Section 130.1

Subsection 130.1(6)

Administrative Policy

20 March 2015 External T.I. 2014-0528311E5 - Mortgage Investment Corporation - RRSP

shareholdings of siblings not included

Would shareholdings of a specified shareholder include those of a brother or sister? CRA stated:

[R]elated persons for purposes of subparagraph 130.1(6)(d)(ii) and the meaning of "specified shareholder" as modified in paragraph 130.1(6)(d), will only include, in general, an individual's minor child, spouse, or common-law partner and not an individual's brother or sister.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(4) - Paragraph 207.01(4)(a) shareholdings of siblings 111

2013 Ruling 2013-0487911R3 - Mortgage Investment Corporation

carrying on non-qualifying activities through subsidiary LP; GP held by relative of patriarch

underline;">: Background. Opco, which qualifies as a MIC under s. 130.1(6), acquired real property (the Property) on foreclosing on a mortgage. Parent1 together with his children is a significant shareholder. Parent1 is the sole director of the manager of Opco.


Opco will transfer the Property to LP in consideration for units of LP, with LP then managing and developing the Property. The sole shareholder, director and office of the general partner (GP Co) of LP will be a relative of Parent1, and GP Co's articles prohibit Opco from owning its shares. The Partnership Agreement will prohibit LP from acquiring any (foreign) property listed in s. 130.1(6)(c).

GP Co will be solely responsible for the management and control of the LP and will conduct the affairs of LP in such a manner that the liability of the limited partner will be limited. … Opco may advance funds to the LP from time to time for working capital and development… on arm's length commercial terms… .


S. 253.1 will apply such that the acquisition of the LP units by Opco will not cause Opco to be carrying on LP's business for purposes of s. 130.1(6)(b).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 253.1 carrying on non-qualifying activities through subsidiary LP; GP held by relative of patriarch 206

12 October 2012 External T.I. 2012-0450291E5 - Mortgage Investment Corporation investing

property management subsidiary

In response to a question as to whether a mortgage investment corporation ("MIC") will satisfy the requirements in s. 130.1(6)(b) that its only undertaking be the investing of funds, and that it not manage or develop real property, if it invests in shares of a corporate subsidiary which owns and manages real property, CRA stated that such investment would not cause the MIC to no longer qualify as such provided that:

there are no facts which would suggest that the MIC is involved in the management or development of any real property held by the corporation.

29 March 2012 External T.I. 2011-0415641E5 - Mortgage Investment Corporation

offshore real estate investments contrary to policy

After noting that s. 253.1 applied only for the purposes of s. 130.1(6)(b) rather than the other provisions of s. 130.1(6)(b), CRA noted that "the notion of a corporation investing indirectly in real estate situated outside Canada through a limited partnership and still qualifying as a MIC may be viewed as being inconsistent with the underlying tax policy of this provision," namely, "to increase the flow of private sector financing for residential housing in Canada by enabling small investors to pool their funds together in a flow-through investment vehicle."

29 March 2012 External T.I. 2011-0403161E5 - Meaning of "shareholder" in 130.1(6)(d)

individual and RRSP counted separately

For the purposes of the 20-shareholder test in s. 130.1(6)(d), an individual and the individual's RRSP and TFSA trusts would each count as a separate shareholder unless s. 104(2) was applied.

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 4801 - Paragraph 4801(a) RRSP is separate unitholder 32

11 January 2012 External T.I. 2010-0377991E5 - MIC - paragraph 130.1(6)(e)

no bonus dividend entitlement

Where a corporation (intended to qualify as a mortgage investment corporation) has two classes of shares with identical attributes except that only one of the classes is entitled to bonus dividends, both classes of shares would qualify as common shares, so that s. 130.1(6)(e) (which is relevant only where there are holders of preferred shares) would not apply to require that the payment of dividends be ordered in the specified manner.

4 December 1997 External T.I. 9726425 - MIC'S AND REAL ESTATE

development or ancillary rental services are not part of investing undertaking

"Where a corporation otherwise would have met all the conditions outlined in subsection 130.1(6) of the Act acquires real property either for rent or for development, the corporation would not be considered a MIC since the condition that the corporation must not manage or develop real property, as outlined above, would not be met. It is also our view that the provision of services, which would likely be required where one is the owner of a rental property, is something other than the mere investing of funds. This would also be the case where the corporation hires a third party to manage or otherwise undertake the development of the real property, even where the property was acquired by the corporation as a result of a foreclosure ... ."

23 January 1992 T.I. (Tax Window, No. 16, p. 16, ¶1711)

A corporation the common shares of which are held by one shareholder and the preferred shares of which are held by 19 shareholders potentially could comply with the test.

The phrase "like amount" in s. 130.1(6)(e) means that both the common and prefered shares must contain provisions entitling the holders to dividends, determined by reference to a fixed percentage of the stated capital of each class.

14 January 1992 T.I. (Tax Window, No. 15, p. 19, ¶1697)

Investments in the shares of a mutual fund corporation investing in mortgages would not qualify as a type of property listed in s. 130.1(6)(f)(i).

5 March 1991 T.I. (Tax Window, No. 2, p. 25, ¶1180)

A mortgage investment corporation will not necessarily lose its status as such by entering into an advisory management services agreement with an arm's length financial institution for asset/liability management activities on behalf of the mortgage investment corporation, provided the activity is undertaken solely to protect its investments.

18 December 1990 T.I. (Tax Window, Prelim. No. 2, p. 20, ¶1061)

Retirement and nursing homes qualify as residential property.


Spindler, "Special-Status Entities", 1989 Conference Report, c. 23, pp. 23:1-23:9

Paragraph 130.1(6)(d)

Administrative Policy

12 August 2020 External T.I. 2019-0833841E5 - MIC Shareholder Count - Joint holders

joint tenants holding a share may be one shareholder, not two

How would the 20-shareholder and 25% tests in s. 130.1(6)(d) be applied where a husband and wife hold a share as joint tenants (with rights of survivorship)? CRA responded:

A joint tenancy is a form of ownership of property in which the joint tenants have concurrent ownership and possession of the same property. The interest of each joint tenant is identical and the property cannot be sold or mortgaged without the consent of both joint tenants. … [I]n the event of the death of one of the joint tenants, the property will belong solely to the surviving joint tenant.

Whether two … joint tenants … of a share in a MIC should be counted as one shareholder or two individual shareholders for purposes of paragraph 130.1(6)(d) of the Act is a mixed question of fact and law … . [W]here two or more joint owners of a share of a corporation are considered one shareholder under relevant corporate law or are entitled to jointly receive any dividend paid on the share by the corporation, the joint owners of the share will generally be counted as one shareholder for purposes of paragraph 130.1(6)(d) of the Act.

Words and Phrases
joint tenancy
Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 4801 - Paragraph 4801(b) joint tenants potentially treated as single security holder 119

26 October 2015 External T.I. 2015-0599021E5 - Establishment of a MIC

CRA confirms that the MIC shareholding tests apply cannot be satisfied through a parent

A parent trading on a Canadian stock exchange wholly-ownd several corporations, one of which is targeted to satisfy the MIC tests subject to satisfying the shareholding test in s. 130.1(6)(d). CRA stated:

[A] corporation wholly owned by a publicly traded corporation would not meet the shareholding test in paragraph 130.1(6)(d)… regardless of any share ownership limitations placed on the publicly traded parent corporation. …[T]he conditions in paragraph 130.1(6)(d)…are directed at the shareholdings of the corporation itself and not its parent corporation. As a result, the wholly-owned subsidiary would not qualify as a MIC.

Paragraph 130.1(6)(f)

Administrative Policy

12 January 2018 External T.I. 2016-0669431E5 - Mortgage Investment Corporation Definition

commercial portion of a “housing project” can be up to 20%

In answering a question which it treated as being directed at the scope of s. 130.1(6)(f), CRA referred to the definitions in the NHA of “house” and “housing project,” and stated:

[C]ommercial facilities that form part of a housing project, such as an apartment or condominium complex should not exceed 20% of the gross floor area of the housing project. … [I]n other types of situations where property is used for commercial and residential activities and/or where the particular property is not zoned as being residential, no portion of a mortgage debt on such a property would be considered as being a debt secured by way of mortgage on a house or a housing project for the purpose of subsection 130.1(6) … .