MIC Operating Policies

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Income Tax Act (Canada)

Although created through the Residential Mortgage Financing Act, Mortgage Investment Corporations must strictly follow policies outlined in the Income Tax Act (ITA).

 

The following are some of the policies outlined in section 130.1 of the ITA:

  • A MIC must be a Canadian corporation.

  • A MIC must have at least 20 shareholders throughout each year and no shareholder may own more than 25% of the total capital.

  • All MIC investments must be in Canada, but a MIC may accept investments outside of Canada.

  • A MIC’s only activity is to invest funds belonging to the corporation and may invest up to 25% of its assets directly in real estate. At no time is a MIC a real estate developer or property manager (there is an exception for properties held by a MIC as a result of a foreclosure).

  • A MIC cannot lend or own real or immovable property located outside of Canada (or own a leasehold interest in such property).

  • A MIC is a flow-through investment vehicle, and distributes 100% of its net income to its shareholders.

  • A MIC’s annual financial statements must be audited

  • A MIC may employ financial leverage by using debt to partially fund assets