The investment industry Association of Canada (IIAC) wants the federal government to expand the types of financial institutions that can act as “facilitators” under the Immigrant Investor Program (IIP) to include investment firms. The participation of Investment Industry Regulatory Organization of Canada (IIROC) registrants would “provide investing expertise” to the IIP, the IIAC’s letter on this matter says.
The IIP, which provides a route to citizenship for wealthy foreign investors, is under review by Ottawa. Currently, the IIP requires business immigrants to deposit $800,000 in a Canadian institution covered by federal deposit insurance.
These funds are supposed to be used by the feds and the provinces to promote economic activity, but because they must be returned to the depositors in five years (without interest), the funds tend to be invested conservatively.
Last summer, Citizenship and Immigration Canada (CIC) announced it would review the IIP to attract “more active investment for Canadian growth companies.” The CIC called on stakeholders for input on how to change the IIP to increase the benefits generated by this investment capital.
The IIAC’s letter supports the review of the popular IIP program. (Last summer, there were about 86,000 pending applications, contributing to a significant backlog.) Federal immigrant investors do not include immigrants applying under the entrepreneurs and self-employed programs.
At present, any registered IIROC dealer involved in the IIP must work with an entity insured by Canada Deposit Insurance Corp. (CDIC), typically one of the Big Six banks, and purchase insurance through a CDIC-insured entity. IIAC wants to remove that requirement.
As well, the IIAC letter backs the idea that the program be expanded to include the option of having an immigrant investor’s assets injected directly into the Canadian economy, says Barbara Amsden, director, strategy and research, with the IIAC: “We believe that to get the maximum benefit out of the investor program, the money coming in with investors should be invested.”
Invested assets would be protected (as funds on deposit currently are) under the Canadian Investor Protection Fund, Amsden says. That fund provides up to $1 million in coverage.
The feds also may bump up the amount required. Canada’s program is among the least expensive in the world. The threshold amount may be doubled in the 2013 federal budget.
A spokesperson for the CIC stated in an email: “There is no set timeline [for changes to the IIP threshold] at this point in time.”
© 2013 Investment Executive. All rights reserved.