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While there are some exemptions to the law, under this Act, “Non-Canadian” is defined as:

• individuals who are not Citizens or Permanent Residents of Canada
• corporations that are not incorporated under Canadian provincial or federal laws
• corporations that are incorporated under Canadian provincial or federal laws but are controlled by foreign individual(s) and/or foreign corporation, and whose shares are not listed on a Canadian stock exchange

Sadly, the impact on our industry was not contemplated when the act was approved, and these unintended consequences may impact your relocation program.  The good news is that CERC (Canadian Employee Relocation Council) has been working with authorities to help them better understand the implications for our industry and the potentially negative implications on the foreign talent that is so vital to the Canadian economy.  CERC is also seeking an exemption for the relocation industry including foreign nationals with bone fide job offers and work permits and real estate transactions for employer sponsored relocations.

While the industry awaits response, it is prudent to think about how this Act might impact your program. At a minimum, you should review your Canada inbound policies and determine if you have foreign nationals in Canada that might be looking to purchase a home.  If this home purchase benefit would have been “company sponsored”, you may need to explore options like subsidizing rental payments for a period of time (likely equal to the typical amount of home purchase costs you would have reimbursed).  Alternatively, you might consider “hibernating” the benefit to let these employees pursue home purchase in two years’ time when hopefully the housing market has cooled.

For Canadian outbound employees that would be eligible for a guaranteed home sale program, and for US corporations that have intra-Canada activity, we are optimistic that as a registered corporation in Canada, we will be able to manage this activity on a business as usual basis pending further expert legal and real estate consultation.

Although we always encourage clients to review policy changes holistically, this new Act will impact employers similarly and therefore we do not anticipate major changes to compensation or shifting competitive advantage among employers.  Instead, it may be necessary to bolster housing allowances and the resulting tax liability from reimbursements.

As your partner we will continue to monitor developments and work directly with our clients to minimize the unintended consequences of this legislation. Until then, if you have any questions, we’re always ready to talk.