Navigating the Exceptions to the Foreign Buyers Ban

Written by: Nicholas Blanchette, Student-at-Law

As of January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”, or colloquially, the “Foreign Buyers Ban”) has prohibited those designated as “non-Canadians” from purchasing residential property in Canada for a minimum of two years, in an attempt to stem the tide of foreign influence in our domestic real estate market.¹ Notwithstanding the variety of opinions on the efficacy of the Act, the Foreign Buyers Ban includes a number of exceptions which allow a person to purchase residential property in Canada where they would otherwise not be able to do so.

 Definition of Non-Canadian

The Act defines a person who is a non-Canadian as an individual who is not a Canadian citizen, nor a person registered as an Indian under the Indian Act and who is not a permanent resident. Additionally, a person may be considered a non-Canadian under the Act if they are a prescribed person or entity.²

With respect to corporations, they will be considered as “non-Canadian” if they are incorporated outside of Canada or a province of Canada or if they are not listed on a Canadian stock exchange pursuant to section 262 of the Income Tax Act, and they are controlled by a person who is a non-Canadian.³

Although for now, the definition for “prescribed entities” found in the regulations for the Act (the “Regulations”) reiterates the above considerations for non-Canadian corporations, it is important to note that these Regulations can change over time and be updated to include more persons who will be prohibited from purchasing residential property in Canada.⁴

 Exceptions to the Act

The Act, although relatively clear with respect to who qualifies as a “non-Canadian”, also includes a number of exceptions to the prohibition based on the type of person making a purchase or the circumstances in which the purchase would take place.

For instance, a temporary resident within the meaning of the Immigration and Refugee Protection Act, who is authorized to study at a designated learning institution may be eligible to purchase residential property in Canada if the following conditions are met:⁵

1.    They have filed all required income tax returns under the Income Tax Act for each of the five taxation years preceding the year in which the purchase will be made;

2.    They were physically present in Canada for a minimum of 244 days in each of the five calendar years preceding the year in which the purchase was made;

3.    The purchase price of the residential property does not exceed $500,000.00; and

4.    They have not purchased more than one residential property.

There are further exceptions noted in the Act, such as for temporary residents with work permits who meet the prescribed conditions, those who are considered protected persons within the meaning of the Immigration and Refugee Protection Act, or those who are purchasing property with a spouse who is Canadian; however, each of these exceptions should be examined in detail by a qualified individual to make sure that a person is in compliance with the Act.

Any person who contravenes the Act or assists in any way with the contravention of the Act is liable on summary conviction to a maximum fine of $10,000.00. This indicates that real estate professionals should consult with a lawyer who understands the Act and the Regulations, to ensure that they do not unintentionally find themselves on the wrong side of the law and/or having to pay a financial penalty.⁶

In addition to the exceptions contained within the Act, the Regulations also contain exceptions for those who are visiting Canada for diplomatic reasons or similar. Furthermore, some individuals who have applied for refugee status in Canada may also be eligible to purchase property if they have complied with certain sections of the Immigration and Refugee Protection Act.

Given that the Act, and the Regulations, denote rules that can only be fully understood with reference to other legislation, it is all the more important that a person qualified to review said legislation make a determination on how best to comply with the Act. 

Conclusion

Although at first glance the Act may seem straightforward with respect to who can and cannot buy residential property in Canada, there are many discrete circumstances and exceptions that may be relevant for purchasers. Given the legal and financial consequences for failing to comply with the act, purchasers and real estate professionals should consult a lawyer prior to entering an agreement for the purchase and sale of a residential property.

If you, your client, or a person you know, has questions about who can purchase residential property in Canada, please do not hesitate to contact the following members of our team at SB LLP who would be pleased to assist you:

Roshan Kalra , Hasman Dhaliwal,  Missy Garska

 *Disclaimer: This article is not intended to provide legal advice and is for information purposes only.

 1. Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2022, c. 10, s.235.

2. Ibid, at s. 2.

3. Ibid.

4. Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250

5. Ibid, at s. 5.

6. Supra, note 1 at s. 6.