Immigration plays a key role in the growth of Canada’s High Net Worth (HNW) sector, as new Canadians often bring fresh ideas and cultures—they bring their business success and personal wealth too.
A recent study by BMO Harris Private Banking shows that Canadians of foreign descent account for almost one-third of all HNW wealth throughout Canada and that almost all of them (96 per cent) keep the bulk of their wealth in Canada. No surprise then that the Canadian government is eager to attract HNW immigrants to the country.
According to Citizenship and Immigration Canada’s 2010 annual report, Canada admitted roughly 154,000 economic immigrants, or about 61 per cent of all total immigrants. Of those, about 11,000 were business immigrants who are expected to contribute to the Canadian economy by owning and managing businesses in Canada or by making an investment in the Canadian economy. About 3,650were investor immigrants, who must bring with them a total net worth of at least $1.6 million into the country and give the Canadian government a five-year, interest free loan of $800,000 for government investment.
Hari Panday, president and CEO of PanVest Capital Corporation, came to Canada from India 35 years ago with a mind for business and a desire to succeed and today he is a vibrant example of how talented immigrants can enhance Canada’s business community. Panday founded ICICI Bank Canada in 2003 and took the organization to more than $4 billion in assets under his leadership. He was also awarded the 2009 Corporate Executive of the Year prize by the Indo-Canadian Chamber of Commerce.
For Panday, networking was a crucial skill he had to master upon coming to Canada and one he suggests all business immigrants take note of whether they are entrepreneurs hoping to continue their business or HNW investors with dreams of growing their fortune.
“A lot of people come here from cultures where networking is frowned upon, it’s seen as something insincere and self-promoting but people need to learn networking to succeed here. When you come to North America you learn there is a skill to selling yourself and it’s a skill you need to learn,” Panday said.
While business owners who choose to immigrate to Canada need to show detailed, active involvement in their chosen business within Canada, investor immigrants are required to give the Canadian government a five-year, interest free loan of $800,000 and must bring with them a total net worth of at least $1.6 million into the country.
However, money alone is not enough—immigrants need to show extensive documentation explaining the sources of the wealth they’re bringing into the country as well as proof that they have actually operated as an investor abroad. In many cases the financial details require planning – and collecting financial papers—well in advance of coming to Canada. The laborious vetting process may seem draconian in its thoroughness but is ultimately intended to weed out suspicious money from paving someone’s way into the country.
“People need to document how they made their vast sums of money as the Canadian government is wary that there isn’t something elicit about how those individuals made that money, said Alan Diner, a partner at Baker & McKenzie in Toronto and former co-author of Ontario’s business immigration program. “We don’t want organized crime, we don’t want to risk fraudulent business practices entering this country so if the government doesn’t like your documentation, they will refuse you.”
Immigrant investors who do successfully navigate the program (and of course meet all residency and citizenship criteria) become full citizens and can choose to invest further but are not required to. According to a study last year by economists Pierre Fortin and Roger Ware, investor immigrants pump about $2 billion into the Canadian economy yearly. While no specific data exists on what kinds of investments immigrant investors lean towards, there’s no reason to expect they trend towards any particular fields or markets based on their immigrant status—they essentially just invest like fellow Canadians.
With Canada remaining an attractive emigration destination for many HNW people, investor immigrants will continue to infuse long-term wealth into the Canadian economy as they and their future generations invest themselves into the fabric of Canada.