THE BUSINESS CLASS: Investors and Entrepreneurs
This Class consists of two categories, Investors and Entrepreneurs. Relatively speaking, there are not many immigrants admitted each year in this Class, compared to the Skilled Worker Class. For reasons discussed below, I do not usually recommend applying in the Entrepreneur category. However, I do recommend the Investor category for wealthy applicants who want to fast track their applications.
For the purposes of this discussion, first I will comment on the differences between the two scategories. The major difference is that the Entrepreneur must establish a business in Canada and the Investor does not have to establish a business at all. The Entrepreneur category is designed for applicants who want to establish and manage their own business in Canada and who are prepared to accept the obligation to do so within two years of arrival in Canada. The Entrepreneur must manage their business for at least 12 months. This management activity will likely make the Entrepreneur liable to pay income tax to Canada on their worldwide income.
The Investor category is for wealthy applicants who do not want to be obligated to establish and manage their own business in Canada. The Investor can, in effect, buy his or her way out of the obligation to establish a business in Canada. The “buy out” consists of loaning the Government of Canada CAD$ 400,000 for 5 years, and at the end of that period, the money is returned to the Investor without interest. But, the Investor is not required to establish and manage a business for 12 months and thus may be able to avoid becoming liable to pay income tax to Canada on worldwide income. This can amount to a considerable benefit.
Most Investors do not want to use their own money to loan Canada CAD$ 400,000, so instead they borrow the money from a Canadian bank or financial institution. Many Canadian banks have Immigrant Investor Program (IIP) schemes, whereby the Bank will loan Canada (or the Province of Quebec, if the Investor chooses to immigrate to Quebec) the money. The Banks charge a loan fee for this loan, an up front one time payment, calculated according to current interest rates. Most banks currently charge a loan fee in the amount of CAD$ 120,000.
Most Investors choose the Loan Option, because it only costs CAD$ 120,000. This means they can make a profitable investment with the other $280,000 (400,000 minus 120,000). For example, they can purchase a home in Canada using the remaining $280,000 and since the profit made on the sale of a Canadian residence is tax exempt, they can easily earn back the money paid to the bank (assuming the property rises in value over the five year period). Plus, they would have a residence, which everyone needs in any event.
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