Does Canada’s ban on foreign buyers of residential property apply when a non-Canadian buys a business that owns real estate?

Section 4(1) of the Prohibition on the Purchase of Residential Property by Non-Canadians Act says that, despite section 34 of the Citizenship Act, a non-Canadian is prohibited from purchasing, directly or indirectly, any residential property. Sections 4(2) to 4(5) set exceptions, including for some temporary residents, protected persons, prescribed classes of persons and prescribed circumstances. Buying a business is not the same as buying a house. The question is what the business owns. For the tax side of a building, see GST/HST on the building.

What counts as residential property

The Act defines residential property as real property situated in Canada that is a detached house or similar building with not more than three dwelling units, or a semi-detached house, rowhouse unit, residential condominium unit or similar premises, other than prescribed property, or any prescribed real property. The definition lists those categories. A shop, plant or office is not among them. Section 3(1) of the Regulations prescribes property outside a census agglomeration or census metropolitan area out of the definition.

Who counts as a non-Canadian

The definition includes an individual who is neither a Canadian citizen nor a person registered as an Indian under the Indian Act nor a permanent resident, and a corporation incorporated otherwise than under the laws of Canada or a province. It also includes a corporation incorporated in Canada or a province whose shares are not listed on a stock exchange in Canada for which a designation under section 262 of the Income Tax Act is in effect, if it is controlled by either of those, and any prescribed person or entity. The Regulations define control by a threshold share of equity value or voting rights, or as control in fact, so check that definition before a share purchase.

What is not a purchase, and what follows a breach

Section 4(2) of the Regulations says a purchase does not include, for example, an acquisition by an individual resulting from death, divorce, separation or a gift, the rental of a dwelling unit to a tenant, or an acquisition by a non-Canadian for development. A breach of section 4 does not affect the validity of the sale, but it is an offence, including for anyone who knowingly aids it, and after a conviction the superior court of the province may, on the Minister’s application and subject to conditions in the Regulations, order the property sold.

Repeal and a note on Ontario

Under the Budget Implementation Act, 2022, No. 1, as amended in 2024, the repeal of the Act takes effect on the fourth anniversary of the day section 235 came into force, which section 237(1) fixes as January 1, 2023. Check the current consolidation for later changes. Section 2(2.1) of Ontario’s Land Transfer Tax Act separately taxes, subject to its section 2.1, conveyances of designated land in the specified region to a foreign entity or a taxable trustee. This page covers the federal Act and that one Ontario rule; check the rules where you are.