What is a MIC?
MIC is the abbreviation for "Mortgage Investment Corporation", established in Canada in 1973 in accordance with Section 130.1 of the Income Tax Act.
Investing in the MIC
Investors invest in a MIC by purchasing equity securities of the MIC. The MIC lends money to borrowers in need of mortgage loans and uses their properties as collateral. The MIC collects principal and interest payments from borrowers and, in many instances, returns 100% of its net income to investors after deducting overhead costs. A MIC typically retains no earnings. All of the MIC's net earnings are typically distributed to shareholders on a quarterly basis. In many instances, investors may choose to withdraw the earnings, or re-invest the dividends by purchasing more equity securities. All loans are secured by properties and mortgages which are registered under the name of the MIC.
Investors' Interest in the MIC Is Well-protected
MICs must comply with CRA regulations when they are set up. Raising money from investors is subject to compliance with securities legislation. In British Columbia, the BC Securities Commission is the securities regulator. Amber MIC is registered as a mortgage broker with the British Columbia Financial Institutions Commission. The use and return of every investment will be clearly shown in our audited annual financial statements. All mortgaged property is registered with the Land Title Office in British Columbia or the equivalent in other Canadian provinces. Amber MIC’s investments are limited to mortgage investment in Canada. MICs cannot directly engage in real estate development and construction projects.
MIC Tax Treatment
As a flow-through vehicle, net income earned by a MIC is exempted from corporation income tax. All of the net income will be flowed through to investors, and investors must report dividend earnings as interest income in their annual tax returns. At the end of each year, a MIC will mail investors the T5 tax form, which summarizes the total amount of dividends distributed throughout the fiscal year. Investors who are not Canadian residents are subject to a withholding tax of 10%.