Nearly 40% of Canada’s farm land is located in Saskatchewan. Land values have risen of late, but are still lower than many other parts of Canada and the world. As a result, there has been intense interest in foreign investment into Saskatchewan farm land.
For decades, Saskatchewan law contained no restrictions on ownership of farm land. This changed in 1974, with the passage of The Saskatchewan Farm Ownership Act, which, with some exceptions, prohibited non-Saskatchewan residents from owning land worth more than $15,000. The restrictions on ownership evolved over the next 30 years, including by moving them into Saskatchewan’s farmer protection legislation, The Saskatchewan Farm Security Act (SFSA). At its most restrictive, the SFSA limited non-Saskatchewan residents (even Canadian citizens) to owning 10 acres of Saskatchewan land.
Saskatchewan liberalized its non-resident ownership rules in 2003 through amendments to the SFSA. The most significant change was to permit Canadian residents to own an unlimited amount of Saskatchewan land, bringing Saskatchewan into line with Alberta and Manitoba. Saskatchewan’s rules are now essentially as follows (some details have been simplified):
- Non-resident ownership is monitored and governed by the Farm Land Security Board. The Farm Land Security Board states that they verify every purchase of farm land to ensure the residency requirements are met. In some cases, the Farm Land Security Board has asked new owners to sign declarations that they are the sole owners of the land.
- The following are subject to no restrictions on owning farm land in Saskatchewan:
- a “resident person”, which is an individual who is a Canadian citizen or resides in Canada at least 183 days per year;
- a “Canadian-owned entity”, which includes:
- a company that is primarily engaged in the business of farming and is majority owned by resident persons (an “agricultural corporation”); and
- a company or other entity that is wholly owned by resident persons;
- A publicly traded company cannot qualify as a “Canadian-owned entity” and will be subject to the ownership restrictions.
- Any non-resident person or non-Canadian-owned entity is restricted to owing an aggregate of 10 acres.
- There are some exemptions for land transferred to relatives of resident persons. As well, non-Canadian-owned entities company may own as much as 320 acres if the majority of shares are legally or beneficially owned by Saskatchewan residents or agricultural corporations.
- The Farm Land Security Board has the ability to grant exemptions to the land holding restrictions, but that will generally be reserved for commercial developments, intensive farming operations and temporary exemptions for persons who intend to become residents.
- A person owning more than 10 acres of farm land who becomes non-resident has five years to reduce their land holding to the 10 acre limit. A company that ceases to qualify has one year to reduce to the applicable limit, but that period can be extended by the Farm Land Security Board.
In this time of increased immigration – the annual limit for Saskatchewan’s provincial immigrant nominee program has just been raised from 4,000 to 4,450 – the Farm Land Security Board has been actively promoting its program where it will grant temporary exemptions to non-residents who plan to move to Saskatchewan and wish to purchase land. The Farm Land Security Board requires a plausible plan for becoming a resident within a reasonable time, and will follow up to ensure that resident status is obtained within an agreed-to period of time.
Saskatchewan has its own definition of resident status – residing in Canada at least 183 days per year. Federal regulations require that a permanent resident must live in Canada at least two out of five years. The Saskatchewan threshold is more stringent and is calculated on an annual basis. Thus, it is possible for an immigrant to Canada to maintain permanent residency status while losing the right to own more than 10 acres in Saskatchewan. In contrast, Manitoba and Alberta use the federal residency threshold.
Still, the amendments brought the Saskatchewan rules much closer to those in Alberta and Manitoba. Alberta has a limit of 20 acres for non-residents, and Manitoba has a limit of 40 acres. In terms of corporate residence requirement, in Alberta publicly traded corporations require two-thirds of the directors to be Canadian citizens, and in Manitoba corporations must be 100% owned by Canadians.
The rule allowing an agricultural corporation to own unlimited land without 100% Canadian ownership (a majority must be owned by resident persons) opens up potential opportunities for foreign investment into Saskatchewan farm land. Moreover, nothing restricts where a purchaser or owner obtains their financing, so a foreign investment could be made through debt instruments.
Nonetheless, the restrictions on ownership are very real, and great care must be taken in structuring any entity for the purpose of purchasing or owning Saskatchewan farm land. Potential investors should obtain legal advice in advance to plan their transactions and entities so that they are not later forced to sell. Immigrants seeking to purchase land need to prepare and present a sound proposal to the Farm Land Security Board and should obtain the advice of an immigration lawyer.