Are You an Accredited Investor in Canada? Eligibility Explained

Investors researching mortgage investment corporations (MICs) often meet the phrase “accredited investors only” early on, and many assume it shuts them out. Sometimes it does; often it does not. Whether an investor is an accredited investor in Canada decides which prospectus exemption a purchase can be made under and how much can be invested, not whether investing is possible at all. This guide explains the tests, the alternatives and the difference between being eligible and being suited to an investment. It is current as of October 2026. Thresholds are summarised; confirm current definitions with a registered dealer. This is general education, not investment, tax or legal advice.

What is an accredited investor in Canada?

An accredited investor is a person or entity that meets the definition in National Instrument 45-106 Prospectus Exemptions (NI 45-106), which lets them buy securities without the issuer preparing a prospectus. A prospectus is the full disclosure document a securities regulator reviews before securities are offered to the public.

The definition covers many kinds of investor, including institutions and companies; this guide deals with individuals. The thresholds work as a proxy for financial capacity. They say nothing about an investor’s experience, goals or need for access to the money, which is why eligibility and suitability have to be assessed separately.

Am I an accredited investor? The tests for individuals

An individual qualifies by meeting any one of three tests: a financial-assets test, a net-income test or a net-assets test. Meeting one is enough.

The table summarises them. Basis of comparison: the threshold, whose figures count, and the point that most often causes confusion.

Two words in the table do a lot of work. “Over” means more than: exactly $1,000,000 of net financial assets does not meet the first test. “Net of related liabilities” means debts taken on to acquire or hold those assets, such as an investment loan, are subtracted first.

Worked example (illustrative)

Three hypothetical households, using round numbers for arithmetic only.

Household A — a couple. They hold $1,200,000 in investment accounts, bought partly with a $200,000 investment loan. Net financial assets: $1,200,000 − $200,000 = $1,000,000, which is not over $1,000,000, so the first test fails. Their incomes are $150,000 and $90,000, a combined $240,000, which fails the income test. They also own a home worth $900,000 with a $300,000 mortgage, so net assets are ($1,200,000 + $900,000) − ($200,000 + $300,000) = $1,600,000, which fails the net-assets test. Not accredited, but their net assets are well above the $400,000 eligible-investor threshold.

Household B — a couple. One spouse earned $190,000 two years ago and $205,000 last year; the other earned $125,000 and $110,000. Individually, the first spouse fails because one year was below $200,000. Combined, they earned $315,000 in each year, above $300,000, so they meet the combined income test if they reasonably expect the same this year.

Household C — a retiree. She owns a home worth $3,800,000 and a $900,000 portfolio, with no debts. Net assets are $4,700,000, below $5,000,000, and financial assets of $900,000 are below $1,000,000. Not accredited, but an eligible investor.

Suppose Household C lives in Ontario and receives suitability advice from an exempt market dealer. Under the offering memorandum exemption she could invest up to $100,000 in 12 months. If she put $100,000 into MIC shares paying an assumed 8% net distribution, she would receive $8,000 a year, or $2,000 a quarter. MIC dividends are taxed as interest, so at an assumed 40% marginal rate she would pay $3,200 and keep $4,800. Tax treatment is stated as at October 2026; confirm your own position with a Canadian tax professional. The 8% is an assumption, not a forecast: higher yields come with higher risk, mortgage investments are not guaranteed, and principal can be lost.

Can I invest in a MIC without being accredited?

Yes. Investors who are not accredited can buy MIC shares under the offering memorandum (OM) exemption in NI 45-106, where the MIC offers shares that way. The issuer delivers an offering memorandum, a disclosure document describing the business, its risks and its financial statements, and the investor signs a risk acknowledgement form where the exemption requires one.

In Alberta, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan, the OM exemption limits how much an individual can invest in 12 months:

• Not an eligible investor: up to $10,000.
• Eligible investor: up to $30,000.
• Eligible investor who receives suitability advice from a portfolio manager, investment dealer or exempt market dealer: up to $100,000.
• Accredited investor: no OM limit.

Other provinces’ rules differ and should not be assumed to match. Mortgage investment rules by province shows where these limits apply, and the exempt market and offering memorandums explains the OM exemption in full. A MIC may also set its own minimum subscription; minimum investments and getting started covers that side.

What is an eligible investor?

An eligible investor is a defined term in NI 45-106, not an exemption in its own right. Its main job for an individual buying MIC shares is to set which OM investment limit applies.

In summary, an individual is an eligible investor with:

• net assets, alone or with a spouse, over $400,000; or
• net income before tax over $75,000, or over $125,000 combined with a spouse, in each of the two most recent years, with a reasonable expectation of the same this year; or
• advice from an eligibility adviser (the rules for this route vary).

Thresholds are summarised; confirm current definitions with a registered dealer.

Who can invest in a MIC?

Any investor who qualifies under a prospectus exemption the MIC is using can subscribe, subject to the dealer’s review and the MIC’s own terms. In practice that usually means an accredited investor, or an investor buying under the OM exemption within any applicable limit.

A few other rules shape who can hold MIC shares and how much:

• Registered plans. MIC shares are generally a qualified investment for registered plans such as RRSPs and TFSAs, held through a self-directed plan trustee. They can become a prohibited investment if the plan holder, with non-arm’s-length persons, has a significant interest (10% or more of any class), under the prohibited-investment rules in section 207.01 of the Income Tax Act. When a MIC becomes a prohibited investment explains the trap.
• Concentration limits in the tax rules. Under subsection 130.1(6) of the Income Tax Act, a MIC needs 20 or more shareholders, and no one, together with related persons, can hold more than 25% of the issued shares of any class. Large investors can run into this ceiling.
• Companies and trusts. The accredited investor definition has categories for entities, which a dealer can confirm.

Eligibility is not suitability

Eligibility and suitability are different questions. Eligibility asks whether an exemption allows the purchase. Suitability asks whether the investment fits this investor’s objectives, time horizon, risk tolerance, need for access to the money and existing holdings.

An investor can be accredited many times over and still be poorly served by an illiquid investment that ties up money they may need. Shares of a private MIC usually have no secondary market, and redemptions follow the MIC’s articles and offering memorandum, with notice periods and the board’s right to defer or suspend. That is why a registered exempt market dealer carries out know-your-client and suitability reviews before any subscription, whatever the investor’s accreditation status.

How does a dealer make a suitability determination?

A suitability determination is the dealer’s own conclusion, required of registered dealers under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, that a particular purchase is suitable for a particular client and puts the client’s interest first. In general terms it draws on two inputs. Know-your-client (KYC) information covers the investor’s personal and financial circumstances, investment needs and objectives, investment knowledge, risk profile and time horizon. Know-your-product (KYP) work covers the dealer’s understanding of the security itself, which for a mortgage investment means its loans, fees, leverage, liquidity and risk factors.

The dealer weighs the two before acting on a purchase, and if it concludes the purchase is not suitable, it tells the investor so. The determination is a process carried out for one investor, not an endorsement of the investment or a promise about its returns, and it is only as good as the information the investor gives. Keeping the KYC form accurate and up to date is the investor’s part of it.

Investors who can leave money invested for the stated term, who can absorb a loss of principal without changing their plans, and who understand that distributions can be reduced or suspended might consider mortgage investments as part of a portfolio. Who might consider mortgage investing explores the other side of that question.

How accredited status is confirmed

Accredited status is confirmed through the dealer and the subscription documents, not by the investor alone. The investor provides financial information to the dealer and makes a representation in the subscription agreement about which test is met, and the dealer considers it as part of its know-your-client process.

The documents to expect, and what each one is for:

• Know-your-client form — the dealer’s record of the investor’s finances, objectives and risk profile.
• Subscription agreement — includes the investor’s representation about the exemption relied on.
• Risk acknowledgement form — signed where the exemption requires one.
• Offering memorandum — the disclosure document, with financial statements and risk factors, where the OM exemption is used.
• The dealer’s registration — check it on the CSA National Registration Search before signing anything.

The investment process, step by step shows where each document fits.

Common mistakes about accredited investor status

These mistakes come up repeatedly in investor questions.

• Treating “at least” and “over” as the same. Exactly $1,000,000 of net financial assets does not qualify.
• Forgetting related liabilities. An investment loan reduces net financial assets.
• Counting assets that may not qualify. Ask the dealer whether specific holdings, such as a home or a business interest, count as financial assets.
• Relying on one strong year. The income test needs both of the two most recent years.
• Treating accreditation as a stamp of safety. It changes which exemption applies, not the risk of the investment.
• Assuming limits are national. The OM limits apply in six provinces only.
• Ticking a box because a seller suggests it. The representation is the investor’s own, and a seller who encourages it without checking is a warning sign.

What this means for a mortgage investor

Being an accredited investor in Canada opens one exemption; not being one leaves the offering memorandum route, with its investment limits in six provinces and the eligible-investor definition deciding which limit applies. Neither status says anything about whether an investment is suitable or how risky it is. That still depends on the borrower, the property, the loan-to-value, the security position, the term, the jurisdiction and the investment structure. Everything here is current as of October 2026; confirm current definitions with a registered dealer.