The Misconceptions About Canada's Foreign Buyer Ban

Due to the extension of the overseas buyer ban, many foreign nationals in Canada (who are not exempted under the legislation) have begun to inquire about whether they can purchase Canadian residential properties through some indirect means, such as: 

1.Finding a Canadian Permanent Resident, Citizen, or refugee to co-purchase a property — Hold on! Unless the foreign national is the spouse of the Canadian permanent resident, citizen, or refugee or other exempted person , this route is not feasible. 

2.Foreign nationals exempted from the foreign buyer ban, when co-purchasing a property with a Canadian permanent resident, citizen, or refugee, may be exempt from the Non-Resident Speculation Tax (NRST).— Wrong! Unless exempted, the NRST must be paid in full based on the value of the purchased property, rather than based on the proportion of the property held by the foreign national. 

3.By partnering with Canadian permanent residents or citizens to establish a company in Canada, and then purchasing properties through this company — Not so! As long as the foreign shareholder's ownership exceeds 10%, the company will be considered subject to the foreign buyer ban. 

4.By having a trustee hold the property — Stop! This is considered an act of assisting foreign nationals in indirectly purchasing properties, which is prohibited by the overseas buyer ban. When lawyers register the property, they need to declare to the Ontario Ministry of Finance whether the property buyer is a trustee, and CRA also requires annual return of trust for real property. 

5.Applying for refugee status — Difficult! Applying for refugee status requires truthful circumstances and compliance with relevant conditions, as well as surrendering passports. If there is no valid reason to return to the home country during the refugee application process, the refugee application may be rejected, and there may be penalties such as immediate deportation. 

Anyone, including lawyers, who assist foreign nationals in violating regulations by directly or indirectly purchasing residential properties in Canada will face corresponding penalties. 

If there is a misunderstanding of the overseas buyer ban or an attempt to deceive, signing a purchase contract that ultimately fails to close may result not only in the loss of the deposit but also potential lawsuits from the seller to recover other damages.

Note:

l. This article is for reference only and does not constitute legal advice. For specific questions, please consult your lawyer.

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