2023 Investment Climate Statements: Canada

Policies Towards Foreign Direct Investment

Canada actively encourages FDI and maintains a sound enabling environment. Investors are attracted to Canada’s proximity to the United States, highly skilled workforce, strong legal protections, and abundant natural resources. Once established, foreign-owned investments are treated equally to domestic investments. As of 2021, the United States had a stock of USD 406 billion of foreign direct investment in Canada. U.S. FDI stock in Canada represents 46 percent of Canada’s total investment. Canada’s FDI stock in the United States totaled USD 528 billion.

The USMCA modernizes the previous NAFTA investment protection rules and investor-state dispute settlement provisions. Parties to the USMCA agree to treat investors and investments of the other Parties in accordance with the highest international standards, and consistent with U.S. law and practice, while safeguarding each Party’s sovereignty and promoting domestic investment.

Invest in Canada (IIC) is Canada’s investment attraction and promotion agency. It provides information and advice on doing business in Canada, strategic market intelligence on specific industries, site visits, and introductions to provincial, territorial, and municipal investment promotion agencies. Still, non-tariff barriers to trade across provinces and territories contribute to structural issues that have held back the productivity and competitiveness of Canada’s business sector.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investment in Canada is regulated under the provisions of the Investment Canada Act (ICA). U.S. FDI in Canada is also subject to the provisions of the World Trade Organization (WTO), the USMCA, and the NAFTA. The ICA mandates the review of significant foreign investments to ensure they provide an economic net benefit and do not harm national security.

Canada is not a party to the USMCA’s chapter on investor-state dispute settlement (ISDS). Ongoing NAFTA arbitrations are not affected by the USMCA, and investors have until July 1, 2023 to file new NAFTA claims, provided the investment(s) were “established or acquired” when NAFTA was still in force and remained “in existence” on the date the USMCA entered into force. An ISDS mechanism between the United States and Canada will cease following a three-year window for NAFTA-protected legacy investments.

The Canadian government issued a new policy under the ICA to significantly restrict investments in Canada’s critical minerals sector and critical minerals supply chains by foreign SOEs and private investors with close ties to foreign governments in October 2022. The Canadian government announced the mandated divestiture of three investments in Canadian critical mineral companies by three PRC investors in November 2022. In December 2022, the Canadian government introduced legislation to modernize the ICA. The proposed amendments include new pre-investment implementation filing requirements for prescribed sectors, ministerial authority to extend national security reviews, stronger non-compliance penalties, improved information sharing with international counterparts, and new rules for the protection of information during the course of judicial review.

The 2021-22 Investment Canada Act Annual Report (released February 2, 2022) indicated an all-time high in new transaction filings of 1,255. Of those, 24 investments were subject to extended national security reviews (the same amount as 2020-21).

Foreign ownership limits apply to Canadian telecommunication, airline, banking, and cultural sectors. Waivers and other workarounds are not granted. Telecommunication carriers, including internet service providers, that own and operate transmission facilities are subject to foreign investment restrictions if they hold a 10 percent or greater share of total Canadian communication annual market revenues as mandated by The Telecommunications Act. These investments require Canadian ownership of 80 percent of voting shares, Canadians holding 80 percent of director positions, and no indirect control by non-Canadians. If the company is a subsidiary, the parent corporation must be incorporated in Canada and Canadians must hold a minimum of 66.6 percent of the parent’s voting shares. Foreign ownership of Canadian airlines is limited to 49 percent with no individual non-Canadian able to control more than 25 percent by mandate of the 2018 Transportation Modernization Act. Canadian airlines cannot be directly or indirectly controlled by non-Canadians to meet Canadian Transportation Agency “control in fact” licensure requirements. Foreign banks can establish operations in Canada but are generally prohibited from accepting deposits of less than CAD 150,000 (approximately USD 112,000). Foreign banks must receive Department of Finance and the Office of the Superintendent of Financial Institutions (OSFI), Canada’s primary banking regulator, approval to enter the Canadian market. Investment in cultural industries also carries restrictions, including a provision under the ICA that foreign investment in book publishing and distribution must be compatible with Canada’s national cultural policies and be of net benefit to Canada.

Other Investment Policy Reviews

The World Trade Organization conducted a trade policy review of Canada in 2019. The report is available at: https://www.wto.org/english/tratop_e/tpr_e/tp489_e.htm . The Organization of Economic Cooperation and Development completed an Economic Forecast Summary and released the results in March 2023. The report is available at: http://www.oecd.org/economy/canada-economic-snapshot/ .

Individuals from Canadian civil society organizations, industry, and academic institutions regularly comment on and assess investment policy-related concerns. Following the enactment of the U.S. Inflation Reduction Act in August 2022, Canadian industry associations, chambers of commerce, and financial experts called on the Canadian government to respond with a similar investment incentives. The Canadian federal budget for fiscal year 2023 included an “enhanced plan to support a clean-economy future” using investment tax credits as one tool.

Business Facilitation

The Canadian government provides information necessary for starting a business at: https://www.canada.ca/en/services/business/start.html . Business registration requires federal or provincial government-based incorporation, the application of a federal business number and corporation income tax account from the Canada Revenue Agency, the registration as an extra-provincial or extra-territorial corporation in all other Canadian jurisdictions of business operations, and the application of relevant permits and licenses. In some cases, registration for these accounts is streamlined (a business can receive its business number, tax accounts, and provincial registrations as part of the incorporation process); however, this is not true for all provinces and territories.

Outward Investment

Canada prioritizes export promotion and outward investment as a means to enhance future Canadian competitiveness and productivity. Canada’s Trade Commissioner Service offers a number of funding opportunities and support programs for Canadian businesses to break into and expand in international markets: https://www.tradecommissioner.gc.ca/funding_support_programs-programmes_de_financement_de_soutien.aspx?lang=eng&wbdisable=true . In November 2022, Canada launched an Indo-Pacific Strategy which seeks to expand trade, investment, and supply chain resilience with Indo-Pacific partners including establishing a Canadian Trade Gateway. Canada does not restrict domestic investors from investing abroad except when recipient countries or businesses are designated under the government’s sanctions regime.

Transparency of the Regulatory System

Canada’s regulatory transparency is similar to the United States. Regulatory and accounting systems, including those related to debt obligations, are transparent and consistent with international norms. Proposed legislation is subject to parliamentary debate and public hearings, and regulations are issued in draft form for public comment prior to implementation in the Canada Gazette, the government’s official journal of record. While federal and/or provincial licenses or permits may be needed to engage in economic activities, regulation of these activities is generally for statistical or tax compliance reasons. Under the USMCA, parties agreed to make publicly available any written comments they receive, except to the extent necessary to protect confidential information or withhold personal identifying information or inappropriate content.

In 2022, Canada launched regulatory reviews for the Blue Economy and Supply Chains as part of the federal government’s multi-year Targeted Regulatory Review program. The Canadian government will require federally regulated financial institutions to report climate-related financial risks beginning in 2024. The Office of the Superintendent of Financial Institutions published a guideline in March 2023 that banks and insurers should incorporate both climate change and low-carbon economy transition risks into their business strategies. Canadian securities legislation does not currently mandate environmental, social, and governance (ESG) disclosure for public or private companies. The Canadian Securities Administrators (CSA), an umbrella organization of all provincial and territorial securities regulators, is exploring mandated Canadian securities ESG disclosure.

Canada publishes an annual budget and debt management report. According to the Ministry of Finance, the design and implementation of the domestic debt program are guided by the key principles of transparency, regularity, prudence, and liquidity.

International Regulatory Considerations

Canada addresses international regulatory norms through its FTAs and actively engages in bilateral and multilateral regulatory discussions. U.S.-Canadian regulatory cooperation is guided by Chapter 28 of the USMCA “Good Regulatory Practices” and the bilateral Regulatory Cooperation Council (RCC). The USMCA aims to promote regulatory quality through greater transparency, objective analysis, accountability, and predictability. The RCC is a bilateral forum focused on harmonizing health, safety, and environmental regulatory differences. Canada-EU regulatory cooperation is guided by Chapter 21 “Regulatory Cooperation” of the Comprehensive Economic and Trade Agreement (CETA) and the Regulatory Cooperation Forum (RCF). CETA encourages regulators to exchange experiences and information and identify areas of mutual cooperation. The RCF seeks to reconstitute regulatory cooperation under the previous Canada-EU Framework on Regulatory Cooperation and Transparency. The RCF is mandated to seek regulatory convergence where feasible to facilitate trade. CPTPP Chapter 25 “Regulatory Coherence” seeks to encourage the use of good regulatory practices to promote international trade and investment, economic growth, and employment. The CPTPP also established a Committee on Regulatory Coherence charged with considering developments to regulatory best practices in order to make recommendations to the CPTPP Commission for improving the chapter provisions and enhancing benefits to the trade agreement.

Canada is a member of the WTO and notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade. Canada is a signatory to the Trade Facilitation Agreement, which it ratified in December 2016.

Legal System and Judicial Independence

Canada’s legal system is based on English common law, except for Quebec, which follows civil law. Law-making responsibility is split between the Parliament of Canada (federal law) and provincial/territorial legislatures (provincial/territorial law). Canada has both written commercial law and contractual law, and specialized commercial and civil courts. Canada’s Commercial Law Directorate provides advisory and litigation services to federal departments and agencies whose mandate includes a commercial component and has legal counsel in Montréal and Ottawa.

The judicial branch of government is independent of the executive branch and the current judicial process is considered procedurally competent, fair, and reliable. The provinces administer justice in their jurisdictions, including management of civil and criminal provincial courts.

Laws and Regulations on Foreign Direct Investment

Foreign investment in Canada is regulated under the provisions of the Investment Canada Act (ICA). U.S. FDI in Canada is also subject to the provisions of the WTO, the USMCA, and the NAFTA. The purpose of the ICA is to review significant foreign investments to ensure they provide an economic net benefit and do not harm national security.

Canada relies on its Invest in Canada promotion agency to provide relevant information to foreign investors: https://www.investcanada.ca/ .

Competition and Antitrust Laws

Competition Bureau Canada (CBC) is an independent law enforcement agency charged with ensuring Canadian businesses and consumers prosper in a competitive and innovative marketplace as stipulated under the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act, and the Precious Metals Marking Act. The Bureau is housed under the Department of Innovation, Science, and Economic Development (ISED) and is headed by a Commissioner of Competition. Competition cases, excluding criminal cases, are brought before the Competition Tribunal, an adjudicative body independent from the government. The Competition Bureau and Tribunal adhere to transparent norms and procedures. Appeals to Tribunal decisions may be filed with the Federal Court of Appeal as per section 13 of the Competition Tribunal Act. Criminal violations of competition law are investigated by the Competition Bureau and are referred to Canada’s Public Prosecution Service (CPPS) for prosecution in federal court.

In November 2022, the federal government announced the launch of a Competition Act review aimed at helping the Competition Bureau better protect consumers and marketplace integrity. The federal government announced amendments to the Competition Act that will come into effect on June 23, 2023. The amendments prohibit wage fixing and no poach agreements, classify drip pricing as a deceptive marketing practice, and increase maximum penalties and fines for Act breaches.

In September 2020, the Bureau signed the Multilateral Mutual Assistance and Cooperation Framework for Competition Authorities (MMAC) with the Australian Competition and Consumer Commission, the New Zealand Commerce Commission, the United Kingdom Competition & Markets Authority, the U.S. Department of Justice, and the U.S. Federal Trade Commission. The MMAC aims to improve international cooperation through information sharing and inter-organizational training.

Expropriation and Compensation

Canadian federal and provincial laws recognize both the right of the government to expropriate private property for a public purpose and the obligation to pay compensation. The federal government has not nationalized a foreign firm since the nationalization of Axis property during World War II. Both the federal and provincial governments have assumed control of private firms, usually financially distressed companies, after reaching agreement with the former owners.

The USMCA, like the NAFTA, requires expropriation only be used for a public purpose and done in a nondiscriminatory manner, with prompt, adequate, and effective compensation, and in accordance with due process of law.

Dispute Settlement

ICSID Convention and New York Convention

Canada ratified the International Centre for Settlement of Investment Disputes (ICSID) Convention on December 1, 2013 and is a signatory to the 1958 New York Convention, ratified on May 12, 1986. Canada signed the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (known as the Mauritius Convention on Transparency) in March 2015.

Investor-State Dispute Settlement

Canada accepts binding arbitration of investment disputes as obligated under its bilateral and multilateral agreements. As part of the USMCA, the United States and Canada agreed to phase out NAFTA’s investor state dispute settlement procedures over a three-year period. Under the USMCA, U.S. and Canadian investors rely on domestic courts and other mechanisms for dispute resolution. Ongoing NAFTA arbitrations are not affected by the USMCA and investors can file new NAFTA claims by July 1, 2023 provided the investment(s) were “established or acquired” when NAFTA was still in force and remained “in existence” on the date the USMCA entered into force.

Over the history of the NAFTA, 29 disputes have been filed against the Government of Canada. For more information about cases filed under NAFTA Chapter 11, please visit https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng 

International Commercial Arbitration and Foreign Courts

Provinces have the primary responsibility for regulating arbitration within Canada. Each province, except Quebec, has legislation adopting the UNCITRAL Model Law. The Quebec Civil Code and Code of Civil Procedure are consistent with the UNCITRAL Model Law. The Canadian Supreme Court has ruled that arbitration agreements must be broadly interpreted and enforced. Canadian courts respect arbitral proceedings and have been willing to lend their enforcement powers to facilitate the effective conduct of arbitration proceedings, by requiring witnesses to attend and give evidence, and to produce documents and other evidence to arbitral tribunals.

Bankruptcy Regulations

Bankruptcy in Canada is governed at the federal level in accordance with the provisions of the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA). Each province also has specific laws for dealing with bankruptcy. Canada’s bankruptcy laws stipulate that unsecured creditors may apply for court-imposed bankruptcy orders. Debtors and unsecured creditors normally work through appointed trustees to resolve claims. Trustees will generally make payments to creditors after selling the debtors assets. Equity claimants are subordinate to all other creditor claims and are paid only after other creditors have been paid in full per Canada’s insolvency ladder. In all claims, provisions are made for cross-border insolvencies and the recognition of foreign proceedings. Secured creditors generally have the right to take independent actions and fall outside the scope of the BIA.

Investment Incentives

Federal and provincial governments offer a wide array of investment incentives designed to advance broader policy goals, such as boosting research and development, and promoting regional economies. The funds are available to qualified domestic and foreign investors. Export Development Canada offers financial support to inward investments under certain conditions. The government maintains a Strategic Innovation Fund that offers funding to firms advancing “the Canadian innovative ecosystem.” Canada also provides incentives through the Innovation Superclusters Initiative, which allocated more than USD 700 million over five years (2017‑2022) to accelerate economic and investment growth in Canada. In Canada’s 2022 budget, the federal government announced a USD 550 funding extension of the program until 2028. The five superclusters focus on digital technology, protein industries, advanced manufacturing, artificial intelligence, and the ocean. Foreign firms may apply for supercluster funding. A 2020 Canada Parliamentary Budget Office report concluded Supercluster Initiative spending lagged budgetary targets and the Initiative was unlikely to meet its ten-year goal to increase GDP by USD 37 billion.

Several provinces also offer incentive programs available to foreign firms. These incentives are normally restricted to firms established in the province or that agree to establish a facility in the province. Quebec is implementing “Plan Nord” (Northern Plan), a 25-year program to incentivize natural resource development in its northern and Arctic regions. The program provides financing to facilitate infrastructure, mining, tourism, and other investments. Ontario provides financial support to investments in targeted sectors including agriculture and forestry. Ontario’s Critical Minerals Innovation Fund provides up to USD 380,000 in funding for critical mineral investments. Alberta offers companies a provincial tax credit worth up to USD 220,000 annually for scientific research and experimental development, as well as Alberta Innovation Vouchers worth up to USD 75,000 to help small early-stage technology and knowledge-driven businesses get their ideas and products to market faster. British Columbia offers various tax credits and programs in targeted sectors such as a 20 percent mining exploration tax credit to corporations engaged in the exploration of all base and precious metals, coal, and some industrial minerals.

The federal government and several provincial governments offer specific incentives for businesses owned by underrepresented investors. The Black Entrepreneurship Program, for example, is a partnership between the Government of Canada, Black-led business organizations, and financial institutions which will provide up to USD 160 million over four years (2021-2025) in loans to help Black Canadian business owners and entrepreneurs grow their businesses. The Yukon First National Procurement Policy prioritizes Yukon First Nations-owned businesses and businesses that employ First Nations workers in territorial procurements.

The federal government and several provincial governments offer incentives aimed at attracting and facilitating green investment. In Canada’s 2023 budget, the federal government announced USD 61 billion in tax credits and subsidies for investments in clean electricity, clean-tech manufacturing, carbon capture, and hydrogen. Specific commitments include a 15 percent tax credit for investments into clean electricity generation, storage, and transmission and a 30 percent clean technology manufacturing tax credit that includes extraction and processing of critical minerals. The federal government announced the Canadian Critical Minerals Strategy in December 2022 which allocates USD 2.8. billion for mineral geoscience, exploration, processing, manufacturing, recycling, and infrastructure to support the industry. The federal government’s Clean Growth in Natural Resource Sectors Program is a USD 120 million fund to incentivize clean technology investment in the energy, mining, and forestry sectors.

Incentives for investment in cultural industries at both the federal and provincial level are generally available only to Canadian-controlled firms. Incentives may take the form of grants, loans, loan guarantees, venture capital, or tax credits. Provincial incentive programs for film production in Canada are available to foreign filmmakers.

Foreign Trade Zones/Free Ports/Trade Facilitation

Under the USMCA, Canada operates as a free trade zone for products made in the United States. Most U.S.-made goods enter Canada duty free.

Performance and Data Localization Requirements

As a general rule, foreign firms establishing themselves in Canada are not subject to local employment or forced localization requirements, although Canada has some requirements on local employment for boards of directors. Ordinarily, at least 25 percent of the directors of a corporation must be resident Canadians. If a corporation has fewer than four directors, however, at least one of them must be a resident Canadian. In addition, corporations operating in sectors subject to ownership restrictions (such as airlines and telecommunications) or corporations in certain cultural sectors (such as book retailing, video, or film distribution) must have a majority resident Canadian director.

Data localization is an evolving issue in Canada. The federal government introduced the Digital Charter Implementation Act in June 2022. The proposed legislation, under parliamentary review as of April 2023, aims to establish rules to govern the protection of personal information. The province of Quebec adopted a law in September 2021 that amends its data protection regime. Under the new law, the transfer of personal data outside of Quebec is limited to jurisdictions with data protection regimes possessing an adequate level of protection based on generally accepted data protection principles. Implementation of the law will be phased in 2021-2024. Privacy rules in Nova Scotia mandate that personal information in the custody of a public body must be stored and accessed only in Canada unless one of the few limited exceptions applies. The law prevents public bodies such as primary and secondary schools, universities, hospitals, government-owned utilities, and public agencies from using non-Canadian hosting services. British Columbia maintained similar rules, however, the province passed legislation November 25, 2021 permitting some public bodies to disclose and store personal information outside of Canada to ensure operations, including meeting public health demand during the pandemic. Beginning February 1, 2023, public bodies in British Columbia are required to have a privacy management program in place to comply with privacy breach notification obligations. Under the USMCA, parties are prevented from imposing data-localization requirements.

The Canada Revenue Agency stipulates that tax records must be kept at a filer’s place of business or residence in Canada. Current regulations were written over 30 years ago and do not consider current technical realities concerning data storage.

Real Property

Foreign investors have full and fair access to Canada’s legal system, with private property rights limited only by the rights of governments to establish monopolies and to expropriate for public purposes. Investors under the USMCA have mechanisms available for dispute resolution regarding property expropriation by the Government of Canada. The recording system for mortgages and liens is reliable. Canadian land ownership includes federal Crown land, provincial Crown land, Indigenous treaty agreement land, and private land. Canada is working toward reconciliation between Indigenous and non-Indigenous peoples including through the settlement of historical claims. Outstanding land claims have the potential to affect investments.

The Prohibition on the Purchase of Residential Property by Non-Canadians Act came into force on January 1, 2023. The Act prohibits non-Canadian citizens and residents from purchasing residential property (defined as detached and semi-detached houses, condominium units, and residential buildings with 3 dwelling units or less) in Canada until December 31, 2024 with some exceptions including for rural areas and for temporary foreign residents with a work permit. Regulatory details of the Act can be accessed here: https://laws-lois.justice.gc.ca/eng/regulations/SOR-2022-250/page-1.html .

The federal Underused Housing Tax Act came into effect on January 1, 2022. The Act imposes a one percent annual tax of the assessed value on the ownership of vacant or underused housing to non-resident, non-Canadian owners beginning in 2023 with some exceptions. The Act requires all non-resident, non-Canadian property owners to file an annual tax return with the Canada Revenue Agency. Regulatory details of the Act can be accessed here: https://laws-lois.justice.gc.ca/eng/regulations/SOR-2022-19116/page-1.html .

British Columbia and Ontario tax foreign buyers of real property. In British Columbia, foreign buyers of real property in Metro Vancouver, the Fraser Valley, the central Okanagan regional district, Nanaimo, and the Capital Regional District are taxed at 20 percent of the property’s fair market value. In 2018, British Columbia broadened taxation on foreign ownership in Metro Vancouver and enacted a 0.5 percent Speculation and Vacancy Tax, targeting vacant foreign-owned homes. In 2019, the British Columbia Ministry of Finance increased the tax to two percent. The tax includes foreign owners and satellite families defined as those who earn most of their income outside of Canada. In Ontario, non-resident buyers of real property are subject to a non-resident speculation tax (NRST) at 25 percent of the property’s fair market value. Ontario extended the NRST in March 2022 to apply to real property throughout the province. In 2022, Nova Scotia began levying property taxes on non-residents of Nova Scotia. Residential properties owned by non-residents of Nova Scotia (with exceptions for multi-unit buildings and properties leased for at least twelve months) are subject to a two percent property tax. In addition, non-residents who buy property and do not move to Nova Scotia within six months of closing have to pay a transfer tax of five percent of the property’s value.

In terms of non-resident access to land, including farmland, Ontario, Newfoundland and Labrador, New Brunswick, and Nova Scotia have no restrictions on foreign ownership of land. Prince Edward Island, Quebec, Manitoba, Alberta, and Saskatchewan maintain measures aimed at prohibiting or limiting land acquisition by foreigners. The acreage limits vary by province, from as low as five acres in Prince Edward Island to as high as 40 acres in Manitoba. In certain cases, provincial authorities may grant exemptions from these limits, including for investment projects. In British Columbia, Crown land cannot be acquired by foreigners, while there are no restrictions on acquisition of other land.

Intellectual Property Rights

Canada is on the 2023 Watch List in the Office of the U.S. Trade Representative’s (USTR) Special 301 Report to Congress. The Pacific Mall located in Toronto, Ontario was listed in USTR’s 2022 Review of Notorious Markets for Counterfeiting and Piracy.

Canada took significant steps to improve its intellectual property (IP) provisions when the USMCA came into force July 1, 2020, addressing areas with long-standing concerns, including full national treatment for copyright protections, transparency, and due process with respect to new geographical indications (GIs), more expansive trade secret protection, authority to seize counterfeit goods in transit to other countries, and enforcement measures in the digital environment. Legislative amendments to extend copyright protections from 50 years to 70 years after the life of the author came into force on December 30, 2022. Canada must implement two additional provisions, including legislation to implement patent term adjustments to compensate for unreasonable patent prosecution delays by December 2024 and accession to the Brussels Convention Relating to the Distribution of Program-Carrying Signals Transmitted by Satellite by July 2024. The Canadian courts have established meaningful penalties against circumvention devices and services. In 2019, Canada made positive reforms to the Copyright Board related to tariff-setting procedures for the use of copyrighted works, and efforts remain ongoing to implement those measures.

Various challenges to IP protection in Canada remain despite this strong legal framework. Canadian IP enforcement of counterfeit and pirated goods at the border and within Canada remains limited. Canada’s system for providing patent term restoration for delays in obtaining marketing approval is also limited in duration, eligibility, and scope of protection. Canada’s ambiguous education-related exemption included in the 2012 copyright law undermines the market for educational publishers and authors.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

Canada’s capital markets are open, accessible, and regulated. Credit is allocated on market terms, the private sector has access to a variety of credit instruments, and foreign investors can get credit on the local market. Canada has several securities markets, the largest of which is the Toronto Stock Exchange, and there is sufficient liquidity in the markets to enter and exit sizeable positions. The Canadian government and Bank of Canada do not place restrictions on payments and transfers for current international transactions.

Money and Banking System

The Canadian banking system is composed of 35 domestic banks and 16 foreign bank subsidiaries. Six major domestic banks are dominant players in the market and manage close to USD 5.4 trillion in assets. Many large international banks have a presence in Canada through a subsidiary, representative office, or branch. Ninety-nine percent of Canadians have an account with a financial institution. The Canadian banking system is viewed as very stable due to high capitalization rates that are well above the norms set by the Bank for International Settlements. The Office of the Superintendent of Financial Institutions (OSFI) announced in January 2022 revised capital, leverage, liquidity, and disclosure rules that incorporate the final Basel III banking reforms with additional adjustments to make them suitable for federally regulated deposit-taking institutions. Most of the revised rules will take effect in the second fiscal quarter (July-September) of 2023, with those related to market risk and credit valuation adjustment risk taking effect in early 2024.

Foreign financial firms interested in investing submit their applications to the OSFI for approval by the Minister of Finance. U.S. and other foreign banks can establish banking subsidiaries in Canada. Several U.S. financial institutions maintain commercially focused operations, principally in the areas of lending, investment banking, and credit card issuance. Foreigners can open bank accounts in Canada with proper identification and residency information.

The Bank of Canada is the nation’s central bank. Its principal role is “to promote the economic and financial welfare of Canada,” as defined in the Bank of Canada Act. The Bank’s four main areas of responsibility are: monetary policy; promoting a safe, sound, and efficient financial system; issuing and distributing currency; and being the fiscal agent for Canada.

Foreign Exchange and Remittances

Foreign Exchange

The Canadian dollar is a free-floating currency with no restrictions on its transfer or conversion.

Remittance Policies

The Canadian dollar is fully convertible, and the central bank does not place time restrictions on remittances.

Sovereign Wealth Funds

Canada does not have a federal sovereign wealth fund. The province of Alberta maintains the Heritage Savings Trust Fund to manage the province’s share of non-renewable resource revenue. The fund’s net financial assets were valued at USD 14 billion as of December 31, 2022. The Fund invests in a globally diversified portfolio of public and private equity, fixed income, and real assets. The Fund follows the voluntary code of good practices known as the “Santiago Principles” and participates in the IMF-hosted International Working Group of SWFs. The Heritage Fund holds approximately 50 percent of its value in equity investments, nine percent of which are domestic. The Heritage Savings Trust Fund does not disclose U.S. asset investment percentages.

Privatization Program

Federal and provincial privatizations are considered on a case-by-case basis, and there are no limitations to foreign participation. SOE privatization occurs via direct sales, share issuances, and employee-management buyouts that are considered non-discriminatory and transparent.

Additional Resources

Department of State

• Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/)
• Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/)
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/)
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/)
• Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/)

Department of the Treasury

• OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions )

Department of Labor

• Findings on the Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  )
• List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods )
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab )
• Comply Chain ( https://www.dol.gov/ilab/complychain/ )

Climate Issues

The Canadian Net-Zero Emissions Accountability Act enshrines in law the Government of Canada’s commitment to achieve net-zero greenhouse gas emissions by 2050. The Act establishes a legally binding process to set five-year national emissions-reduction targets as well as develop credible, science-based emissions-reduction plans to achieve each target. It establishes the 2030 greenhouse gas emissions target of reductions of 40-45 percent below 2005 levels by 2030 as Canada’s Nationally Determined Contribution (NDC) under the Paris Agreement. The Act also establishes a requirement to set national emissions reduction targets for 2035, 2040, and 2045, ten years in advance. Canada issued on March 29, 2022, the first Emissions Reduction Plan under the Canadian Net-Zero Emissions Accountability Act. Progress under the plan will be reviewed in progress reports produced in 2023, 2025, and 2027. The 2030 Emissions Reduction Plan describes the measures Canada is undertaking to reduce emissions to 40 to 45 percent below 2005 levels by 2030 and achieve net-zero emissions by 2050. This Plan reflects economy-wide measures such as carbon pricing and clean fuels, while also targeting actions sector by sector ranging from buildings to vehicles to industry and agriculture. The 2030 plan is designed to be evergreen and governments, businesses, non-profits, and communities across the country are expected to work together to reach these targets.

Canada’s Net-Zero Accelerator initiative provides up to USD 6 billion to support large-scale industrial investments targeting clean and long-term growth. In November 2022, the federal government issued Canada’s National Adaptation Strategy. The Strategy includes USD 1.2 billion in funding to improve health and well-being, build, and maintain resilient public infrastructure, protect, and restore nature and biodiversity, support the economy and workers, and reduce the impacts of climate-related disasters. In December 2022, the federal government launched Canada’s Critical Mineral Strategy including USD 2.8 billion to advance the production of clean technology.

In Canada’s 2023 budget, the federal government announced USD 61 billion in tax credits and subsidies for investments in clean electricity, clean-tech manufacturing, carbon capture, and hydrogen. Specific commitments include a 15 percent tax credit for renewable power, a 30 percent clean technology manufacturing tax credit, and a 30 percent tax credit for machinery and equipment investments used to extract and process critical minerals.

Canada’s Greening Government Strategy commits that the Government of Canada’s operations will be net-zero emissions by 2050 including government-owned and leased real property; government fleets, business travel, and commuting; procurement of goods and services; and national safety and security operations. The government intends to aid in the net-zero transition through green procurement that includes life-cycle assessment principles and the adoption of clean technologies and green products by including criteria that address greenhouse gas emissions reduction, sustainable plastics, and broader environmental benefits into procurements, among other efforts.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Martine Richard (Interim)
Conflict of Interest and Ethics Commissioner (for appointed and elected officials, House of Commons)
Office of the Conflict of Interest and Ethics Commissioner
Parliament of Canada
66 Slater Street, 22nd Floor
Ottawa, Ontario

Office of the Conflict of Interest and Ethics Commissioner
Parliament of Canada
Centre Block, P.O. Box 16
Ottawa, Ontario
K1A 0A6 (Mailing address)

Pierre Legault
Office of the Senate Ethics Officer (for appointed Senators)
Thomas D’Arcy McGee Building
Parliament of Canada
90 Sparks St., Room 526
Ottawa, ON K1P 5B4

Contact at a “watchdog” organization:

Transparency International Canada Inc.
c/o Maytree Foundation
77 Bloor Street West, Suite 1600
Toronto, Ontario, M5S 1M2