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Government: Investment Canada Act

Regulatory - Investment: Investment Canada Act Foreign Ownership

Canada welcomes international investment. This policy perspective is enshrined in the 1985 Investment Canada Act, the purpose of which is:

• to encourage investment that contributes to economic and employment growth, and
• to provide for the review of significant investments in Canada by non-Canadians to ensure these benefits to Canada.

Each time a non-Canadian investor commences a new business activity in Canada or acquires control of an existing Canadian business, it must notify the federal Department of Industry within 30 days of the transaction. For acquisitions, thresholds have been established to determine whether a transaction has to be reviewed. Acquisitions below these thresholds are not typically subject to review.

Generally, for the direct, controlling acquisition of a Canadian business, the thresholds for transactions subject to review are $5 million for direct investments and $50 million for indirect transactions. However, the $5 million threshold will apply for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50% of the asset value of the global transaction.

Investors from WTO member countries benefit from higher thresholds.  For WTO members, the 2008 review threshold for a direct acquisition is $295 million. Indirect acquisitions by WTO member investors are not subject to review, but are still subject to notification.

There are four sectors that continue to be governed by the $5 million and $50 thresholds, for all foreign investors. These are financial services, transportation, uranium and cultural industries.

For investments requiring a review, the investment is judged on the basis of its "net benefit" to Canada. The Minister of Industry makes the final decision, after receiving a recommendation from the department. The Act provides for an initial review period of 45 days.

Portfolio investments, the acquisition of assets that do not constitute a business, and investments in related businesses are neither reviewable nor notifiable. Most investments to establish new Canadian businesses are not subject to review.

Repatriation of investment or profits

There are no restrictions on a foreign investor’s ability to repatriate investment or profits. Canada has no exchange controls, and the Canadian currency is freely convertible to American or other currencies. There are, however, withholding taxes on the payment to non-residents of certain dividends, interest, salaries, bonuses, commissions, or other amounts for services rendered.

For additional information, please contact:

Industry Canada, Investment Review Division
Phone: (613) 954-1887
Fax: (613) 996-2515
E-mail: investcan@ic.gc.ca
Web: investcan.ic.gc.ca