American entrepreneur Stacey Schacter is an avid gardener, who’s passionate about food and healthy eating.
In 2022, he and his wife set their eyes on starting a vertical farming operation north of the border, in Ontario’s rural Simcoe County, through Canada’s Start Up Visa program. The federal business immigration stream offered foreign entrepreneurs work permits to develop their businesses here and ultimately a chance for permanent residence.
At the time, Ontario had already imposed a 25 per cent tax on foreign homebuyers. But the couple purchased a house in Clearview Township. They figured they’d get their permanent status and qualify for a tax rebate well within the four-year limit after the purchase. The Start Up Visa processing time then was just over a year.
But thanks to growing immigration processing delays, the Schacters’ rebate deadline is fast approaching and the couple from Maryland may never see the refund of the $619,800 they paid in Non-Resident Speculation Tax.
“I would think I’m exactly the type of person they’re trying to attract to Canada, somebody who’s creating jobs, spending money and putting down roots within the community,” said Schacter, whose three “container farms” grow leafy greens and herbs in stacks using artificial lighting and hydroponics.
“It’s unfair that you only have four years to get back your refund on a (permanent residence) process that takes more than four years.”
Immigration experts said this has become another unintended consequence for temporary residents struggling for permanent residence after Canada’s abrupt reduction in immigration intakes. The prospects of not getting the rebate off this capital investment may even make top international talent think twice before coming here, they warned.
Ontario’s foreign homebuyers tax
Ontario introduced a 15 per cent levy in 2017 on people who weren’t citizens or permanent residents, out of concern that foreign investors were buying homes in the Greater Golden Horseshoe for speculative purposes. The tax was raised to 25 per cent and expanded provincewide in 2022 as Canadians struggled to secure affordable housing.
Foreign buyers may apply for a rebate if they become permanent residents within four years of the purchase. Exemptions are granted to refugees who have been given protection in Canada; foreign spouses of Canadians; and permanent residence candidates who have already been picked and nominated under the Ontario provincial immigration program.
Following the pandemic, immigration application backlogs grew and processing times surged. Delays increased in the last two years as Ottawa reduced its annual permanent resident intake. Fewer spots mean longer wait times.
New applications under Schacter’s start-up program, for instance, currently take more than 10 years to process.
Toronto lawyer Sam Plett, who represents Schacter in suing the government for the immigration delay, said it’s not uncommon for temporary residents to buy a home while in Canada, as an investment and asset.
Reduced immigration levels, he said, have a ripple effect on processing times, especially for programs that are not a priority for Ottawa. (The Start Up Visa program has stopped accepting new applications since January, while the permanent residence spots allocated for provincial nominee immigration program was slashed by half to 55,000 last year.)
Now, the impact is starting to trickle down, affecting those who were hopeful of getting permanent residence and bought a home as non-residents.
“There’s a lot of rhetoric around foreign speculators being responsible for increases in home price, but that’s not what we’re talking about here,” said Plett.
“I’m talking about families in Canada who are hopeful of getting PR that want to live here, and have bought a home with the understanding that as long as they get PR within that window of time, they’ll get that refund. It’s not for speculation. That’s their home.”
A worry for employers
Gabriela Ramo, a corporate immigration lawyer, said people didn’t think it was a big deal when Ontario and B.C. (in 2016) introduced the levies for foreign homebuyers.
“Anybody who wanted to stay here permanently got PR in four years,” said Ramo, a partner with EY Law in Toronto. “That was pretty much how the system was working. So people went ahead and bought houses with that in mind. And then the door got slammed in 2024. It’s an emerging issue for those who are now getting close to their (rebate) deadline.”
Ramo said this hurts Canadian employers trying to recruit top international talent, who may want to invest in a home to settle their families. That’s also why, she added, Ottawa carved out an exemption when it introduced its ban against foreign homebuyers in 2023 — for foreign workers with 183 days or more remaining on their work permits.
And the extra costs of buying a home have had some chilling effects.
According to the Ontario Finance Ministry, the yearly amount of Non-Resident Speculation Tax collected rose steadily from $156.7 million in 2017 to $184 million in 2022, before the tax rate was raised. Since then, it dropped by half to $71.3 million in 2023 and $81.5 million in 2024, the latest figures available.
The province, however, was unable to provide the Star with the amount of money rebated to qualified foreign buyers and would not say if the four-year rebate eligibility can be extended.
“In March 2024, the government made amendments to the NRST to improve compliance and fairness, which included extending the deadline for rebate applications (from 90 days) to 180 days from the date of obtaining permanent resident status,” a spokesperson wrote in an email.
The Immigration Department declined to comment on Schacter’s litigation or Ontario tax rules, but acknowledged the uncertainty around waiting for decisions.
Schacter, himself a lawyer, said he has already put in more than $1 million in his business, Cornucopia Farms, and hired 10 people, but he is holding off on any further investment. His only hope is that his permanent residence will come through before Dec. 12; he’s also pleading with the province to extend his rebate eligibility deadline.
“I just feel I’m caught up in the cogs of the machine,” he lamented. “Do we cut our losses or do we limp along?”
