Skip links
Ryan Mortgage Income Fund is currently open for new investments – book a meeting here.

What is a Mortgage Investment Corporation?

A mortgage investment corporation (MIC) is an issuer and lending institution which:

Offers shares of the corporation to investors

Invests the proceeds from the offering into mortgage secured by real property by lending to mortgage borrowers

MIC shareholders receive income from the MIC mortgage pool. In essence, the debt payments that the borrower makes on their mortgages are flowed through to the shareholders of the MIC. Additional revenue may be generated from various fees paid by the borrower throughout the life of their mortgage.

Flow-through investments

MICs are flow-through investments, meaning that tax is not paid by the corporation. Rather, income is flowed through to the investors. The criteria for eligibility for MICs, under the Tax Act (Canada), are summarized below:

Must have at least 20 shareholders

No shareholder may hold more than 25% of the MIC’s total capital

At least 50% of a MIC’s assets must be residential mortgages and/or cash and deposits insured by Canada Deposit Insurance Corporation (CDIC)

May invest up to 25% of its assets directly in real estate

Must not develop land or engage in construction

Must not invest in assets or debts (mortgages) related to property outside of Canada

Must distribute 100% of its net income to its shareholders

Distributions paid from a MIC to its shareholders are considered income for tax purposes (T5)

Annual financial statements must be audited by an independent accounting firm

May employ financial leverage by using debt to partially fund assets

Distribution of Mortgage Investment Corporations

Most commonly, MICs are offered to investors under exemptions from prospectus requirements. As with all securities offered in the exempt market, MICs are distributed primarily by way of an offering memorandum (OM) and may only be purchased by certain investors who qualify for exemption (e.g. accredited investor (AI) exemption, eligible investors under the OM exemption, or the family, friends or business associates (FFBA) exemption).

When considering an exempt investment you should thoroughly review the offering documents (offering memorandum) and audited financial statements as a matter of your due diligence obligations.