What Is a Mortgage Investment Corporation (MIC)?

Investors who want income from private mortgage lending, without holding a mortgage in their own name, soon arrive at the same question: what is a mortgage investment corporation? The name sounds like a type of company, but the answer is more precise: it is a tax status, set out in one section of the Income Tax Act, that a corporation must earn every year.

This guide explains what a MIC is, how it works from the investor’s dollar to the borrower and back, the nine statutory conditions in summary, how MIC income is taxed, how a MIC compares with other ways to invest in mortgages, and the benefits and risks side by side. This is general education, not investment, tax or legal advice.

What is a mortgage investment corporation?

The precise answer is a legal one: a MIC is a corporation that meets the definition in section 130.1 of the Income Tax Act. Subsection 130.1(6) sets nine conditions, and a corporation is a MIC for a taxation year only if it meets all of them throughout that year.

In practical terms, a MIC is a pool. Many investors buy shares; the corporation lends the combined money to borrowers, mostly on mortgages; and it pays out its income to shareholders as dividends. Section 130.1 lets the MIC deduct the taxable dividends it pays, so income it distributes is taxed in shareholders’ hands rather than in the corporation. That flow-through is the reason the structure exists.

MIC status is not a licence or a quality rating. It says how a corporation is taxed and what it may hold, not how good its loans are. Two MICs can differ widely in the borrowers they lend to, the loan-to-value of their mortgages and the amount they borrow.

How do MICs work?

A MIC moves money in a cycle: capital comes in from investors, goes out to borrowers, and comes back as interest and repayments that are paid out or relent. Six steps describe it.

1. Raising capital. A private MIC sells shares to investors under prospectus exemptions in National Instrument 45-106, usually the offering memorandum exemption or the accredited investor exemption, through a registered exempt market dealer that reviews know-your-client information and suitability.
2. Lending. The MIC’s manager lends the pooled money to borrowers, typically through licensed mortgage brokers, taking a registered charge on each property as security.
3. Administration. A mortgage administrator collects payments, holds them in trust and tracks arrears.
4. Earning income. The MIC earns interest and lender fees, and pays management fees, operating costs, any loan losses and interest on any money it borrows.
5. Distributing. It pays its net income to shareholders as dividends, in cash or reinvested through a dividend reinvestment plan (DRIP).
6. Returning capital. Shareholders who want to leave redeem shares under the MIC’s articles and offering memorandum (OM), subject to notice periods and the board’s right to defer or suspend redemptions.

Lendmax Capital MIC follows this pattern: its shares are distributed through a registered exempt market dealer, its mortgages are administered by Lendmax Inc. under FSRA Mortgage Administrator Licence 13002 with payments collected into trust and reconciled monthly, and it pays distributions quarterly in cash or through a DRIP.

The nine conditions in section 130.1(6), in summary

The table summarises each condition and why it matters to an investor. It is a plain-language summary, not the statutory text; read section 130.1 on the Justice Laws Website for the exact wording. It is current as of October 2026.

Each condition is explained, with what to check, in the nine conditions a MIC must meet to keep its tax status.

How is MIC income taxed?

MIC dividends are taxed as interest. Subsection 130.1(2) deems a taxable dividend from a MIC, other than a capital gains dividend, to be received by the shareholder as interest payable on a bond issued by the corporation. The practical effect is that it is taxed at the investor’s marginal rate, with no dividend gross-up or dividend tax credit, and reported on a T5 slip.

Held in a registered plan, the distributions are governed by the plan’s rules instead: they accumulate without tax inside an RRSP, RRIF or TFSA, and the plan’s own rules apply on withdrawal. MIC shares are generally a qualified investment for registered plans under section 4900 of the Income Tax Regulations. They can become a prohibited investment under the prohibited-investment rules in section 207.01 of the Income Tax Act if the plan holder, with non-arm’s-length persons, has a significant interest (10% or more of any class), or if the MIC holds debt of the plan holder or non-arm’s-length persons. See the registered-plan trap.

Tax content is as at October 2026. The full treatment is in how mortgage investment income is taxed in Canada; confirm your own position with a Canadian tax professional.

What does a MIC investor actually own?

A MIC investor owns shares of a corporation, not mortgages. The shareholder has no direct claim on any particular loan or property; the claim is on whatever the corporation has left after paying all its creditors, including any bank that has lent to it.

That has two consequences. Income from the whole portfolio is shared, so one borrower’s default is diluted across many loans. Losses are shared too: if loan losses exceed income, the value of the shares can fall. MICs often issue more than one class of share, with different terms, explained in MIC share structure.

Worked example (illustrative)

Assume an investor holds $50,000 of shares in a MIC whose pooled money is fully lent out. All figures are illustrative assumptions, not a forecast or any MIC’s results.

1. Gross income: assume the mortgages earn 10% a year in interest and fees: $50,000 × 10% = $5,000 attributable to the investor’s shares.
2. Management fee: assume 1.5%: $750.
3. Operating costs: assume 0.5%: $250.
4. Net income distributed: $5,000 − $750 − $250 = $4,000, or 8.0%; paid quarterly, $1,000 a quarter.
5. Tax outside a registered plan: treated as interest at an assumed 40% marginal rate, tax is $1,600 and after-tax income $2,400, or 4.8%.
6. Inside a TFSA: the $4,000 is not taxed when received.

Now two harder years. If loan losses equal 1% of the portfolio, net income falls to 7.0% and the distribution to $3,500. If losses equal 10% of the portfolio, the 8% of net income does not cover them: the 2% shortfall, $1,000, reduces the investor’s capital to about $49,000, and there is no income to distribute that year.

How a MIC compares with other ways to invest in mortgages

A MIC is one of several ways to put money into mortgages. The comparison below describes typical features; each issuer’s documents set the actual terms.

The choice between pooling and holding a charge yourself is covered in MIC vs investing in mortgages directly.

Benefits and risks of a MIC investment, side by side

Each feature of a MIC that can work for an investor has a matching risk. The table keeps them on the same rows.

Mortgage investments are not guaranteed. Returns are targets, not promises, and principal can be lost. A higher distribution usually reflects higher-risk lending or more leverage: higher return, higher risk. MIC shares are not deposits; eligible deposits at CDIC member institutions are insured up to $100,000 per insured category, but MIC shares carry no CDIC or provincial deposit insurance.

Who regulates MICs?

No single regulator oversees a MIC. Different parts of its business answer to different authorities, and this summary is current as of October 2026.

• Tax: the Canada Revenue Agency administers the Income Tax Act, including section 130.1.
• Securities: provincial securities regulators. Private MIC shares are usually sold under the offering memorandum or accredited investor exemption in NI 45-106, through a registered exempt market dealer. In Alberta, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan, individuals buying under the OM exemption face limits over 12 months: up to $10,000 for non-eligible investors, $30,000 for eligible investors, and $100,000 for eligible investors who receive suitability advice from a portfolio manager, investment dealer or exempt market dealer; accredited investors have no OM limit. Other provinces differ. Thresholds summarised; confirm current definitions with a registered dealer.
• Mortgage brokering and administration: provincial regulators, such as FSRA in Ontario, BCFSA in British Columbia (where the Mortgage Services Act is scheduled to come into force on 13 October 2026), RECA in Alberta and the AMF in Québec.

The steps from first enquiry to subscription are set out in how to invest in mortgages.

What to check before investing in a MIC

• MIC status and tax treatment — the OM’s income-tax section.
• Portfolio by position, loan-to-value, region, property type and term — the OM and the MIC’s periodic investor reports.
• Impaired loans, loss provisions and leverage — the audited financial statements.
• Fees — the OM, including who receives lender fees.
• Redemption terms — the OM and the articles.
• Dealer registration — the CSA National Registration Search.
• Historical distributions, with periods — the OM or the manager’s published record. Past performance does not indicate future results.

Common mistakes investors make with MICs

• Reading a distribution rate as a fixed rate. It is the result of the portfolio’s income less costs and losses.
• Assuming every MIC lends only on homes in first position. The tax rules require 50% of cost amount in residential mortgages, deposits and money, not 100%, and say nothing about position.
• Assuming redemptions are on demand.
• Comparing a MIC with a GIC as if both were insured.
• Holding 10% or more of a class in a registered plan without checking the prohibited-investment rules.

What this means for a mortgage investor

A mortgage investment corporation is a Canadian corporation that pools investors’ money into mortgages, meets the nine conditions of subsection 130.1(6) each year, and passes its income to shareholders as dividends taxed like interest. The structure decides how income is taxed and what the MIC may hold, but not how risky its loans are. That depends on the seven axes on which every mortgage investment varies: the borrower, the property, the loan-to-value, the security position, the term, the jurisdiction and the investment structure.