One of the world’s most popular wealth-migration schemes, Quebec’s Immigrant Investor Programme, has failed to reach its target of applications for the first time, as wealthy Chinese look for alternatives to Canada’s turmoil-plagued millionaire-migration systems.
The application window for the 2014 intake was pushed back three times until March 2015, to give applicants more time to satisfy strict new documentation rules regarding wealth and income sources. The target was 1,750 household applications, which would typically represent about 6,400 immigrants.
But Quebec’s immigration ministry told the South China Morning Post last week that only 1,400 applications were ultimately received before the window closed. That was down 74 per cent compared to 2013, when 5,389 mostly-Chinese applications were received in a two-week application window, easily surpassing the same target.
Ministry spokesman Jonathan Lavallée said the 1,400 included 908 applications from mainland Chinese millionaires and 17 from Hong Kong permanent residents; this too fell short of the 1,200 cap for all of China.
Lavallée said the 2015 application window had been increased to five months, from August 31 to January 31, 2016. “A longer intake period was established … to allow more time for potential investors to prepare their application and find a financial intermediary who will sign their investment agreement,” said Lavallée.
The Quebec IIP has long been popular, but even more rich Chinese switched their attentions to the scheme after Ottawa froze its federal IIP in 2012 then shut it down entirely last year. This helps explain the 2013 rush for Quebec applications.
Under the QIIP, would-be immigrants worth a minimum of C$1.6 million must loan Quebec C$800,000 interest-free for five years; the same benchmarks applied to the federal IIP.
Some 65,151 wealthy immigrants and family members were approved under the Quebec IIP from 2012 to 2014, about two-thirds of them mainland Chinese, making it one of the world’s biggest vehicles for wealth migration - although about 90 per cent later leave Quebec for elsewhere in Canada.
But Larry Wang, president of Chinese immigration consultants Well Trend United, said “unreasonable, onerous documentation requirements” introduced last year had turned off some rich Chinese from applying to the QIIP. The new list of required documents is 15 pages long.
Wang, whose firm is one of the mainland’s leading immigration service providers, also blamed “unrealistic requirements” set by brokers who typically arrange financing for the immigrants’ C$800,000 loan to Quebec.
Canada’s wealth-migration systems have been in flux since 2010 when a flood of thousands of applications by mainland millionaires at Canada’s Hong Kong consulate forced the freezing and ultimate cancellation of the federal IIP. More than 50,000 applicants and family members were dumped from the IIP queue after Canada decided it could not handle the backlog, sparking anger and failed legal action.
The scheme devised to replace the federal IIP, the Immigrant Investor Venture Capital scheme, has proven a flop. The South China Morning Post reported last week that it had received just six applications worldwide.
Despite the relatively low number of 2014 applications to the QIIP, a backlog of past-years’ applications will likely ensure the flow of rich immigrants to Canada under the scheme continues for years. As of January 2015, there were 3,415 backlogged QIIP household applications, and approvals for QIIP visas were up more than 60 per cent last year.
Maxime Lapointe, head of the legal department for Hong Kong-based immigration consultants Yelo Consulting, said he believed the 2015-2016 target for the QIIP would be reached and that “two more months would have been enough to complete the [2014] quota as the Quebec investor programme is one of the most popular programmes in the world”.
However, some rich Chinese were looking for alternatives, in particular the US EB-5 wealth-migration scheme, requiring a US$500,000 investment.
“At the moment, the US [EB-5] programme is extremely popular… This currently affects the promotion of the QIIP as marketing forces are focused on the US programme, which has reasonable processing time and checklist, good passing rate and tangible results for investors as they finance a project,” Lapointe said.
Wang said the “meteoric rise” of the EB-5 showed that it had “clearly benefitted from the demise of the Canadian [federal] IIP”.
Richard Kurland, a Vancouver-based immigration lawyer, said the new documentation requirements for the QIIP “went too far for the marketplace” but should serve as a warning “that taxation will be under the microscope”.
“It’s one thing to get permanent residence. It’s quite another to keep it,” said Kurland. “Canada now requires four Canadian income tax returns as a tax resident of Canada in order to apply for citizenship. And at least one tax return to retain permanent residence. You can bet Canada will be verifying the information on your tax return with your home country.”
He predicted this would “cool the flow of hot money, and tax miscreants” arriving in Canada.
Source: SCMP
