Short answer: yes. Shares of a qualifying Mortgage Investment Corporation can generally be held inside registered accounts — RRSP, TFSA, RRIF, and LIRA — and for most investors that is the most tax-efficient way to own one. The reason comes down to how MIC income is taxed.
How is MIC income taxed in Canada?
Because a MIC distributes nearly all of its income each year, that income “flows through” and is taxed in the investor’s hands as interest income — not as dividends or capital gains. Interest income is the least tax-friendly kind: it is taxed at your full marginal rate, with none of the preferential treatment that Canadian dividends or capital gains receive. Held in a taxable account, a big share of a MIC’s yield can go to tax. That is exactly why registered accounts matter so much for this asset.
Which registered accounts can hold a MIC?
| Account | Tax treatment of MIC income | Best suited to |
|---|---|---|
| TFSA | Completely tax-free — no tax on the distributions or on withdrawal | Maximising after-tax income |
| RRSP | Tax-deferred — no tax until you withdraw | Long-term, tax-deferred growth |
| RRIF | Tax-deferred; withdrawals taxed as income | Turning savings into retirement income |
| LIRA | Locked-in, tax-deferred | Former pension money |
A TFSA is often the most powerful home for a MIC: because the income would otherwise be taxed as interest at your top rate, sheltering it tax-free is a meaningful advantage.
Why holding a MIC in a TFSA or RRSP makes sense
Consider two investors earning the same distribution from the same fund. One holds it in a taxable account and pays their marginal rate on every dollar of income each year. The other holds it in a TFSA and keeps all of it, or in an RRSP and defers the tax while it compounds. Over many years, that difference — driven purely by the account, not the investment — can be substantial. (This is illustrative; your own outcome depends on your tax situation.)
What to check before you invest
- Is the fund eligible to be held in the plan you want? A qualifying MIC generally is, but confirm it for the specific fund.
- Does your plan trustee accept exempt-market securities? Many MICs are held in self-directed registered plans administered by trustees such as Olympia Trust Company.
- Do you have contribution room? Registered plans have annual limits.
- Speak with a qualified advisor about your own tax picture before acting.
- A qualifying MIC can usually be held in an RRSP, TFSA, RRIF or LIRA.
- MIC distributions are taxed as interest income at your full marginal rate outside a shelter.
- A TFSA makes the income tax-free; an RRSP/RRIF defers the tax.
- Confirm fund eligibility, your plan trustee, and your contribution room first.
The Morex Fund is eligible for RRSP, TFSA, RRIF and LIRA accounts, with Olympia Trust Company acting as trustee and custodian. Learn more about yield versus return, how the risk is managed, or request investor information.
