homeownership in their communities sooner and address housing supply issues.
Four amendment details are as follows:
- Enable more work permit holders to purchase a home to live in while working in Canada. The amendments allow those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and they haven’t purchased more than one residential property. The current provisions on tax filings and previous work experience in Canada are being repealed.
- Repealing existing provision so the prohibition doesn’t apply to vacant land. Section 3(2) of the regulations is repealed, so the prohibition doesn’t apply to all lands zoned for residential and mixed use. Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.
- Exception for development purposes. This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian.
- Increasing the corporation foreign control threshold from 3% to 10%. For the purposes of the prohibition, with regards to privately held corporations or privately held entities formed under the laws of Canada or a province and controlled by a non-Canadian, the control threshold has increased from 3% to 10%. This aligns with the definition of ‘specified Canadian Corporation’ in the Underused Housing Tax Act.
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