A Mortgage Investment Corporation (MIC) is a lending company designed specifically for mortgage lending in Canada. Owning shares in a MIC enables you to invest in a company which manages a diversified and secured pool of mortgages. The shares of a MIC are qualified investments under the Income Tax Act (Canada) for RDSP’s, RRSP’s, RRIF’s, TFSA’s or RESP’s and the management of the mortgage fund is under the direction of a professionally licensed mortgage broker.

According to the Income Tax Act section 130.1, some common facts about a MIC include:

• A MIC must have at least 20 shareholders.
• A MIC is generally widely held. No shareholder may hold more than 25% of the MIC’s total share capital. Shareholders whose MIC holding are held in registered accounts (RRSP, TFSA, etc.) are limited to 10% due to regulations restricting ownership in those capital accounts.
• At least 50% of a MIC’s assets must be residential mortgages, and/or cash and insured deposits at Canada Deposit Insurance Corporation member financial institutions.
• A MIC may invest up to 25% of its assets directly in real estate, but may not develop land or engage in construction. This ceiling on real estate holdings does not include real estate acquired as a result of mortgage default.
• A MIC is a flow-through investment vehicle, and distributes 100% of its net income to its shareholders.
• All MIC investments must be in Canada, but a MIC may accept investment capital from outside of Canada.
• A MIC is a tax-exempt corporation as its income is instead taxed in the hands of its shareholders.
• Dividends received with respect to directly held shares, not held within RRSPs or RRIFs, are taxed as interest income in the shareholder’s hands. Dividends may be received in the form of cash, or additional shares.
• MIC shares are qualified RRSP and RRIF investments.
• A MIC’s annual financial statements must be audited.