Frequently Asked Questions
How much due diligence is performed before investing in a mortgage?
Are shares in Sun Country MIC RRSP eligible?
How do I purchase Sun Country MIC shares?
What tax advantages does a MIC offer?
When Sun Country MIC invests in a property, what name goes on title?
What types of properties does Sun Country MIC invest in and what is the typical portfolio mix?
What does Sun Country MIC do with money when not invested in mortgages?
Does Sun Country MIC consider other investments opportunities or personal loans?
What asset mix does Sun Country MIC carry?
What debt-equity ratios does Sun Country MIC observe?
What is a MIC?
How does CRA treat a MIC investment?
How much due diligence is performed before investing in a mortgage?
Each Mortgage investment opportunity is reviewed by management and by the credit committee to ensure it meets or exceeds Sun Country MIC’s investment objectives, practices and restrictions. Every mortgage opportunity is evaluated on its own financial and business merits and against current market conditions. Assessments of all mortgage opportunities includes, at a minimum, a review of a recent independent appraisal of the property to be secured by the Mortgage, generally an evaluation of the property pursuant to an environmental assessment (if applicable) and a general assessment of: (1) the project and financial information provided by the borrower; (2) the security provided; (3) the current market conditions; and (4) the overall risk to the corporation.
Are shares in Sun Country MIC RRSP eligible?
Sun Country MIC shares are an eligible investment for deferred investment plans, including RRSPs and RPPs. Particularly attractive for registered plans, a MIC does not pay any tax when its income is flowed out as dividends while plans do not pay any tax when they receive dividends. Beneficiaries only pay tax when they collapse their plans and actually receive the funds therein. Canadian tax rules prohibit Personal Registered Plans from borrowing funds, a MIC however, can borrow funds. Therefore plans can enhance their income capability by leveraging their available capital.
How do I purchase Sun Country MIC shares?
In order to purchase Sun Country MIC Preferred Shares, there are several steps you must complete: a Subscription Agreement; a Representation Letter, if you are an accredited investor ; a Risk Acknowledgement Form, if you are a resident in a jurisdiction other than Ontario and are not an accredited investor ; an Eligible Subscriber Status Certificate, if you are resident in Alberta, Saskatchewan, Manitoba, Newfoundland and Labrador, Northwest Territories, Nunavut, Prince Edward Island or Quebec, and are purchasing more than 10,000 Preferred Shares and are not an accredited investor; and provision of a certified cheque or bank draft made payable to Sun Country Mortgage Investment Corp.
Return the applicable completed forms to Sun Country Mortgage Investment Corp. prior to April 29, 2009, together with the certified cheque, money order or bank draft for the full amount of the Preferred Shares you wish to purchase. For more information, download and review Sun Country MIC’s Offering Memorandum [link]
What tax advantages does a MIC offer?
The MIC is allowed to deduct from its income all amounts paid to its shareholders as taxable dividends. Consequently, a MIC is a conduit and as such, is non-taxable.
When Sun Country MIC invests in a property, what name goes on title?
All mortgages will, following funding, be registered on title to the subject property in Sun Country Mortgage Investment Corp.’s name.
What types of properties does Sun Country MIC invest in and what is the typical portfolio mix?
All mortgage investments will be made in established or developing areas. Sun Country MIC attempts to maintain at least 87.5% of assets in investments in mortgages secured by residential real estate. No more than 50% of our assets will be invested in mortgages secured by commercial and industrial real estate and we will only invest in mortgages on properties for which we have reviewed and evaluated by way of independent appraisal.
What does Sun Country MIC do with money when not invested in mortgages?
When certain funds are not invested in mortgages from time to time, they will be held in cash deposited with a Credit Union or Chartered Bank, or will be invested by the manager on our behalf in short-term deposits, savings accounts or government guaranteed income certificates or treasury bills so as to maintain a level of working capital for our ongoing operations considered acceptable by our directors.
Does Sun Country MIC consider other investments opportunities or personal loans?
We will not loan money to, or borrow money from or invest in securities other than investments in mortgages. We will not make any investment that would result in our failing to qualify as a MIC.
What asset mix does Sun Country MIC carry?
At least 50% of Sun Country MIC’s assets must be comprised of loans secured on houses or on property included in a housing project (terms defined in the National Housing Act, Canada); deposits insured by the Canada Deposit Insurance Corporation (or Quebec DIC); deposits in a credit union; or cash. No more than 25% of Sun Country MIC's assets consist of real property (excluding any real property acquired by foreclosure).
What debt-equity ratios does Sun Country MIC observe?
Generally speaking, Sun Country MIC does not exceed a 3:1 debt-equity ratio, or a 5:1 ratio if more than two-thirds of the company's property consists of residential mortgages and/or deposits secured by the Canada Deposit Insurance Corporation (or Quebec DIC) or in a credit union.
What is a MIC?
A Mortgage Investment Corporation is a corporation entitled to special non-taxable status under Section 130.1 of the Income Tax Act, a federal statute. Designed specifically for mortgage lending in Canada, investors pool their money by buying shares in the MIC company. MICs may also borrow from a bank or other lender, using both the shareholders’ capital and loan proceeds to fund a mortgage portfolio.
How does CRA treat a MIC investment?
Under Section 130.1 of the Income Tax Act, there are several requirements. These include:
- A MIC is a tax-exempt corporation.
- A MIC must have at least 20 shareholders with no one shareholder holding more than 25% of the MIC's total capital.
- At a minimum, 50% of a MIC’s assets must be comprised of residential mortgages, and/or cash and insured deposits at Canada Deposit Insurance Corporation member financial institutions.
- While a MIC may accept investment capital from outside of Canada, all MIC investments must be made in Canada.
- A flow-through investment vehicle, a MIC distributes 100% of its net income to its shareholders.
- MIC shares not held within RRSPs or RRIFs, are taxed as interest income in the shareholder’s hands.
For more information on Sun Country MIC,
you can download the Offering Memorandum by [clicking here].
