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MICs: The Technical Aspects of a Mortgage Investment Corporation



  1. A Canadian Corporation throughout the taxation year where its business only undertakes to invest its funds, and thereafter qualifies as a MIC, is deemed to be a public corporation under the ITA, and therefore must have its financials audited. 
    • Depending on which province your MIC is registered, it will have to comply with securities legislation in that province;
    • Depending on which province your shareholders or investors are, it will have to comply with securities legislation in that province;


  1. Mortgages secured against real estate in Canada
    • Mortgagors can be individuals or corporate
    • Mortgagors can be Canadian non-residents
  2. Deposits in banks or credit unions or other that is insured by the CDIC
  3. Real estate in Canada
    • Cannot manage or develop but can retain experts to manage the MIC’s portfolio solely in an attempt to protect its investments. However cannot directly or indirectly manage a rental as renting is not the “mere investing of funds”, also if acquired by way of a foreclosure.
    • Can be freehold or leasehold
  4. Shares of Canadian resident corporations


  1. Throughout the taxation year, the original cost base of any combination of 1 & 2 above (under Type of Activity etc…), whereby 1 is strictly in regards to those mortgages on houses (“a building or movable structure, or any part thereof, that is intended for human habitation and contains not more than two family housing units, together with any interest in land appurtenant to the building, movable structure or part thereof”) and  properties within housing projects (“any building or movable structure, or any part thereof, that is intended for human habitation, or any property that is intended to be improved, converted or developed to provide housing accommodation or services in support of housing accommodation, or any property that is associated with housing accommodation, including, without limiting the generality of the foregoing, land, buildings and movable structures, and public, recreational, commercial, institutional and parking facilities (e.g. a condo development , government housing, retirement & nursing homes, but NOT hotels)); must have been at least 50% of the cost of all properties, investments and assets (the “Property”) made by the MIC. The mortgages must be direct and not through a fund that invests in mortgages.
  2. Throughout the taxation year, the original cost base of 3 (under Type of Activity etc…) above could not have been more than 25% of the cost of all Property of the MIC.
    • This does no include any properties acquired by way of mortgage enforcement proceedings such as foreclosures.  However, if the property acquired by way of foreclosure requires rental management or development, the MIC will loose it status.
  3. Throughout the taxation year, the total liabilities are not more than three (3) times the NET ASSET VALUE (i.e. net-worth book value) of the MIC (the original cost of all Property minus liabilities), whereby at anytime in the year there was an occurrence in which paragraph 1 above (under Min & Max Levels etc…) was less than 67.67% (2/3rds) of the cost amount of all Property of the MIC.  Otherwise, if paragraph 1 above (under Min & Max Levels etc…) is more than 2/3rds the total liabilities cannot be more than five (5) times.
    • This means that if all the residential mortgages and bank deposits of the MIC equate to less than 2/3rds of the MIC’s Property on an original cost basis, then the MIC can borrower up to 75% of its Property  cost.
    • If the MIC invests more in residential mortgages or bank deposits (essentially more secure, and inline with policy by providing more loans on Canadian real estate) the MIC can borrow up to 83.33% (5/6th) of it Property cost.


  1. By the last day of the first taxation year of the MIC there are at least 20 shareholders going forward and throughout every taxation year thereafter, and no shareholder would have been a “modified” specified shareholder of the MIC at any time in the year.
    • “Modified” in that instead of owning 10% or more it has been increased to more than 25% of the issued shares of any class of the MIC. Furthermore, included in this number are those shares owned by related persons, changed from anyone not dealing at arm’s length (broader inclusion).  Also not included are shares owned in other corporations that are related to the MIC. Related persons was further narrowed to not include, brothers, sisters, parents, in-laws, and children over 18. That means your parents, in-laws, adult children, brothers and sisters can own shares in the MIC without pushing anyone into the specified shareholder classification.  A large family can start there own MIC.
    • Trusts that are Registered Pension Plans or Deferred Profit Sharing Plans will count as 4 shareholders if they hold shares in the MIC but only as one “modified” Specified Shareholder.


  1. None so long as you are compliant with the OBCA/CBCA (i.e. between all the classes of shares the right to vote, dividends and participate has been conferred), except when incorporating preferred shares.   In that case, any holders of preferred shares of the corporation have a right, not only to any preferred dividends, but to receive any additional dividends with equal right and ranking to the common shareholders, once the common shareholders received a dividend similar to the preferred dividend.  Essentially preferred shareholders are to always be preferred!
    • Where a MIC has two classes of shares with “like” attributes except that only one of the classes is entitled to bonus dividends, both classes of shares would qualify as common shares, so that this restriction (which is relevant only where there are holders of preferred shares) would not apply to require that the payment of dividends be ordered in the specified manner. “Like” being that both common and preferred shares must have rights to dividends in reference to a fixed percentage of its stated capital.