Saskatchewan restricts non-residents and non-Canadian owned entities to owning parcels with an aggregate area of ten acres. The Farm Land Security Board oversees this regime and publicly advises that the purpose of these restrictions is to maintain opportunities for Saskatchewan residents to acquire ‘farm land’ (i.e. all land located outside of a city, town, village or smaller settlement for agricultural purposes) and to support the development of strong rural communities. All land defined as farm land falls under these requirements; however this does not include land used primarily for extracting, processing, storing or transporting minerals.
All types of interests in land are affected including any interests in farm land under an agreement to purchase or lease and any interest in farm land that directly or indirectly results in the vesting of title or conferring a right to possession or control. An interest in farm land held by way of security for a debt or other obligation is not captured by this regime unless the creditor enforces its security interest.
Who is affected?
Non-residents are subject to the restrictions and this includes persons who reside in Canada for less than 183 days in any year. Canadian citizens will always be considered resident, regardless of where they normally reside.
Canadian-owned entities are not affected provided the corporation is primarily engaged in farming or all of its shares or interests are legally and beneficially owned by Canadian residents. If a corporate entity does not meet these requirements, it is considered to be a non-Canadian entity and subject to foreign ownership restrictions. While the legislation does not specify a threshold that will amount to effective corporate control, it does state that an interest in land includes both indirect and direct control; therefore, investors planning to use Canadian-owned entities as investment vehicles in Saskatchewan must consider how the entity will be controlled. Recent legislative amendments have clarified that the following are not Canadian-owned entities:
- pension plans
- administrators of pension plans
- trusts (other than trusts where there are ten or fewer beneficiaries and all of them are residents).
Non-Canadian owned entities controlled by Saskatchewan residents
A non-Canadian owned entity can hold an interest in up to 320 acres of land if the majority of issued voting shares are legally or beneficially owned by Saskatchewan residents or agricultural corporations. A Saskatchewan resident is a person who resides in Saskatchewan for at least 183 days and an agricultural corporation is one that is engaged in farming.
Recent legislative changes
Saskatchewan is currently undertaking a review of its foreign ownership rules and will be conducting consultation sessions. Until the review and consultation is complete, the government has enacted various amendments to the regulations to prevent dispositions to certain types of entities, such as pension plans and trusts, and has restricted financing options for farm land purchases to financial institutions registered to do business in Canada or to Canadian residents.