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The Benefits of working with an MIC

A MIC is an acronym for Mortgage Investment Corporation. MIC’s are a popular choice for investors as they usually produce excellent returns and have the added benefit of being taxed reasonably. 

The capital gains of a MIC can be channeled to shareholders without being taxed like a normal corporation. Usually a corporation will be taxed on the income it receives prior to sending out dividends. With an MIC this happens the other way around.  Anything shareholders receive are taxed as income.

Generally speaking, MIC’s get money from investors who are interested in shares of the company using a fixed dollar amount (as in per share). The MIC then takes that money and puts it together in a pool of funds that is lent out for various real estate mortgages. Borrowers pay by the way of interest (on mortgages) and this functions as profit that can be dispersed between investors. 

In addition to the tax benefits that investors can enjoy with an MIC it’s good to keep in mind that there are a few exceptions. There can be a few tricky areas that could be seen as “traps” to avoid so unless you are particularly familiar with making this type of investment, it’s advisable to seek professional advice if you want to make a “qualified investment.”

A corporation needs to go through a strict assessment to ensure that it meets all requirements before becoming an MIC in terms of the Income Tax Act. Always make sure to ask to see an MIC’s offering memo before investing. They should be kept up to date based on each time shares are offered. 

in Mortgage