The Government of Canada has published the 2025 financial thresholds for pre-closing, “net benefit” review and approval of foreign investment under the Investment Canada Act (“ICA“). The ICA financial thresholds are reviewed annually and have once again increased. Notably, the financial threshold for trade agreement investors that are not state-owned enterprises (“SOE”) has exceeded CAD 2 billion for the first time. Failure to notify and obtain approval for an investment may result in significant penalties under the ICA.
Investment Canada Act Financial Thresholds – 2025
All investments in Canada by non-Canadian investors are subject to the ICA, which is Canada’s foreign investment review legislation. Under the ICA, the direct or indirect acquisition of control of a Canadian business by a non-Canadian investor requires either pre-closing, “net benefit” review and approval by the Minister of Innovation, Science and Industry if the applicable financial threshold is exceeded, or notification, which must be filed within 30 days of closing. The applicable financial threshold used to determine whether an investment requires “net benefit” review and approval depends on the: (1) identity of the investor (e.g., the nationality of the investor and whether it is a SOE); (2) transaction structure; and (3) type of Canadian business.
The financial thresholds for “net benefit” reviews are adjusted annually based on changes in Canada’s nominal gross domestic product (“GDP“). The 2025 thresholds are as follows:
- Direct investments by private investors from WTO member states that are not SOEs: CAD 1.386 billion based on enterprise value (up from CAD 1.326 billion in 2024).
- Direct investments by private investors from countries having a trade agreement with Canada, referred to as “trade agreement investors”, that are not SOEs: CAD 2.079 billion based on enterprise value (up from CAD 1.989 billion in 2024).
- Direct investments by investors from WTO member states that are SOEs: CAD 551 million based on the book value of the Canadian business’ assets (up from CAD 528 million in 2024).
- Investments by non-WTO investors or involving Canadian “cultural businesses”, as defined in the ICA, remain the same: CAD 5 million and CAD 50 million based on the book value of assets of the Canadian business for direct and indirect investments, respectively. However, the CAD 50 million threshold for indirect acquisitions of cultural businesses is reduced to CAD 5 million when the value of the Canadian business represents more than 50% of the value of all the assets in the transaction.
- There is no change to the mandatory notification requirement, which applies to all investments within the jurisdiction of the ICA that do not meet the applicable criteria and thresholds for “reviewable” transactions, with no minimum value threshold.
- There are also no value thresholds for screening investments on national security grounds.
Indirect acquisitions of Canadian businesses involving WTO investors, including SOEs, continue not to be subject to “net benefit” review (unless the investment is in a cultural business); however, they remain subject to mandatory notification.
The financial thresholds will be officially published in the Canada Gazette in January 2025.
