Why Invest in a MIC? How Lendmax Capital MIC Works
A mortgage investment corporation is not a speculative fund. It is a Canadian corporation governed by section 130.1 of the Income Tax Act: its only business is investing in mortgages, and the taxable income it distributes flows to shareholders without corporate-level tax — taxed in your hands as interest income.
The tax conduit, step by step
An ordinary corporation pays tax on its earnings before it pays dividends. A MIC that meets the conditions in subsection 130.1(6) can deduct the taxable dividends it pays, so distributed income is not taxed twice:
Under subsection 130.1(2), those dividends are deemed to be interest income in your hands: fully taxable at your marginal rate in a non-registered account, reported on a T5, and sheltered under the plan's rules inside an RRSP, RRIF or TFSA. Tax information as at October 2026; confirm with a Canadian tax professional. How MIC income is taxed.
What a corporation must do, all year, to be a MIC
- Be a Canadian corporation whose only undertaking is investing its funds — it may not manage or develop real property.
- Have at least 20 shareholders, with no shareholder (together with related persons) holding more than 25% of the issued shares of any class.
- Hold at least 50% of the cost amount of its property in residential mortgages, insured deposits and cash.
- Hold no more than 25% in real property directly — property taken back through foreclosure or default does not count toward that limit.
- Stay within leverage limits: liabilities up to 3 times equity, or 5 times when residential mortgages, deposits and cash make up at least two-thirds of assets.
- Hold no foreign mortgages, foreign real property or shares of non-resident corporations.
Summarised from subsection 130.1(6) of the Income Tax Act, checked 3 October 2026. All nine conditions explained.
Direct mortgage vs. MIC vs. REIT
Three ways to put money into Canadian real estate income. Each carries different concentration, liquidity and price risk — none of them is right for everyone.
Mortgage investment corporation
- Pool diversification: Capital spread across many residential first and second mortgages, borrowers and regions.
- Professional servicing: Underwriting, legal, collections, arrears and enforcement handled by a licensed administrator.
- Not priced by a stock exchange: Share value depends on the mortgage book and its losses, not daily market sentiment.
- Illiquid: Redemption under the offering memorandum, with notice periods and possible deferral or suspension.
- Fees and manager risk: Management and administration costs come out of returns; results depend on the manager’s underwriting.
Read the full comparisons: MIC vs direct mortgage investing · MIC vs REIT · all structures compared.
RRSP, TFSA and RRIF eligibility
Because MIC distributions are taxed as interest outside a plan, the account you hold them in matters more than usual. Lendmax Capital MIC shares can be held in self-directed RRSP, RRIF, TFSA, RESP, RDSP and FHSA accounts administered by Olympia Trust Company or Western Pacific Trust Company.
Opt into the DRIP and each quarterly dividend buys additional shares instead of being paid in cash, so distributions compound. Model it.
The 10% registered-plan rule
If you and non-arm's-length persons hold 10% or more of any class of a MIC's shares, those shares become a prohibited investment for your registered plans, with penalty tax. This is separate from the 25% cap in the MIC test itself. How the trap works.
The administrator's role
Lendmax Inc. holds FSRA Mortgage Administrator Licence 13002. A mortgage administrator is licensed separately from a brokerage, with its own capital, insurance, trust-accounting and audit obligations — and the licence forbids guaranteeing a lender or investor anything in respect of a mortgage.
Registered security
Each first or second mortgage is registered on title as a charge in favour of the lender, so the claim on the property is a matter of public record.
Collection into trust
Borrower payments are collected by pre-authorized debit into a trust account, kept separate from the administrator’s own money and reconciled monthly.
Audit and reporting
The corporation’s financial statements are audited annually; the administrator files audited statements, an internal-controls report and a trust-account report with FSRA.
Exit-before-advance discipline
Short-term private mortgage money is a bridge, not a destination. Every file names its repayment source — a refinance to an institutional lender, a sale, or a structured payout — and a fallback, before any money is advanced. Value is the appraised value today, not a forecast of what a market might do.
“A loan a borrower cannot leave is a loan we should not have made.”
Questions about the MIC structure
How does a MIC avoid double taxation?
A MIC that meets the section 130.1(6) tests can deduct the taxable dividends it pays, so income distributed to shareholders is generally not taxed at the corporate level. Shareholders are taxed on those dividends as interest income.
What is the difference between the 25% rule and the 10% rule?
The 25% rule is part of the MIC test itself: no shareholder, together with related persons, may hold more than 25% of any class of shares. The 10% rule is a registered-plan rule: if you and non-arm's-length persons hold 10% or more of a class, the shares become a prohibited investment for your RRSP, TFSA or RRIF. More on the registered-plan trap.
Is a MIC better than a REIT?
Neither is better in general — they are different exposures. A MIC lends against property and earns contractual interest; a REIT owns property and its units trade daily on an exchange. A MIC is less liquid; a REIT's price moves with the market. MIC vs REIT compared.
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Explore Mortgage Investment Opportunities
Connect with our experienced mortgage professionals to discuss available mortgage investment opportunities, understand the underlying property and security, compare potential returns and risks, and determine which opportunities align with your investment objectives.
Securities are offered by offering memorandum through a registered exempt market dealer. Not every investment is suitable for every investor.