The act prevents non-Canadians and foreign corporations from buying residential property in Canada for two years. But what does “non-Canadian” mean in this context? The act defines non-Canadians as those who are not:
- Canadian citizens
- Permanent residents of Canada
- Persons registered under the Indian Act
As for foreign corporations, non-Canadian corporations are defined as those that are:
- Privately held
- Not listed on a stock exchange in Canada
- Controlled by someone who is considered a non-Canadian under the act
A person or corporation defined as non-Canadian can’t buy property, either directly or through trusts, partnerships or similar entities.
When it comes to the control of a Canadian property, the regulations in the act define “control” as, “direct or indirect ownership of shares or ownership interests of the corporation or entity representing 3% or more of the value of the equity in it, or carrying 3% or more of its voting rights, or control in fact of the corporation or entity, whether directly or indirectly, through ownership, agreement or otherwise.” In other words, non-Canadian participants in corporations cannot be majority shareholders.
Thankfully for those who may assume they are affected by the ban, there are some exceptions to the regulations when it comes to owning Canadian property.
If a non-Canadian ends up with an interest in a residential property due to separation, death or a divorce, they are not subject to the ban. They are also not subject to the ban when the transfer of the property is from exercising the interest or secured right by a secured creditor and also when the property is being rented by a tenant.
There are also other exceptions to the ban. Some people who are not technically citizens or permanent residents can still buy property over the next two years. These exceptions include:
- Non-residents married to a citizen
- Diplomats and members of international organizations who are living in Canada
- Refugees and those with temporary resident status
- Workers who have worked and filed tax returns in Canada for three out of the four years before buying property
- International students who have spent most of the previous five years in the country (they can buy property up to $500,000)