Liahona Mortgage Investment Corp (MIC)
How long has LMIC been in operation?
Liahona Mortgage Investment Corp. was incorporated under the business corporations act of the province Ontario in December 2006.
What is a MIC?
A company designed specifically for mortgage lending. Owning shares in a mortgage investment corporation (MIC) enables you to invest in a company which manages a portfolio of secured mortgages. Shares of a MIC are qualified investments under the Income Tax Act, which means that they are eligible to be invested in registered accounts of all types. Profits generated by MICs are distributed to its shareholders according to their proportionate interest.
Our MIC’s management is responsible for all aspects for the Company’s operation which include sourcing suitable mortgage investments, analysis of mortgage applications, negotiation of interest rate, terms and conditions, instruction of lawyers, mortgage portfolio and general administration.
Liahona MIC is regulated by the Ontario Securities Commission and the federal Income Tax Act (ITA). A MIC must distribute 100% of its annual net income to its shareholders in the form of a dividend under the ITA regulations. This dividend is taxed as interest income. It is for this reason that the MIC is such a suitable vehicle for registered investments (i.e. RRSPs, RRIFs and TFSAs)
Section 130.1 of the Income Tax Act (ITA) sets out the criteria governing an MIC, which act as safeguard for investors.
Income Tax Act, Section 130.1: Salient Rules
- A MIC must have at least 20 shareholders.
- A MIC is generally widely held. No shareholder may hold more than 10% of the MIC’s total capital.
- At least 50% of a MIC’s assets must be residential mortgages, and/or cash and insured deposits at Canada Deposit Insurance Corporation member financial institutions.
- A MIC may invest up to 25% of its assets directly in real estate, but may not develop land or engage in construction. This ceiling on real estate holdings does not include real estate acquired as a result of mortgage default.
- A MIC is a flow-through investment vehicle, and distributes 100% of its net income to its shareholders.
- A MIC is a tax-exempt corporation as its income is instead taxed in the hands of its shareholders.
- Dividends received with respect to directly held shares, not held within RRSPs or RRIFs, are taxed as interest income in the shareholder’s hands. Dividends may be received in the form of cash, or additional shares.
- MIC shares are qualified RRSP and RRIF investments.
- A MIC may distribute income dividends, typically interest from mortgages and revenue from property holdings, as well as capital gains dividends, typically from the disposition of its real estate investments.
- A MIC’s annual financial statements must be audited.
- A MIC may employ financial leverage by using debt to partially fund assets.
What is the difference between investing in a MIC vs. private mortgage?
Investing in a MIC allows an investor to pool their funds in multiple mortgages. Investing in a single private mortgage, the investor would bear 100 percent of the credit risk associated with the specific mortgage. In a MIC any credit risk is diversified across multiple mortgages.
What types of mortgages does LMIC underwrite and where?
LMIC underwrite a diversified portfolio of mortgages, concentrating on 1st and 2nd residential mortgages, along with a small number of commercial and construction mortgages that fit our risk and geographic profile. Our lending standards are stringent to minimize credit losses and ensure consistent returns.
Will I receive Statements?
Yes, all shareholders will receive quarterly statements. A T5 will be issued to shareholders holding their shares in a non-registered account, the amount will reflect the annual taxable dividend.
Are LMIC shares RRSP, RRIF or TSFA eligible?
Yes, Liahona is a qualified investment for self-directed RRSP, RRIF and TFSA accounts. We will assist you with your investment or to answer any other questions you may have.
How is Income from this fund taxed?
The Income Tax Act requires that 100% of a MIC’s annual net income, be distributed to its shareholders, in the form of a dividend. This dividend is taxed as interest income.
Who can invest in LMIC shares?
LMIC shares are available to selected types of investors only. Shares are not available to the general investing public. As a general rule, to qualify, investors must be accredited.
When do I receive dividends?
Dividends are issued quarterly. Once the year end audit has been completed the actual annual rate is determined and the balance between the actual dividend and what was paid is issued to the investor.
For investors who opt to receive their distribution in cash, the funds will be deposited on or before the 5th business day following the quarter end.
What is the liquidity of my shares?
Shares can be redeemed with 180 days notice. However, historically shares have been redeemed within as little as a week after an investor’s redemption request.
How to Invest
Our investors are comprised of family, friends, business associates and referrals. We issue shares at a fixed price of $1.00 per share. Shares can be held in non registered or registered accounts (i.e. RRSP, RRIF, LIRA, TFSA etc.)
Liahona is a tax exempt Mortgage Investment Corporation. We distribute 100% of our net profits to our investors.
Investors that hold non-registered shares can opt to have quarterly dividends paid in cash or reinvested into shares.
Investors will receive quarterly statements.
Contact us to meet with a dealing representative to obtain further information including financial statements and mortgage portfolio data.
Audited financial statements available upon request