Category Archives: Federal Investor Program

Immigration Minister to Visit Silicon Valley to Promote ‘Start Up Visa’

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Waterloo, Ontario, sometimes called Silicon North, is one of Canada’s major tech centres. Citizenship and Immigration Canada hopes the new Start Up Visa encourages foreign technology entrepreneurs to start companies in the country

Canadian Citizenship and Immigration Minister Jason Kenney will be visiting California’s Silicon Valley on Friday for a four day trip intended to promote Canada as a place to live for the region’s entrepreneurs.

According to an article in San Jose’s Mercury News, a billboard is currently appearing near Silicon Valley advertising Canada to foreign tech workers struggling with H-1B visa restrictions:

On Tuesday, just days before Kenney was set to tour San Francisco and the South Bay to promote his new visa for startup entrepreneurs, a giant red maple leaf emerged on a billboard off Highway 101 on the route from San Francisco to the heart of Silicon Valley, part of a Canadian advertisement encouraging tech workers here temporarily to migrate north permanently.

Modeled on an idea first introduced but never passed in the U.S. Congress, Canada’s new “startup visa” grants permanent residency to entrepreneurs who can raise enough venture capital and start a Canadian business.

“H-1B problems?” asks the South San Francisco billboard, referencing America’s temporary visa for skilled foreign workers. “Pivot to Canada.”

Citizenship and Immigration Canada (CIC) hopes to capitalize on the frustration tech companies in the U.S. are feeling over immigration restrictions on foreign technology workers and encourage them to relocate to and invest in Canada.

The eventual goal is to help foster the development of a Canadian equivalent to Silicon Valley.

One challenge that CIC faces in this mission is the country’s top marginal income tax rate, which is significantly higher than that of the U.S. A Canadian entrepreneur can look forward to paying about 50 percent of their income to the government if they succeed in joining the top bracket of income earners.

Compensating for this disadvantage, the federal government is offering a perk that no other advanced economy offers foreign entrepreneurs: permanent residency status.

For foreign tech workers in the U.S. anxiously awaiting the six year limits on their H-1B visas, immigration to Canada offers a chance of stability that only permanent residency can provide.

Also working in Canada’s favor is the perception of being a safer country than the U.S., with significantly lower violent crime rates, particularly homicide rates. A better fiscal situation, with a much lower deficit to GDP ratio than the U.S., also gives foreign nationals more confidence in the country’s economic future.

Regardless of how successful CIC’s headhunting campaign in Silicon Valley ends up being, the federal government has a lot of ground to make up for, with total venture capital funding in all of Canada in 2012 coming to $1.5 billion -less than 15 percent of the $10.9 billion worth of deals that happened in Silicon Valley last year.

Immigration Canada Announces April 1 Launch of Start-Up Visa Program

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Foreign entrepreneurs who receive venture capital funding from a designated venture capital fund or angel investor group will qualify for the new Start-Up Visa Program (CICS News)

Citizenship and Immigration Canada (CIC) announced on Thursday that foreign entrepreneurs would be able to start applying for the newly created Start-Up Visa Program on April 1st of this year.

“Canada is open for business to the world’s start-up entrepreneurs,” said Citizenship and Immigration Minister Jason Kenney in announcing the launch date.

“Innovation and entrepreneurship are essential drivers of the Canadian economy. That is why we are actively recruiting foreign entrepreneurs – those who can build companies here in Canada that will create new jobs, spur economic growth and compete on a global scale – with our new start-up visa.”

To qualify for a Start-Up Visa, a potential immigrant must receive venture capital funding from a fund and angel investor group designated as a recognized venture capital investor by CIC, in partnership with Canada’s Venture Capital and Private Equity Association (CVCA) and the National Angel Capital Organization (NACO).

A full list of designated venture capital funds and angel investor groups can be seen on the CIC website.

International competition

The Canadian Start-Up Visa Program is the first permanent residency program of its kind in the world but will still have to contend with competition for global start-ups from other countries which offer temporary residency and other perks to attract foreign entrepreneurs.

Singapore for example offers the EntrePass (Entrepreneur Pass), which provides business visas to qualifying individuals seeking to start a business in the country, and a competitive business environment, with no capital gains tax, a low income tax, and no fiscal deficit.

While inviting foreign business people and entrepreneurs to Canada undoubtedly contributes to the Canadian economy, an analysis on the income trends of Canada’s economic class immigrants, conducted by CICS News in January, suggests that the full potential of the capital and talent invited to Canada might remain unrealized unless the country’s business environment becomes globally competitive in terms of expected after-tax returns on investment made in the country.

Canada’s Immigration Backlog Reduced by 40 Percent

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Citizenship and Immigration Minister Jason Kenney announced on Tuesday that his department had reduced the backlog of permanent resident applications by forty percent since 2008 (Citizenship and Immigration Canada)

Citizenship and Immigration Canada’s (CIC) backlog of permanent resident applications has declined by forty percent since 2008, according to a CIC announcement on Tuesday.

A freeze in the acceptance of new Federal Skilled Worker and Federal Immigrant Investor applications, in place since July 2012, and an indefinite suspension of the parent and grandparent sponsorship stream of the Family Class immigration program, have reduced the rate at which CIC is receiving new permanent resident applications and allowed it to work through the backlog.

Citizenship and Immigration Minister Jason Kenney applauded the development in a press conference, saying a reduced backlog would allow for a faster and better immigration system:

“Backlogs and delays prevent Canada from attracting the best and brightest from around the world and ensuring that our immigration system is contributing to economic growth and long-term prosperity. For too long, we accepted far more applications than we could process each year. That led to backlogs increasing every year and processing times of eight to ten years in some cases, which discouraged talented, dynamic people from coming to Canada.”

CIC’s goal is to reduce processing times of applications for permanent residence to less than one year, from the sometimes over five years that it has taken in recent years.

The eventual goal is to put in place an Expression of Interest (EOI) model by the end of 2014, which will solicit simplified applications from foreign nationals interested in immigrating to Canada and invite the most promising applicants to submit a full application.

Immigrant Income Levels Depend on Canadian Immigration Program

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Data from the Statistics Canada report on the income of immigrants, released in December, shows large differences in the economic performance of immigrants depending on which immigration program they were admitted through (Moxy)

In the second part of our series on the recently released Statistics Canada report on the income of immigrants, we delve deeper into the data and look at how various economic class immigration programs compare for immigrants who arrived between 1986 and 2010. The first part can be found here.

Among the most important immigration-related issues for the federal government every year is picking the right mix of immigration programs to make up the annual quota that it sets aside for new permanent residents.

The major priorities that the federal government seeks to meet in selecting the allocation are:

  • meeting the humanitarian commitments it has set for itself to re-settle a certain portion of the world’s refugees
  • accommodating Canadians whose family members live abroad and who they would like to re-unite with through family class immigration sponsorship
  • admitting immigrants that will contribute to Canada’s economy and meet its investment and labour needs

To meet the last objective, the federal government currently allocates 60 percent of the permanent residence quota to economic class immigration programs, which consist of the Federal Skilled Worker Class (FSWC), the Canadian Experience Class (CEC), the business class programs, and the provincial nominee class programs.

Historically, the skilled worker program (FSWC) has contributed the largest portion of Canada’s economic class immigrants, but there have been calls to increase the proportion admitted through programs in the business and provincial nominee classes.

The provincial governments in particular have frequently called on the federal government to allow them to pick a greater share of Canada’s immigrants through their respective provincial nominee programs (PNPs), which has resulted in their quotas being increased from 2,500 in 1999, to over 30,000 in 2009.

Whether the FSWC should remain the mainstay of Canadian economic-class immigration or whether the PNPs, or perhaps business class programs, should continue to see their role expanded, is a question that the StatCan report can help answer.

The 30 year longitudinal study (we have only reproduced 24 years of it, as we assessed the data from 1980-1986 to be too limited to be useful) has a few surprising findings.

Income of immigrants by immigration program. Skilled worker class immigrants see the most wage growth over the 24 year period.

Early success for PNP immigrants, long-term success of the skilled worker class immigrants

Immigrants admitted through the FSWC earn significantly more than those admitted through the business classes, and after seven years in Canada, more than PNP class immigrants.

Average income in 2010 for skilled worker class immigrants. The graph shows rapid income gains in the first few years following immigration, followed by more gradual income growth

PNP-class immigrants earn nearly double what other immigrants earn in the first year of their permanent residence. This is most likely due to the fact that a person needs to already be in Canada and working to qualify for most provincial nominee programs, whereas immigrants who become permanent residents through the FSWC or business class programs arrive in Canada for the first time on the day they receive their permanent residency.

The data shows that the PNPs’ lead in income quickly closes, as FSWC immigrants see rapid income gains in their first few years in Canada.

Average income in 2010 for provincial nominee (PNP) class immigrants. PNP-class immigrants start out with much higher incomes than other economic-class immigrants

It should be taken into account however that the data on PNP-class immigrants that arrived in the early 2000s is quite limited, given the provincial nominee programs admitted fewer than 10,000 immigrants for most of the first of half of the 2000s, so the long term income growth statistics for the PNP class could change over-time.

Poor performance of business class immigrants

The business class immigrants, despite having met demanding minimum net worth requirements to qualify for immigration to Canada, have lower income levels than skilled worker and provincial nominee class immigrants, especially in the first few years after they arrive.

Over the long run, their income gradually converges with the skilled worker class, but this takes nearly 24 years and it never meets the level of their skilled worker counterparts.

One partial exception to this is immigrants from the Africa and Middle East region. Business class immigrants in this group see their income surpass skilled worker class-immigrants from the same region after 24 years.

Average income in 2010 for business class immigrants. Business class immigrants from the Africa and Middle East region see significant income growth over a 24 year period

Cause of business class under-performance

Ideally, business class immigrants, with their substantial capital and business experience, would be the biggest contributors to the Canadian economy among the country’s immigrant population.

One possible explanation for their lower than expected incomes is that they keep their investments abroad.

Canada, which has relatively high average personal income tax rates, is out-matched in investment opportunities by many regions in the world, like the rapidly developing Asian country of South Korea, which has average personal income tax rates and government expenditure levels that are one third lower than Canada.

While business-class immigrants could choose to remain invested abroad, skilled worker class immigrants likely benefit from working in Canada, since it is a high-income country that provides better wages than the vast majority of the world, and in any case they have few options other than working and earning their salary in Canada, since labour is not mobile like capital.

If investment opportunities in Canada being comparatively poor is in fact the cause of lower than expected income performance of business class immigrants, this is not a problem that the federal government can fix by changing immigration selection rules.

Regulatory Compliance Costs Canada’s Economy $6,000 per Employee, Possible Relief on the Way

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Regulations cost Canadian businesses nearly $6,000 per employee per year, with most of that cost borne by small businesses

A report by the Canadian Federation of Independent Business (CFIB), which represents Canada’s small and medium sized businesses, estimates that the country’s regulatory burden costs Canadian businesses nearly $6,000 per employee per year, with the cost falling heaviest on small businesses.

The report, done in partnership with auditor KPMG, also found that compliance costs are higher in Canada than the US for businesses in all size categories except the largest – those with 100 or more employees – for which per employee costs in Canada, at $1,146, are slightly lower than the $1,278 cost in the U.S.

For the smallest businesses, which are categorized as those with 5 or fewer employees, regulatory costs in Canada average $5,942 per employee, significantly more than the $4,082 per employee cost in the US.

In the survey outlined in the report, 31 percent of Canadian business owners said they may not have gone into business if they had known the burden of regulation, a discouraging finding for Canada’s business environment.

The report is the second major analysis in the last year showing that regulations are placing a heavy burden on Canada’s smallest economic players.

A study by the Canadian Labour Market and Skills Researcher Network (CLSRN) last October found that occupational regulations are preventing many of Canada’s immigrants from working in their field of study, at a cost of $2-5.9 billion a year to the country’s economy.

A turning of the tide

Like most OECD countries, Canada has experienced gradual regulatory creep over the past several decades, as a diverse array of labour and business interest groups have promoted the expansion of regulations in their respective sectors, to limit the competition they face from the greater labour and business markets.

The trend could see a reversal over the coming years though, with the seminal Red Tape Reduction Action Plan. The plan is one of the most ambitious regulatory reform initiatives in Canadian history, and includes:

  • A One-for-One Rule which will require compliance costs imposed by the enactment of new regulations to be offset by an equal reduction of regulatory compliance costs through the reduction of existing regulations.
  • A Small Business Lens which will require regulators to take into account the costs imposed on small businesses by regulations.
  • The publication of Forward Plans, which will inform businesses of upcoming regulatory changes 24-months in advance of their enactment, to allow them to prepare for the changes.
  • Service Standards that set targets for speedy issuance of licences, certifications and permits, and encourage the establishment of feedback mechanisms by regulators for businesses subject to licensure.
  • An Annual Scorecard which will publicize progress on reforms, in particular the One-for-One Rule, the Small Business Lens and the Service Standards.

In addition to the six systemic reforms, the plan requires 90 department-specific reforms over the next three years. The President of the Treasury Board of Canada, Tony Clement, described the Red Tape Reduction Action Plan as a “game changer” when it was unveiled last October.

Canadian Government to Provide $400 Million to Bolster Domestic Venture Capital Industry

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The headquarters of Shopify, one of Canada’s rising tech stars, in the ByWard Market district of Ottawa. The federal government hopes to see more high-growth technology companies like Shopify being started in Canada (GOOGLE MAPS)

The Harper government announced on Monday that it will inject $400 million in Canada’s venture capital industry as part of the Venture Capital Action Plan.

The goal of the plan is to encourage the creation of large venture capital funds that specialize in investing in early-stage, high-growth startup companies in Canada.

“Our Government understands that Canada’s long-term economic competitiveness in the emerging knowledge economy needs to be driven by globally competitive, high-growth businesses that innovate and create high-quality jobs,” said Prime Minister Stephen Harper in announcing the initiative.

$250 million of the $400 million of federal funding will be used to create a “fund of funds” for Canada’s venture capital industry, which will invest in Canada-focused venture capital funds.

$100 million will be invested into a private-sector counter-part to the government-run ‘fund of funds’, which will have a similar role as the government-administered fund, but with private and provincial co-funders.

The remaining $50 million will be invested into “three to five” existing high-performance Canadian venture capital funds.

The federal government has made several efforts over the past year to support Canada’s venture capital and startup industry, including providing publicity for the volunteer-led and funded Startup Canada project, and beginning consultations on creating a new ‘startup visa’ to provide a route for entrepreneurs with venture capital funding to immigrate to Canada.

With top marginal personal income tax rates that are among the highest in the world though, the government could face an uphill battle in fostering an entrepreneurial culture in Canada according to some analysts.

A study released by Canadian economist Ergete Ferede last year shows a negative correlation between the extent of redistribution and progressivity in the personal income tax and the rate of self-employment.

Federal Immigrant Investor Program to Launch Early This Year

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Wealthy foreign nationals from places like Dubai are keen to apply for Canadian permanent residency through the Federal Immigrant Investor Program when the program starts up again this year (Ranjit Laxman)

In an interview in late December, Canadian Citizenship and Immigration Minister Jason Kenney said that he expected his department to launch the Federal Immigrant Investor Program sometime in the first half of this year.

The program, which grants permanent residency to those with assets worth over $1,600,000 in exchange for a no-interest five-year loan of $800,000, is currently not accepting any new applications as the Department of Citizenship and Immigration decides on new, more demanding selection rules for the program.

The department says the 700 applicant annual quota for the program was filled in 30 minutes in 2011, as wealthy foreigners chartered private planes to be the first to submit their application to the Nova Scotia intake office.

In the interview with Postmedia News (via immigration news site workpermit.com) Kenney said that the government would like to raise the amount of money applicants are required by the program to invest and require the investment to be an active one where the applicant assumes some risk rather than a passive loan with a guaranteed return like under current rules.

Asked about the investor program’s 25,000 application backlog, Kenney said he doesn’t contemplate wiping it out like his department did with the Federal Skilled Worker Program (FSWP) backlog.

He said they are considering offering a fast-track option to those whose applications are in the backlog in exchange for the applicant meeting the program’s new requirements.

Canadian Prime Minister Lays Out His Vision For Immigration To Canada

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Prime Minister Stephen Harper told the Globe and Mail that Canada will need to compete for high value immigrants as other country look to immigration to solve their fiscal problems

In an interview on Saturday with the Globe and Mail, Canada’s largest national newspaper, Prime Minister Stephen Harper expounded in length on his vision for Canada’s immigration programs.

He told the Globe that competition for skilled international workers would heat up over the coming years, as “the demographic changes .. the aging population, start to bite, in many developed countries”.

He trumpeted his government’s achievements in reforming what he called the old “passive pro-immigration policy” which “operated on receiving applications and processing them in order” and had left his government with “backlogs of hundreds and hundreds of thousands of applications”.

He said his government is trying to shift to an “activist policy” where Canada goes out and recruits the immigrants it needs, and when it receives applications, “prioritize them to the country’s objectives.”

The Prime Minister said that as the rest of the developed world increases its immigration intake, Canada would need the activist immigration policy to “compete, and make sure we get the immigrants both in terms of volumes and particular attributes: skills, expertise and investment capacity.”

Under the Conservative government, Citizenship and Immigration Canada (CIC) has legislatively wiped out the 280,000 application Federal Skilled Worker (FSW) program backlog, and frozen acceptance of new applications under both the FSW program and the Federal Immigrant Investor program as it re-designs the programs and reduces the backlogs.

CIC has also suspended the parent and grandparent sponsorship programs and replaced them with a ‘Super Visa’ that allows foreign parents and grandparents of Canadian citizens and landed immigrants to visit Canada for up to ten years.

Largest Canadian Province, Ontario, Announces New Immigration Strategy

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Arnon Melo, far right, is the type of immigrant Ontario wants more of. A native of Brazil, the entrepreneur founded a logistics company that now employs 10 people (Ontario Ministry of Citizenship and Immigration)

The provincial government of Ontario announced a new immigration strategy on Monday which primarily focuses on attracting more economic class immigrants, meaning those who immigrate through skilled worker and investor programs, to Ontario.

The strategy is shaped by recommendations submitted to the Ontario government by an expert roundtable last month which the government commissioned as a response to years of decreasing immigration to the province.

The final strategy adopted by the provincial government sets as its objectives to increase the province’s total immigration numbers and the proportion of economic immigrants, to boost the economic success of immigrants in order to bring their incomes and employment rates up to that of the Ontario average, and to help the province take greater advantage of the international links immigrants bring.

Some of the specific targets included in the strategy are:

  • Bringing the proportion of economic immigrants up to 70 percent from the
    current 52 percent.
  • Requesting that the federal government double the province’s Provincial Nominee Program (PNP) quota from its current 1,000, to 5,000 by 2014.
  • Encouraging employers to develop and expand mentorship, internship and on-the-job training programs.
  • Increasing the number of immigrants licensed in their field.
  • Increasing Francophone immigration to five percent.

The strategy sets out to persuade the federal government to change some of the immigration rules that the Ontario provincial government blames for contributing to the province’s underperformance, relative to other provinces, in attracting economic immigrants.

While 52 percent of immigrants to Ontario are economic immigrants, the average rate for other Canadian provinces is 70 percent, a disparity that the Ontario government attributes primarily to the low number of economic immigrants, as a percentage of the total number of economic immigrants to the province, that the federal government permits Ontario to select relative to other, less populated, provinces.

Monday’s announcement will likely put pressure on the federal Department of Citizenship and Immigration to increase the number of immigrants it allows Ontario to select through the Ontario PNP.

Immigration Canada Launches Online Consultations to Improve Federal Investor Program

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The federal government is launching online consultations today to get feedback from the public on how to improve the federal Immigrant Investor Program.

Citizenship and Immigration Canada (CIC) today launched an online consultation campaign to solicit input from the Canadian public on ways to modify the federal Immigrant Investor Program (IIP) to increase the benefit it provides to the country.

“We can no longer be a passive player in the global competition for talent and investment. That is why we need to review our immigration programs to create dynamic opportunities that enable immigrants’ investments to directly benefit the Canadian economy,” said Immigration Minister Jason Kenney in a statement put out today.

Acceptance of new applications under the federal IIP was temporarily suspended on July 1st to give the federal government time to revamp the program to address shortcomings it had according to the Immigration Ministry.

One change that CIC has signalled it is considering is requiring immigrant investors to make an active investment in the Canadian economy. The current investment requirement for applicants under the IIP is to provide an interest-free loan of $800,000 to a province or territory for five years, which CIC representatives have argued is too passive and does not contribute enough to the Canadian economy.

The online consultations are open to the public until September 4th 2012, and CIC says it is planning to re-open the investor program in the beginning of the 2013.