Investing in Mortgages

Mortgages make up a big part of a Canadian bank’s business model. This is a good indication that investing in mortgages is not only lucrative but also secure compared to many other alternative investment options. It’s our mission to open up the mortgage investment market to the public and add mortgages to your investment portfolio as an alternative to stock market-based assets, such as mutual funds.

The IQInvest MIC provides a way for individuals and corporate investors to access Canadian real estate markets and take advantage of economies of scale not available to them as individuals. Investors pool their money by buying shares in a company called a Mortgage Investment Corporation (MIC). The MIC invests these funds in mortgages that generate a yield through interest rates and fees charged to the borrowers. This yield produces monthly cash flow for its investors.

The MIC’s management is responsible for all facets of the MICs operations: sourcing of mortgage opportunities, analysis and underwriting of mortgages, and structuring and facilitating the related legal transactions. The MIC then manages and administers the entire mortgage portfolio comprised of these individual mortgage investments.

Extensive oversight from different regulatory bodies ensures transparency and security. The Financial Services Regulatory Authority of Ontario (FSRA) regulates the mortgage brokering and lending activities of MICs under the Mortgage Brokers, Lenders and Administrators Act, 2006. We file our Offering Memorandum and audited financial statements annually with the Ontario Securities Commission.

A Guide to the Mortgage Investment Corporation (MIC)

It is important for investors in a “Mortgage Investment Corporation” (MIC) to know as much as possible about the background, intent, structure, regulations and tax-exempt flow-through aspects of the MIC.

Let’s define what a MIC is.

• A MIC is an investment that lets people pool their money to be invested in mortgages. All of the MIC’s net profit from the mortgages flows through to the MIC investors.
• MICs have been around since 1973 when federal legislation was enacted to promote private financing and make it easier to invest in mortgages.
• MICs are one of the lesser known asset classes despite yielding solid long-term returns and despite being RRSP, TFSA, RRIF and RESP eligible in most cases.

A “Mortgage Investment Corporation” as defined under Section 130.1 of the Income Tax Act pay no corporate income tax and act as a flow-through entity, provided 100% of its taxable income gets paid out as dividends.

IQInvest Mortgage Investment Corporation is managed and administered by CWF Group Mortgages Inc. (FSCO Administrator License No. 12944 and Brokerage License No. 12786)

MIC History & Purpose

Section 130.1 was enacted by Section 18 of the Residential Mortgage Financing Act (chapter 49 of the Statutes of 1973-74), the purpose of which is to stimulate the flow of private mortgage money for housing in Canada. That Act provides three steps for achieving the stated purpose:

1)		the creation of a Crown corporation (the “Federal Mortgage Exchange Corporation”) to buy and sell mortgages,
2)		the recognition of specialized Mortgage Investment Corporations (MICs) under the Loan Companies Act and theIncome Tax Act, and
3)		the adoption of a “conduit” or “flow-through” tax treatment as to the income of the mortgage investment corporations.  It is with this last step that section 103.1 of the Income Tax Act is concerned. The income of a mortgage investment corporation is allowed to flow through to and be taxed in the hands of the shareholders as interest income.

The purpose of the Residential Mortgage Financing Act is further explained in the following excerpts from Hansard for June 12, 1973, at page 4686:

To help resolve these problems and to make residential mortgages competitive with other forms of investment and thereby attract private savings, the bill provides for a new form of Canadian financial institution, the Mortgage Investment Corporation (MIC), which is intended to make investment in residential mortgages and real estate more accessible to the small investor. It is extremely difficult at the present time for smaller investors to make this kind of investment. Unlike investment in securities, mortgage and real estate investments are legally and administratively cumbersome to split in such a way that investors can become owners of separate, divided interests.

Backed by expert management service and the security of a diversified portfolio, mortgage investment companies will provide opportunities for the smaller investor to participate in mortgage and real estate investments, and in this way attract new savings into residential mortgages and real estate investments.

The stated purpose of the Residential Mortgage Financing Act was “to enhance the marketability of mortgages issued on residential properties in Canada and improve the effectiveness of the contribution of the private sector to the financing of housing in Canada.” For this purpose special tax treatment was introduced that in effect treated the MIC as a conduit, flowing income earned on its investments through to its shareholders without the imposition of corporate tax.

Investment in a MIC becomes particularly attractive for the various deferred income vehicles provided for in the Income Tax Act. These include Registered Retirement Savings Plans (RRSPs), Deferred Profit Sharing Plans (DPSPs) and Registered Pension Plans (RPPs). Such plans are prohibited from borrowing funds and are thus restricted to earning income on funds contributed to the plans or upon reinvestment of earnings. Thanks to the MIC these plans can indirectly enhance their earning capabilities by leveraging their investment in residential mortgages and enjoying a spread between the rate of interest paid on borrowed funds and the rate charged on the MIC’s residential mortgages. Since the income of the MIC can flow through to registered plans without intermediary tax and be reinvested by them, the MIC can retain the entire amount on a tax-free basis until distribution of funds from the plans to their beneficiaries.

NATURE OF THE CORPORATION

The corporation must be a Canadian corporation and must not do anything other than invest its funds. Specifically, it must not manage or develop any real property even though it may own the property as an investment.

INVESTMENT RESTRICTIONS AND LIMITATIONS

There are certain minimum and maximum investment criteria that a MIC must meet, and all are based on the cost of property acquired. At least 50% of the MIC’s property must be represented by mortgages on residential properties, as defined in the National Housing Act, together with cash on hand or deposits with a bank or other corporation whose deposits are insured by the Canada Deposit Insurance Corporation or the Quebec Deposit Insurance Board, or with a credit union. The cost of real property owned by the corporation must not exceed 25% of the cost of all of the MIC’s property. An exception is provided for real property that may have been acquired by foreclosure on a mortgage.

1)		It is permitted to loan funds only on property located in Canada.
2)		It is not permitted to make loans to nonresidents of Canada unless such loans are made on the security of real property located in Canada.
3)		It is not permitted to acquire and hold shares of nonresident corporations.
4)		It is not permitted to own real property that is located outside Canada.

SHAREHOLDINGS

A MIC must have at least 20 shareholders, and no shareholder may own more than 25% of the issued shares of the company.

BORROWING

Although a MIC is permitted to borrow for purposes of investment, there are restrictions on the amount it can borrow. Provided at least 2/3rds of the cost of its property is represented by residential mortgages or cash on deposit, it is permitted to borrow up to 5/6ths of the cost of its assets. If less than 2/3rds of the cost is represented by residential mortgages and cash on deposit, its borrowings cannot exceed 3/4ths of the cost of its property.

In short, the MIC can borrow (leverage) up to 5 times the cost of its assets if 2/3rds of its assets are in residential mortgages and/or insured bank deposits.

DISTRIBUTION OF DIVIDENDS

Where a MIC has paid taxable dividends to its shareholders during its taxation year, it is permitted to deduct the total amount of the taxable dividends in computing its income for the year. Similarly, where a MIC has realized a capital gain, it may elect to distribute the gain as a capital gains dividend to its shareholders.

In short, dividends paid to MIC shareholders are treated as company expenses for tax purposes. Hence, a MIC is not taxed.

SHAREHOLDER TREATMENT

Dividends received by shareholders are deemed to have been received as interest for tax purposes.

LEVERAGE

A particular strength of the MIC arises through effective use of the leveraging that is permitted to a MIC and the spread that can be achieved between the cost of borrowing and the return that can be obtained on the MIC’s mortgages. As a simple example, if we assume that the initial contributions to the MIC total $100,000, the corporation could borrow up to 5 times this amount provided more than 2/3rds of its investments are represented by residential mortgages or cash on deposit.

If it is assumed in this situation, for example, that the rate of return that can be obtained on the MIC’s mortgages is 7% and the total amount invested is $600,000 (the maximum funding that could be obtained utilizing the 5 times cost leverage allowance), the interest earned would be $42,000. The cost of borrowing the permitted maximum of 5 times equity is assumed to be 5% for a cost of $25,000, leaving a net income of $17,000. It can be seen that the return on invested capital of $100,000 is 17%. These funds would then be paid as dividends to the Registered Plan and may in turn be reinvested in the MIC at no tax cost. It is apparent that if the net income of $17,000 is reinvested the MIC can borrow a further 5 times equity and in the second year the potential income could be $19,890 for a net return of 17%.

YEAR 1
Initial contribution		$100,000
Borrowings, maximum 5 x $100,000		$500,000
Available investment funds		$600,000
Interest income (assume 7%achieved on mortgages of $600,000)		$42,000
Leverage cost (assume 5% cost ofborrowed funds)		$25,000
Net income distributed to shareholders		$17,000
Return to the MIC		17%
YEAR 2
Accumulated equity		$117,000
Borrowings, maximum 5 X $117,000		$585,000
Available investment funds		$702,000
Interest income		$49,140
Leverage cost		$29,250
Net income distributed to shareholders		$19,890
Return to the MIC		17%

Section 130.1 of the Income Tax Act

CANADA INCOME TAX ACT

R.S.C. 1985, c. 1 (5th Supp.)

PART I — Income Tax

DIVISION F — Special Rules Applicable in Certain Circumstances

MORTGAGE INVESTMENT CORPORATIONS

SECTION 130.1
Deduction from tax

130.1.(1) In computing the income for a taxation year of a corporation that was, throughout the year, a mortgage investment corporation,

130.1.(1)(a) there may be deducted the total of

(i) all taxable dividends, other than capital gains dividends, paid by the corporation during the year or within 90 days after the end of the year to the extent that those dividends were not deductible by the corporation in computing its income for the preceding year, and

(ii) 1/2 of all capital gains dividends paid by the corporation during the period commencing 91 days after the commencement of the year and ending 90 days after
the end of the year; and

130.1.(1)(b) no deduction may be made under section 112 in respect of taxable dividends received by it from other corporations.

Dividend equated to bond interest

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130.1.(2) For the purposes of this Act, any amount received from a mortgage investment corporation by a shareholder of the corporation as or on account of a taxable dividend, other than a capital gains dividend, shall be deemed to have been
received by the shareholder as interest payable on a bond issued by the corporation after 1971.

Application of s. (2)

130.1.(3) Subsection 130.1(2) applies where the taxable dividend (other than a capital gains dividend) described in that subsection was paid during a taxation year throughout which the paying corporation was a mortgage investment corporation or within 90 days thereafter.

Election re capital gains dividend

130.1.(4) Where at any particular time during the period that begins 91 days after the beginning of a taxation year of a corporation that was, throughout the year, a mortgage investment corporation and ends 90 days after the end of the year, a dividend is paid by the corporation to shareholders of the corporation, if the corporation so elects in respect of the full amount of the dividend in prescribed manner and at or before the earlier of the particular time and the first day on
which any part of the dividend was paid,

130.1.(4)(a) the dividend shall be deemed to be a capital gains dividend to the extent that it does not exceed the amount, if any, by which

(i) twice the taxed capital gains of the corporation for the year exceeds

(ii) the total of all dividends, and parts of dividends, paid by the corporation during the period and before the particular time that are deemed by this paragraph to be
capital gains dividends; and

130.1.(4)(b) notwithstanding any other provision of this Act, any amount received by a taxpayer in a taxation year as, on account of, in lieu of payment of or in satisfaction of, the dividend shall not be included in computing the taxpayer’s income for the year as income from a share of the capital stock of the corporation, and

(i) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000 and the taxation year of the taxpayer began after February 27, 2000 and ended

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before October 18, 2000, 9/8 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year,

(ii) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000, and the taxation year of the taxpayer includes February 27, 2000, the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year and before February 28, 2000,

(iii) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000 and the taxation year of the taxpayer began after October 17, 2000, 3/2 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital
property in the year,

(iii.1) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000 and the taxation
year of the taxpayer begins after February 27, 2000 and ends after October 17, 2000, 9/8 of the dividend is deemed to be a capital gain of the taxpayer from the
disposition by the taxpayer of capital property in the year and before October 18, 2000,

(iv) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred after February 27, 2000 and before October 18, 2000, and the taxation year of the taxpayer began after October 17, 2000, 4/3 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year,

(v) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred after February 27, 2000, and before October 18, 2000 and the taxation year of the taxpayer includes October 17, 2000, the dividend is deemed to be a capital gain of the taxpayer from the disposition by the
taxpayer of a capital property in the year and in the period that began after February 27, 2000 and ended before October 18, 2000,

(vi) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred after February 27, 2000, and before October 17, 2000 and the taxation year of the taxpayer began after February 27, 2000 and ended before October 17, 2000, the

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dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year, and

(vii) in any other case, the dividend is deemed to be a capital gain of the taxpayer from the disposition of capital property after October 17, 2000 and in the year.

Application of ss. 131(1.1) to (1.4)

130.1.(4.1) Where at any particular time a mortgage investment corporation paid a dividend to its shareholders and subsection 130.1(4) would have applied to the dividend except that the corporation did not make an election under that subsection on or before the day on or before which it was required by that subsection to be made, subsections 131(1.1) to 131(1.4) apply with such modifications as the circumstances require.

Reporting

130.1.(4.2) Where paragraph (4)(b) applies to a dividend paid by a mortgage investment corporation to a shareholder of any class of shares of its capital stock in the period that begins 91 days after the beginning of the corporation’s taxation year that includes February 28, 2000 or October 17, 2000 and ends 90 days after the end of that year, the corporation shall disclose to the shareholder in prescribed
form the amount of the dividend that is in respect of capital gains realized on dispositions of property that occurred

130.1.(4.2)(a) before February 28, 2000,

130.1.(4.2)(b) after February 27, 2000 and before October 18, 2000, and

130.1.(4.2)(c) after October 17, 2000

and, if it does not do so, the dividend is deemed to be in respect of capital gains from dispositions of property that occurred before February 28, 2000.

Allocation

130.1.(4.3) Where subsection (4) applies in respect of a dividend paid by a mortgage investment corporation at any time in the period that begins 91 days after the beginning of the corporation’s taxation year that includes February 28, 2000 or October 17, 2000 and ends 90 days after the end of that year, and the corporation does not elect under subsection (4.4), the following rules apply:

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130.1.(4.3)(a) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the particular period that
began at the beginning of the year and ended at the end of February 27, 2000 is deemed to be that proportion of the dividend that the net capital gains of the corporation from the dispositions of property in the particular period is of
the total of the corporation’s net capital gains from the dispositions of property in each of the particular periods referred to in this subsection,

130.1.(4.3)(b) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the particular period that
began at the beginning of February 28, 2000 and ended at the end of October 17, 2000 is deemed to be that proportion of the dividend that the net capital gains of the
corporation from the dispositions of property in the particular period is of the total of the corporation’s net capital gains from the dispositions of property in each of
the particular periods referred to in this subsection,

130.1.(4.3)(c) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the particular period that
begins at the beginning of October 18, 2000 and ends at the end of the year, is deemed to be that proportion of the dividend that the net capital gains of the corporation from the dispositions of property in the particular period is of
the total of the corporation’s net capital gains from the dispositions of property in each of the periods referred to in this subsection, and in this subsection net capital gains from dispositions of property in a particular period means the amount, if any, by which the corporation’s capital gains from dispositions of property in the particular period exceeds the corporation’s capital losses from dispositions of property in the particular period.

Allocation

130.1.(4.4) Where subsection (4) applies in respect of a dividend paid by a mortgage investment corporation in the period that begins 91 days after the beginning of the
corporation’s taxation year that includes February 28, 2000 or October 17, 2000 and ends 90 days after the end of that year, and the corporation so elects under this subsection in its return of income for the year, the following rules apply:

130.1.(4.4)(a) the portion of the dividend that is in

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respect of capital gains from dispositions of property that occurred in the year and before February 28, 2000 is deemed to be that proportion of the dividend that the number of days that are in that year and before February 28, 2000 is of the number of days that are in that year;

130.1.(4.4)(b) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the period that began at the
beginning of February 28, 2000 and ended at the end of October 17, 2000 is deemed to be that proportion of the dividend that the number of days that are in the year and in that period is of the number of days that are in the year; and

130.1.(4.4)(c) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the period that begins at the beginning of October 18, 2000 and ends at the end of the year, is deemed to be that proportion of the dividend that the number of days that are in the year and in that period is of the number of days that are in the year.

Allocation

130.1.(4.5) Where no dividend to which subsection (4.4) applies is paid by a mortgage investment corporation in respect of its net taxable capital gains for its taxation year that includes February 28, 2000 or October 17, 2000, the corporation has net capital gains or net capital losses from dispositions of property in the year, and the corporation so elects under this subsection in its return of income for the year

130.1.(4.5)(a) the portion of those net capital gains and net capital losses that is in respect of capital gains and losses from dispositions of property that occurred before February 28, 2000 is deemed to be that proportion of the net capital gains or net capital losses respectively that the number of days that are in the year and before February 28, 2000 is of the number of days that are in the year,

130.1.(4.5)(b) the portion of those net capital gains and net capital losses that is in respect of capital gains and losses from dispositions of property that occurred in the
year and in the period that began at the beginning of February 28, 2000 and ended at the end of October 17, 2000, is deemed to be that proportion of the net capital gains or net capital losses respectively that the number of days that are in the year and in that period is of the number of days that are in the year, and

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130.1.(4.5)(c) the portion of those net capital gains and net capital losses that is in respect of capital gains and losses from dispositions of property that occurred in the
year and in the period that began at the beginning of October 18, 2000 and ended at the end of the year, is deemed to be that proportion of the net capital gains or
net capital losses respectively that the number of days that are in the year and in that period is of the number of days that are in the year, and, for the purpose of this subsection,

130.1.(4.5)(d) the net capital gains of a mortgage investment corporation from dispositions of property in a year is the amount, if any, by which the corporation’s
capital gains from dispositions of property in a year exceeds the corporation’s capital losses from dispositions of property in the year, and

130.1.(4.5)(e) the net capital losses of a mortgage investment corporation from dispositions of property in a year is the amount, if any, by which the corporation’s
capital losses from dispositions of property in a year exceeds the corporation’s capital gains from dispositions of property in the year.

Public corporation

130.1.(5) Notwithstanding any other provision of this Act, a mortgage investment corporation shall be deemed to be a public corporation.

Meaning of “mortgage investment corporation”

130.1.(6) For the purposes of this section, a corporation is a “mortgage investment corporation” throughout a taxation year if, throughout the year,

130.1.(6)(a) it was a Canadian corporation;

130.1.(6)(b) its only undertaking was the investing of funds of the corporation and it did not manage or develop any real property;

130.1.(6)(c) none of the property of the corporation consisted of

(i) debts owing to the corporation that were secured on real property situated outside Canada,

(ii) debts owing to the corporation by non-resident persons, except any such debts that were secured on real

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property situated in Canada,

(iii) shares of the capital stock of corporations not resident in Canada, or

(iv) real property situated outside Canada, or any leasehold interest in such property;

130.1.(6)(d) there were 20 or more shareholders of the corporation and no person would have been a specified shareholder of the corporation at any time in the year if

(i) the portion of the definition “specified shareholder” in subsection 248(1) before paragraph (a) were read as follows:

“specified shareholder” of a corporation at any time means a taxpayer who owns, directly or indirectly, at that time, more than 25% of the issued shares of any
class of the capital stock of the corporation and, for the purposes of this definition,

(ii) paragraph (a) of that definition were read as follows:

(a) a taxpayer is deemed to own each share of the capital stock of a corporation owned at that time by a person related to the taxpayer,

(iii) that definition were read without reference to paragraph (d) of that definition, and

(iv) paragraph 251(2)(a) were read as follows:

251.(2)(a) an individual and

(i) the individual’s child (as defined in subsection 70(10)) who is under 18 years of
age, or

(ii) the individual’s spouse or common-law partner;

130.1.(6)(e) any holders of preferred shares of the corporation had a right, after payment to them of their preferred dividends, and payment of dividends in a like
amount per share to the holders of the common shares of the corporation, to participate pari passu with the holders of the common shares in any further payment of dividends;

130.1.(6)(f) the cost amount to the corporation of such of its property as consisted of

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(i) debts owing to the corporation that were secured, whether by mortgages, hypothecs or in any other manner, on houses (as defined in section 2 of the National
Housing Act) or on property included within a housing project (as defined in that section), and

(ii) amounts of any deposits standing to the corporation’s credit in the records of

(A) a bank or other corporation any of whose deposits are insured by the Canada Deposit Insurance Corporation or the Régie de l’assurance-dépôts du Québec, or

(B) a credit union,

plus the amount of any money of the corporation was at least 50% of the cost amount to it of all its property;

130.1.(6)(g) the cost amount to the corporation of all real property of the corporation, including leasehold interests in such property, (except real property acquired by the corporation by foreclosure or otherwise after default made on a mortgage, hypothec or agreement of sale of real property) did not exceed 25% of the cost amount to it of all its property;

130.1.(6)(h) its liabilities did not exceed 3 times the amount by which the cost amount to it of all its property exceeded its liabilities, where at any time in the year the cost amount to it of such of its property as consisted of property described in subparagraphs 130.1(6)(f)(i) and 130.1(6)(f)(ii) plus the amount of any money of the
corporation was less than 2/3 of the cost amount to it of all of its property; and

130.1.(6)(i) its liabilities did not exceed 5 times the amount by which the cost amount to it of all its property exceeded its liabilities, where paragraph 130.1(6)(h) is not applicable.

How shareholders counted

130.1.(7) In paragraph (6)(d), a trust governed by a registered pension plan or deferred profit sharing plan by which shares of the capital stock of a corporation are held shall be counted as four shareholders of the corporation for the purpose of determining the number of shareholders of the corporation, but as one shareholder for the purpose of determining whether any person is a specified shareholder (as
defined for the purpose of that paragraph).

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First taxation year

130.1.(8) For the purposes of subsection 130.1(6), a corporation that was incorporated after 1971 shall be deemed to have complied with paragraph 130.1(6)(d) throughout the first taxation year of the corporation in which it carried on business if it complied with that paragraph on the last day of that taxation year.

Definitions

130.1.(9) In this section,

“liabilities” “passif”

“liabilities” of a corporation at any particular time means the total of all debts owing by the corporation, and all other obligations of the corporation to pay an amount, that were outstanding at that time;

“non-qualifying real property”

(Repealed by S.C. 1995, c. 3, s. 40(2).)

“non-qualifying taxed capital gains”

(Repealed by S.C. 1995, c. 3, s. 40(2).)

“qualifying taxed capital gains”

(Repealed by S.C. 1995, c. 3, s. 40(2).)

“taxed capital gains” “gains en capital imposés”

“taxed capital gains” has the meaning assigned by paragraph
130(3)(b).
APPLICATION INFORMATION S.C. 2001, Chapter 17, section 127, effective June 14, 2001
(R.A.), contains the following provision: (5) Subsections (1) to (4) apply to taxation years that
end after February 27, 2000 except that, for a corporation’s taxation year that includes February 28,
2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000,
(a) the reference to the fraction “1/2″ in subparagraph 130.1(1)(a)(ii) of the Act, as enacted by
subsection (1), shall be read as a reference to the fraction in paragraph 38(a) of the Act, as
enacted by subsection 22(1), that applies to the corporation for the year; and (b) the reference
to the word “twice” in subparagraph 130.1(4)(a)(i) of the Act, as enacted by subsection (2),
shall be read as a reference to the expression “the fraction that is the reciprocal of the fraction in
paragraph 38(a), as enacted by subsection 22(1) of the Income Tax Amendments Act, 2000, that
applies to the corporation for the year, multiplied by”. S.C. 2000, Chapter 12, section 143, effec-

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tive July 31, 2000 (SI/2000-76), states as follows: 143. Sections 130 to 142 apply to the 2001
and following taxation years. S.C. 1999, Chapter 22, section 53, effective June 17, 1999 (R.A.),
contains the following provisions: (3) Subsections (1) and (2) apply in determining whether a
corporation is a mortgage investment corporation for a taxation year that begins after January 14,
1998, except that subsections (1) and (2) apply to the corporation, with respect to a particular person
and persons related to the particular person, only as provided in subsections (4) to (10) if (a) the
corporation was a mortgage investment corporation at the end of January 14, 1998; (b) the
particular person is a specified shareholder of the corporation at any time in the year; and (c)
the particular person (i) was a specified shareholder of the corporation at the end of
January 14, 1998, or (ii) both (A) was a specified shareholder of the corporation at
any time after January 14, 1998 and before August 14, 1998, and (B) would have
been a specified shareholder of the corporation at the end of January 14, 1998 if
paragraph 130.1(6)(d) of the Act, as enacted by subsection (1), were read without refer-
ence to subparagraphs (ii) and (iv). (4) Subsections (1) and (2) apply to a corporation
that was a mortgage investment corporation at the end of January 14, 1998 for a taxation year that
begins after that day if a person who at any time in the year is a specified shareholder of the corpo-
ration contributes capital to the corporation, or acquires a share of the corporation’s capital stock
other than by a permitted acquisition, at any time after January 14, 1998 and before the end of the
year. (5) Subsections (1) and (2) apply to a corporation that was a mortgage investment corpora-
tion at the end of January 14, 1998 for a taxation year that begins after that day if a newly related
person in respect of a person who at any time in the year is a specified shareholder of the corpora-
tion (a) contributes capital to the corporation, or (b) holds property (in this paragraph referred
to as an “ineligible investment”) that is (i) a share of the capital stock of the corporation,
or (ii) a share of the capital stock of a corporation that holds an ineligible investment
at any time after January 14, 1998 and before the end of the year. (6) Subsections (1) and (2)
apply to a corporation that was a mortgage investment corporation at the end of January 14, 1998
for a taxation year that ends after that day if (a) at any particular time after January 14, 1998 and
before the end of the year, a mortgage lender is a specified shareholder of the corporation; and
(b) at any time that is in the taxation year that includes the particular time and that is after Janu-
ary 14, 1998, any person contributes capital to the corporation or acquires from the corpora-
tion a share of the corporation’s capital stock, other than a share that was issued to the person as
a stock dividend. (7) Subsections (1) and (2) apply to a corporation that was a mortgage invest-
ment corporation at the end of January 14, 1998 for a taxation year that ends after 2007 if a mort-
gage lender is a specified shareholder of the corporation at any time in the year or in a taxation year
that ends before the year and after 2007. (8) For the purposes of subsections (4) to (7), (a) if
at a particular time (i) a trust distributes a share of the capital stock of a corporation to
a person who was a beneficiary under the trust throughout the period from the end of January
14, 1998 to the particular time in satisfaction of all or any part of the beneficiary’s capital in-
terest in the trust, or (ii) a partnership distributes, to a person who was a member
of the partnership throughout the period from the end of January 14, 1998 to the particular
time, on the partnership ceasing to exist or on the ceasing of the person to be a member
of the partnership, a share of the capital stock of a corporation or an interest in such a
share, the share is deemed to have been owned by the beneficiary or member throughout the
period that begins at the later of the end of January 14, 1998 and the time the share was last
acquired by the trust or partnership and that ends at the particular time; and (b) if a person
who is a beneficiary under a trust or who is a member of a partnership is deemed by paragraph

Page 12

(b), (c) or (e) of the definition “specified shareholder” in subsection 248(1) of the Act to own
a share owned by the trust or partnership, the person is deemed to own the share and to have
acquired the share at the later of the time the share was acquired by the trust or partnership and
the time the person last became a beneficiary under the trust or a member of the partnership.
(9) At any time on or after the day of the death of a person described in paragraph (3)(c) in respect
of a corporation and before the third anniversary of that day, (a) the estate of the deceased per-
son is deemed to be a person described in paragraphs (3)(b) and (c) who is related to each
person who, throughout the period that begins at the beginning of January 15, 1998 and ends at
the time of death, was related to the deceased person; (b) notwithstanding subsection (10),
(i) the estate is deemed not to be a newly related person in respect of the corporation, and
(ii) the acquisition of shares of the corporation’s capital stock by the estate from the deceased
person is deemed to be a permitted acquisition; and (c) the estate is deemed not to be a
trust for the purposes of subparagraph (8)(a)(i) and paragraphs (b) and (e) of the definition
“specified shareholder” in subsection 248(1) of the Act. (10) The definitions in this subsec-
tion apply in subsections (3) to (9) and this subsection. “mortgage lender” “créancier hypothécaire>.
“mortgage lender” means a particular corporation where the ordinary business of (a) the
particular corporation, or (b) a corporation (other than a mortgage investment corpora-
tion) or partnership affiliated with the particular corporation includes the holding of debts
that are secured, whether by mortgage or in any other manner, on houses (as defined in sec-
tion 2 of the National Housing Act) or on property included within a housing project (as defined
in that section). “newly related persons” “personnes nouvellement liées” “newly related persons”
means persons who are related to each other and who became so related after January 14, 1998.
“permitted acquisition” “acquisition autorisée” “permitted acquisition” means an acquisition by a
particular person of a share of a class of the capital stock of a corporation that was (a)
held, at each particular time after January 14, 1998 and before the time at which the particular
person acquired it, or (b) issued after January 14, 1998 by the corporation as a
stock dividend and held, at each particular time after the time the share was issued and before
the time at which the particular person acquired it, by the particular person or by a person
who was related to the particular person throughout the period that began at the beginning of
January 15, 1998 and that ends at the particular time if, immediately after the time at which the
particular person acquires the share, the percentage of the issued shares of that class held by the
particular person and persons related to the particular person (or in the case of acquisitions
before August 14, 1998, by the particular person and persons with whom the particular per-
son did not deal at arm’s length immediately after the acquisition) does not exceed the permitted
percentage for the particular person in respect of that class of shares. “permitted percentage”
“pourcentage autorisé” “permitted percentage” for a particular person in respect of a class of
shares of the capital stock of a corporation means (a) in respect of acquisitions of shares be-
fore August 14, 1998, the percentage of the issued shares of that class held at the end of
January 14, 1998 by the particular person and persons with whom the particular person
did not at that time deal at arm’s length; and (b) in any other case, the greater of (i)
the percentage of the issued shares of that class held at the end of January 14, 1998 by the
particular person and persons related at that time to the particular person, and
(ii) the percentage of the issued shares of that class held at the beginning of August 14,
1998 by the particular person and persons related at that time to the particular
person. “related persons” “personnes liées” “related persons” and persons related to each other have, for purposes other than applying the definitions “permitted acquisition” and “permitted per-

Page 13

centage” in respect of acquisitions of shares before August 14, 1998, the meaning that would
be assigned by section 251 of the Act if paragraph 251(2)(a) of the Act were read as follows:
(a) an individual and (i) the individual’s child (as defined in subsection 70(10)) who is under 19 years of age, or (ii) the individual’s spouse; “specified shareholder” “actionnaire déterminé” “specified shareholder” has the meaning assigned by paragraph 130.1(6)(d) of the Act, as enacted by subsection (1).
** Editor’s Table **

For changes prior to Editor’s Tables, please see other
sources for in force information.

Provision Changed by In force Authority

130.1(1)(a) 2001 c17 s127(1) 2001 Jun 14 R.A.
(ii)

130.1(4)(a) 2001 c17 s127(2) 2001 Jun 14 R.A.
(i)
130.1(4)(b) 2001 c17 s127(3) 2001 Jun 14 R.A.

130.1(4.2) 2001 c17 s127(4) 2001 Jun 14 R.A.

130.1(4.3) 2001 c17 s127(4) 2001 Jun 14 R.A.

130.1(4.4) 2001 c17 s127(4) 2001 Jun 14 R.A.

130.1(4.5) 2001 c17 s127(4) 2001 Jun 14 R.A.

130.1(6)(d) 1999 c22 s53(1) 1999 Jun 17 R.A.
130.1(6)(d) 2000 c12 s142 2000 Jul 31 SI/2000-76
(iv)
130.1(6)(f) 2001 c17 s214(1) 2001 Jun 14 R.A.
(i)
130.1(6)(g) 2001 c17 s214(2) 2001 Jun 14 R.A.

130.1(7) 1999 c22 s53(2) 1999 Jun 17 R.A.
*****
History: S.C. 1973-74, c. 49, s. 18; S.C. 1977-78, c. 1, s. 64; S.C. 1985, c. 45, s. 75; S.C. 1986, c.
6, s. 75; S.C. 1988, c. 55, s. 118; S.C. 1994, c. 7, Sch. VIII, s. 75; S.C. 1995, c. 3, s. 40; S.C. 1998, c.
19, s. 156; S.C. 1999, c. 22, s. 53; S.C. 2000, c. 12, s. 142; S.C. 2001, c. 17, ss. 127, 214 (E).

National Housing Act

An Act to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions
	SHORT TITLE
Short title	1. This Act may be cited as the National Housing Act.R.S., c. N-10, s. 1.
	INTERPRETATION
Definitions	2. In this Act,”approved instalment credit agency” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1]
“approved lender”	“approved lender” means a person designated as an approved lender by the Corporation under section 5;”approved loan” [Repealed, 1999, c. 27, s. 1] “bank” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1] “borrowers’ charges” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1]
“builder”	“builder” means a person who builds houses for sale or for rent;”condominium unit” [Repealed, 1999, c. 27, s. 1] “cooperative housing project” [Repealed, 1999, c. 27, s. 1]
“Corporation”	“Corporation” means the Canada Mortgage and Housing Corporation established by the Canada Mortgage and Housing Corporation Act;
“cost of construction”	“cost of construction” means the aggregate of(a) the cost or appraised value of the land, whichever is the lesser, or, in the case of land acquired by gift or devise, the appraised value of the land, (b) actual expenditure for building, (c) the architectural, legal and other expenses and carrying charges necessary to complete the house or housing project, (d) where work is done by the owner, such amount as the Corporation may fix as the value of the work, and (e) land development costs and carrying charges; “cost of construction of a family housing unit” [Repealed, 1999, c. 27, s. 1] “cost of conversion” [Repealed, 1999, c. 27, s. 1] “designated area” [Repealed, 1999, c. 27, s. 1]
“family housing unit”	“family housing unit” means a unit providing therein living, sleeping, eating, food preparation and sanitary facilities for one family, with or without other essential facilities shared with other family housing units;
“family of low income”	“family of low income” means a family that receives a total family income that, in the opinion of the Corporation, is insufficient to permit it to rent housing accommodation adequate for its needs at the current rental market in the area in which the family lives;”farm” [Repealed, 1999, c. 27, s. 1] “guaranteed home improvement loan” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1] “home improvement loan” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1]
“house”	“house” means a building or movable structure, or any part thereof, that is intended for human habitation and contains not more than two family housing units, together with any interest in land appurtenant to the building, movable structure or part thereof;
“housing project”	“housing project” means(a) any building or movable structure, or any part thereof, that is intended for human habitation, (b) any property that is intended to be improved, converted or developed to provide housing accommodation or services in support of housing accommodation, or (c) any property that is associated with housing accommodation, including, without limiting the generality of the foregoing, land, buildings and movable structures, and public, recreational, commercial, institutional and parking facilities; “Indian” [Repealed, 1999, c. 27, s. 1] “Indian band” [Repealed, 1999, c. 27, s. 1]
“insured loan”	“insured loan” means a loan that is insured by the Corporation under Part I;”lender” [Repealed, 1999, c. 27, s. 1] “lending value” [Repealed, 1999, c. 27, s. 1]
“limited-dividend housing company”	“limited-dividend housing company” means a company incorporated to construct, hold and manage a low-rental housing project, the dividends payable by which are limited by the terms of its charter or instrument of incorporation to five per cent per annum or less;
“low-rental housing project”	“low-rental housing project” means a housing project undertaken to provide decent, safe and sanitary housing accommodation, complying with standards approved by the Corporation, to be leased to families of low income or to such other persons as the Corporation,(a) in its discretion, in the case of a housing project owned by it, or (b) under agreement with the owner, in the case of a housing project not owned by it, designates, having regard to the existence of a condition of shortage, overcrowding or congestion of housing;
“metropolitan area”	“metropolitan area” means a city together with one or more adjacent municipalities in close economic relationship with the city;
“Minister”	“Minister” means such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act;”mortgage” [Repealed, 1999, c. 27, s. 1] “multiple-family dwelling” [Repealed, 1999, c. 27, s. 1]
“municipality”	“municipality” means an incorporated city, metropolitan area, town, village, county, township, district, rural municipality or other municipality;
“non-profit corporation”	“non-profit corporation” means a corporation, no part of the income of which is payable to or is otherwise available for the personal benefit of any proprietor, member or shareholder thereof;
“official community plan”	“official community plan” means a master plan of community development and land utilization prepared by a local planning authority and legally adopted by or on behalf of a municipality;”one-family dwelling” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1] “owner” [Repealed, 1999, c. 27, s. 1]
“person”	“person” includes a group of persons, an organization, a municipality or a department or agency of the government of Canada or of a province;
“rental housing project”	“rental housing project” means a housing project occupied or intended to be occupied primarily by a person other than the owner.”reserve” [Repealed, 1999, c. 27, s. 1] “semi-detached dwelling” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1] “title” [Repealed, R.S., 1985, c. 25 (4th Supp.), s. 1] R.S., 1985, c. N-11, s. 2; R.S., 1985, c. 20 (2nd Supp.), s. 7, c. 25 (4th Supp.), s. 1; 1992, c. 1, s. 142, c. 32, s. 5; 1994, c. 35, s. 38; 1999, c. 27, s. 1.
Debts treated as loans	2.1 (1) For the purposes of this Act, a transaction by which a person becomes indebted to a creditor is to be treated as the making of a loan from the creditor to the person.
Persons treated as owner	(2) If the Corporation is of the opinion that the circumstances so warrant, a lessee, a purchaser under an agreement or an occupant may be treated as an owner for the purposes of this Act.1999, c. 27, s. 2.
	PURPOSE
Purpose	3. The purpose of this Act, in relation to financing for housing, is to promote housing affordability and choice, to facilitate access to, and competition and efficiency in the provision of, housing finance, to protect the availability of adequate funding for housing at low cost, and generally to contribute to the well-being of the housing sector in the national economy.R.S., 1985, c. N-11, s. 3; 1992, c. 32, s. 6; 1999, c. 27, s. 2.
	RIGHTS AND OBLIGATIONS OF THE CORPORATION
Her Majesty has rights and obligations of the Corporation	4. Every right or obligation acquired or incurred by the Corporation under this Act, whether in its name or in the name of Her Majesty, is a right or obligation of Her Majesty.R.S., c. N-10, s. 4. 4.1 [Repealed, 1999, c. 27, s. 3]
	APPROVED LENDERS
Designation	5. (1) The Corporation may designate any person as an approved lender for the purposes of this Act.
Term of designation	(2) The designation of an approved lender and any renewal of that designation are in force for any period that the Corporation may specify.
Conditions and restrictions	(3) The Corporation may, at any time, establish conditions and restrictions applicable to an approved lender.
Suspension	(4) The Corporation may, at any time, suspend or cancel the designation of an approved lender.
Fees	(5) The Corporation may establish schedules of fees payable by approved lenders in relation to their designation and supervision.R.S., 1985, c. N-11, s. 5; R.S., 1985, c. 25 (4th Supp.), s. 2; 1999, c. 27, s. 3.
Powers of approved lenders	6. (1) Subject to subsection (2), an approved lender who is subject to the jurisdiction of Parliament may, notwithstanding any restrictions on the power of the lender contained in any other statute or law,(a) make loans on such terms and conditions as are provided for by or under this Act; (b) acquire from the Corporation any secured obligation in favour of the Corporation that is to be insured or guaranteed by the Corporation after it is acquired; (c) dispose of or acquire insured loans together with the security taken in respect of those loans; (d) pledge an insured loan with the Corporation or an approved lender to secure the repayment of money borrowed, and borrow money from the Corporation or an approved lender on the security of an insured loan; (e) administer an insured loan for and on behalf of the holder of the loan; and (f) on such terms and conditions as are specified by the Corporation, act as agent for the Corporation in the exercise of any of the Corporation’s powers and functions under Part I and in the making or administering of loans that the Corporation is authorized to make.
Restriction of powers	(2) The Corporation may restrict the powers that an approved lender may exercise under subsection (1).R.S., 1985, c. N-11, s. 6; 1999, c. 27, s. 3.
	PART I HOUSING LOAN INSURANCE, GUARANTEE AND PROTECTION
Definition of “housing loan”	7. In this Part, “housing loan” means a loan that(a) relates to a housing project;(b) is secured at least in part by security on or affecting a housing project or by an agreement relating to the use, occupancy or disposal of a housing project;(c) is made for the purpose of acquiring a financial interest in a person who, directly or indirectly, owns, leases or operates a housing project; or(d) is made for the purpose of refinancing a debt that the Corporation is of the opinion relates to a housing project or to a financial interest referred to in paragraph (c).R.S., 1985, c. N-11, s. 7; R.S., 1985, c. 25 (4th Supp.), s. 3; 1992, c. 32, s. 8(F); 1999, c. 27, s. 3.
Insurance of loans	(2) For lenders, the purpose of insuring housing loans is to indemnify lenders in the event of default by borrowers. The obligations of borrowers or other persons are not released or discharged by that insurance or indemnification.R.S., 1985, c. N-11, s. 8; R.S., 1985, c. 25 (4th Supp.), s. 4; 1999, c. 27, s. 3.8.1 [Repealed, 1999, c. 27, s. 3]
Payments by Corporation for completion	9. If the Corporation has insured a loan that has been provided to finance the completion of work relating to, or the supply of materials for, a housing project and the work has not been completed, the materials have not all been supplied or the work or materials have not been fully paid for, the Corporation may make loans or payments for the completion of the work or the supply of the materials or for the satisfaction of claims in respect of the project.R.S., 1985, c. N-11, s. 9; R.S., 1985, c. 25 (4th Supp.), s. 6; 1999, c. 27, s. 3.
Avoiding or curing defaults	10. (1) The Corporation may make payments to approved lenders or to holders of insured loans, and may make loans or payments to borrowers or their assignees, for the purpose of avoiding or curing, in whole or in part, default under insured loans or facilitating variation of the terms of payment of insured loans, or for any other purposes that the Corporation considers appropriate to protect its interest as an insurer.
Subrogation	(2) If the Corporation makes a payment to an approved lender or holder of an insured loan under subsection (1), the Corporation is subrogated, to the extent of the amount of the payment, to all the rights and interests of the lender or holder in respect of that amount, and may maintain an action in respect of those rights and interests in the name of the lender or holder or in the name of the Corporation. Any money recovered by the lender or holder must first be applied against money owing to the lender or holder on account of the insured loan.
Waiver	(3) The Corporation may waive the right of subrogation referred to in subsection (2).R.S., 1985, c. N-11, s. 10; R.S., 1985, c. 20 (2nd Supp.), s. 8, c. 25 (4th Supp.), s. 7; 1999, c. 27, s. 3.
Maximum total	11. Notwithstanding anything in this Act, the total of the outstanding insured amounts of all insured loans may not exceed the sum of(a) one hundred and fifty billion dollars, and(b) any additional amounts authorized by Parliament under an appropriation Act or other Act of Parliament on or after April 1, 1997.R.S., 1985, c. N-11, s. 11; 1992, c. 32, s. 9; 1999, c. 27, s. 3.11.1 to 11.3 [Repealed, 1999, c. 27, s. 3]
Administration of housing loans	12. The Corporation may administer a housing loan by agreement with the holder of the loan.R.S., 1985, c. N-11, s. 12; R.S., 1985, c. 25 (4th Supp.), s. 9; 1992, c. 32, s. 11; 1999, c. 27, s. 3.
Corporation may lend	13. The Corporation may make a housing loan in any of the following circumstances:(a) where the loan would otherwise not be available to the borrower;(b) where the Corporation intends to(i) make a contribution to the borrower,(ii) make another loan, or advances on another loan, to the borrower, or(iii) forgive any indebtedness of the borrower to the Corporation; or(c) where the Corporation is a party to an agreement respecting the operation of the housing project to which the loan relates. R.S., 1985, c. N-11, s. 13; R.S., 1985, c. 25 (4th Supp.), s. 9; 1992, c. 32, s. 12; 1999, c. 27, s. 3.
Guarantee	14. The Corporation may guarantee payment of any or all principal or interest, or both, in respect of securities issued on the basis of housing loans.R.S., 1985, c. N-11, s. 14; R.S., 1985, c. 25 (4th Supp.), s. 9; 1992, c. 32, s. 13; 1999, c. 27, s. 3.14.1 to 14.8 [Repealed, 1999, c. 27, s. 3]
Maximum total	15. Notwithstanding anything in this Act, the total of the outstanding guaranteed amounts of principal, for all issues of securities in respect of which guarantees that have been given under section 14 are in force, may not exceed the maximum total amount provided for in section 11.R.S., 1985, c. N-11, s. 15; 1999, c. 27, s. 3.15.1 [Repealed, 1999, c. 27, s. 3]
Interest rate protection	16. The Corporation may provide protection against the effects of changes in interest rates for housing loans.R.S., 1985, c. N-11, s. 16; R.S., 1985, c. 25 (4th Supp.), s. 11; 1992, c. 32, s. 19; 1999, c. 27, s. 3.
Dealing in obligations by Corporation	17. The Corporation may(a) acquire housing loans or interests in housing loans;(b) make loans to the holders of housing loans;(c) sell any obligation held by the Corporation and may, under an agreement made with the purchaser, continue to administer the obligation; and(d) issue securities based on housing loans.R.S., 1985, c. N-11, s. 17; R.S., 1985, c. 25 (4th Supp.), s. 12; 1992, c. 32, s. 20; 1999, c. 27, s. 3.
Reinsurance	18. (1) The Corporation may obtain reinsurance with respect to the risk covered by the Corporation in respect of any insurance, guarantee or other protection provided by the Corporation under this Part.
Payment to Receiver General	(2) The Corporation may pay to the Receiver General amounts determined in accordance with the Corporation’s corporate plan approved under section 122 of the Financial Administration Act to compensate Her Majesty for Her exposure to the risks covered under this Part by Her agent the Corporation. Those amounts are, for the Corporation, expenses of carrying on business under this Part.R.S., 1985, c. N-11, s. 18; R.S., 1985, c. 25 (4th Supp.), s. 12; 1992, c. 32, s. 21; 1999, c. 27, s. 3.
Terms and conditions	19. The Corporation may(a) set the terms and conditions on which it exercises any powers or functions under this Part, including terms and conditions relating to the payment of claims in respect of any insurance, guarantee or other protection provided by the Corporation under this Part; and(b) establish schedules of premiums, fees and charges for anything done in the exercise of any powers or functions of the Corporation under this Part.R.S., 1985, c. N-11, s. 19; R.S., 1985, c. 25 (4th Supp.), s. 13; 1992, c. 32, s. 22; 1999, c. 27, s. 3.
Agents	20. The Corporation may authorize an approved lender to act as agent for the Corporation in the exercise of any of its powers or functions under this Part, including in a situation involving a loan made or administered by the lender.R.S., 1985, c. N-11, s. 20; R.S., 1985, c. 25 (4th Supp.), s. 14; 1999, c. 27, s. 3.20.1 and 20.2 [Repealed, 1999, c. 27, s. 3]

Establishment of funds	21. (1) The Corporation must establish and maintain funds to provide for claims, losses, expenditures and costs relating to the conduct of its business under this Part.
Corporate plan	(2) The Corporation’s corporate plan required under section 122 of the Financial Administration Act must contain a proposal that the Corporation’s profits from the conduct of its business under this Part that are not credited to a fund established under subsection (1) be used for one or more of the following purposes:(a) the capitalization of the Corporation’s business under this Part;(b) the payment of a dividend to the Consolidated Revenue Fund;(c) the purposes of this Act or the Canada Mortgage and Housing Corporation Act or any other purpose authorized by Parliament relating to housing; and(d) retention.
Implementation of proposal	(3) The Corporation is authorized to implement a proposal referred to in subsection (2) after the proposal is approved under section 122 of the Financial Administration Act as part of the Corporation’s corporate plan.
Non-application	(4) Section 29 of the Canada Mortgage and Housing Corporation Act does not apply to profits from the conduct of the Corporation’s business under this Part.R.S., 1985, c. N-11, s. 21; R.S., 1985, c. 25 (4th Supp.), s. 16; 1992, c. 32, s. 25; 1995, c. 47, s. 1; 1999, c. 27, s. 3.21.1 to 21.5 [Repealed, 1999, c. 27, s. 3]
	PART II HOUSING FOR RENTAL PURPOSES
Contractual guarantee of return from rental housing project	22. (1) The Corporation may enter into contracts with builders of rental housing projects to guarantee in each contract a financial return from a rental housing project after its completion in an amount to be determined by the Corporation for a total period of not more than thirty years.
Undertaking to enter into contract	(2) The Corporation may give to a builder an undertaking that the Corporation will enter into a contract with the builder under subsection (1) if the builder builds a rental housing project.
Terms and conditions	(3) The Corporation may determine the terms and conditions on which it enters into a contract in respect of a rental housing project under subsection (1), including, without limiting the generality of the foregoing,(a) fees with respect to any guarantee referred to in subsection (1);(b) conditions with respect to the operation or occupancy of the project;(c) restrictions on the disposal, leasing or charging of the project or any part of it or interest in it;(d) limits on the amount of the financial return that may be made from the project; and(e) provisions giving the Corporation the right to direct the use of any amount received in excess of any limits referred to in paragraph (d).
Consent to assign	(4) A contract referred to in subsection (1) is personal to the builder of the rental housing project to which the contract relates and may be assigned to a subsequent owner of the rental housing project only with the written consent of the Corporation.R.S., 1985, c. N-11, s. 22; 1992, c. 32, s. 29; 1999, c. 27, s. 4.
Loans for rental housing projects	23. (1) Any approved lender who is subject to the jurisdiction of Parliament may, notwithstanding any restrictions on the power of the lender to lend or invest money contained in any other statute or law,(a) make loans for rental housing projects in respect of which an undertaking has been given by the Corporation under subsection 22(2) or the financial return has been guaranteed by the Corporation under section 22; and(b) dispose of or acquire loans made for rental housing projects in respect of which the financial return has been guaranteed by the Corporation under section 22, together with any security taken in respect of the guarantee.
Terms and conditions	(2) A loan may be made under paragraph (1)(a) only with the approval of the Corporation and on such terms and conditions as may be determined by the Corporation.
Restriction of powers	(3) The Corporation may restrict the powers that an approved lender may exercise under subsection (1).R.S., 1985, c. N-11, s. 23; 1992, c. 32, s. 30; 1999, c. 27, s. 4.
Corporation may lend	24. If, in the opinion of the Corporation, a person is unable to obtain a loan described in paragraph 23(1)(a), the Corporation may make a loan to that person on such terms and conditions as may be determined by the Corporation.R.S., 1985, c. N-11, s. 24; 1999, c. 27, s. 4.24.1 [Repealed, 1999, c. 27, s. 4]
Loans, etc., with respect to rental housing projects	25. (1) The Corporation may make loans and contributions with respect to rental housing projects, make loans to refinance debt that, in the opinion of the Corporation, relates to rental housing projects and forgive amounts owing on those loans.
Terms and conditions	(2) The Corporation may determine the terms and conditions on which it makes a loan or contribution or forgives an amount under subsection (1), including, without limiting the generality of the foregoing,(a) conditions with respect to the operation or occupancy of a rental housing project;(b) restrictions on the disposal, leasing or charging of the project or any part of it or interest in it;(c) limits on the amount of the financial return that may be made from the project; and(d) provisions giving the Corporation the right to direct the use of any amount received in excess of any limits referred to in paragraph (c).R.S., 1985, c. N-11, s. 25; R.S., 1985, c. 25 (4th Supp.), s. 21; 1991, c. 47, s. 738; 1999, c. 27, s. 4.26. to 31. [Repealed, 1999, c. 27, s. 4]
Life insurance companies investment	32. (1) Any life insurance company subject to the jurisdiction of Parliament may, notwithstanding any restriction on the power of the company to lend or invest money contained in any other statute or law,(a) subject to the conditions set out in subsection (2), invest its funds, to an aggregate amount not exceeding five per cent of its total assets in Canada, as shown in its most recent annual return filed under section 665 of the Insurance Companies Act, in the purchase of land and the construction thereon of a low cost or moderate cost rental housing project, including such buildings or such accommodation for retail stores, shops, offices and other community services, but not including hotels, as the company may deem proper and suitable for the convenience of the tenants of that rental housing project; and(b) after investing its funds pursuant to paragraph (a), hold, maintain, repair, alter, demolish, reconstruct, manage, collect or receive income from, sell or convey, in whole or in part, land acquired by means of the investment and the improvements on the land.
Conditions of investment under subsection (1)	(2) The conditions under which an investment referred to in subsection (1) may be made are as follows:(a) the project shall, in the discretion of the Corporation, be constructed in accordance or in harmony with an official community plan satisfactory to it;(b) the project shall be designed to provide housing accommodation for families of low income or moderate income and the Corporation may prescribe a maximum average cost per room or per family housing unit provided thereby, or per person to be accommodated;(c) the company shall submit to the Corporation an application in a form to be prescribed by it and accompanied by the following:(i) a map showing the location of the land and any structures thereon, the purchase of which is deemed by the company to be necessary to the project,(ii) a plan and specifications prepared by an architect showing the buildings or improvements to be constructed thereon pursuant to the project,(iii) an estimate of the cost of the entire project prepared by an architect or engineer and approved by the company, (iv) an estimate of such rentals of the family housing units and the other facilities to be provided as are necessary to assure a minimum return of six per cent per annum on the cost of the entire project after payment of all taxes, insurance, costs of operation and maintenance and an annual amount sufficient to amortize the cost of construction of the project, less the cost of the land, within a period representing the estimated useful life of the project but not in any case exceeding fifty years after the date of completion of the project, and (v) such other information or material as the Corporation may require; and (d) the investment is approved by the Corporation.
Guarantee to life insurance company	(3) Where a life insurance company agrees with the Corporation(a) to maintain, in relation to a rental housing project in which the company invests under this section, separate books and records satisfactory to the Corporation and open to its inspection at any time,(b) to establish, on account of the project, a reserve comprising all net earnings in any year after completion of the project that are in excess of seven per cent per annum on the cost of the project, and(c) to repay out of the reserve any advances made by the Corporation under the guarantee given pursuant to this subsection,the Corporation shall guarantee to the company, for as long as it retains ownership of the whole or any part of the project, a net return in any year after the completion of the project of three per cent per annum of the cost of the project for a period not exceeding the estimated useful life of the project and in any case not exceeding fifty years.
Definition of “net return in any year”	(4) In this section, “net return in any year” means an amount equal to annual net earnings derived from the project computed by deducting from the total annual revenues therefrom all expenses of the year in respect thereof, including provision for taxes, insurance, repairs and maintenance, interest and an amount sufficient to amortize the cost of construction of the project, including the cost of the land, over the estimated useful life of the project.
Two or more companies	(5) Two or more life insurance companies may join in the development, ownership and management of a rental housing project under this section.
Power of Governor in Council to designate approved lenders	(6) The Governor in Council may, for the purposes of this section, designate(a) an approved lender subject to the jurisdiction of Parliament, to which lender, if designated under this paragraph, subsections (1) to (5) apply, with such modifications as the circumstances require, but the amount of its funds that may be invested shall not exceed five per cent of its assets in Canada or such amount as is approved by the Governor in Council for the purposes of this subsection; and(b) an approved lender that is not subject to the jurisdiction of Parliament but is empowered to make investments referred to in this section, to which lender, if designated under this paragraph, subsections (2) to (5) apply, with such modifications as the circumstances require, but the amount of investments in respect of which guarantees may be given under this section shall not exceed five per cent of its assets in Canada or such amount as is approved by the Governor in Council for the purposes of this subsection.R.S., 1985, c. N-11, s. 32; R.S., 1985, c. 18 (3rd Supp.), s. 37; 1991, c. 47, s. 739; 1999, c. 27, s. 5.
Power of Corporation to determine administrative matters	33. (1) The Corporation may(a) prescribe the manner in which the cost of a rental housing project shall be calculated for the purposes of section 32;(b) adjust the cost of a rental housing project in the event of the sale of a portion thereof or an addition thereto;(c) prescribe the manner in which the net earnings shall be calculated for the purposes of section 32; and(d) take such other measures as the Corporation may deem necessary or desirable to give effect to the purposes or provisions of this section and section 32 and to safeguard the interests of the Corporation.
Power of insurance company to acquire land	(2) Prior to the approval of an investment pursuant to paragraph 32(2)(d), a life insurance company subject to the jurisdiction of Parliament may, notwithstanding any restriction on its power to invest money contained in any other statute or law, with the approval of the Corporation, purchase land for the purpose of making an investment under subsections 32(1) and (2) and may hold and manage the land on such terms and conditions as the Corporation may specify.R.S., c. N-10, s. 18.34. and 35. [Repealed, 1999, c. 27, s. 6]36. and 37. [Repealed, 1992, c. 32, s. 34]
	PART III LAND ASSEMBLY
Definition of “investment”	38. In this Part, “investment” includes the purchase price of land, moneys expended on the installation of services, the laying out and construction of streets, sidewalks and lanes and the development of park areas, public space and facilities appropriate to a residential housing development, and such carrying charges and other expenses incurred by the company in respect of the land as may be approved by the Corporation, including taxes, insurance, repairs and maintenance.R.S., c. N-10, s. 20.
Company may invest funds in purchase of land for housing development	39. (1) Any life insurance, trust or loan company subject to the jurisdiction of Parliament (in this Part called “company”) may, notwithstanding any restriction on the power of the company to lend or invest money contained in any other statute or law,(a) subject to the conditions set out in subsection (2), invest its funds in the purchase and improvement of land to be used for a residential housing development to an aggregate amount that, when added to the aggregate amount invested by the company under section 32, does not exceed the limitation on the investment imposed by or pursuant to section 32 or 33; and(b) subject to this Part, hold, maintain, repair, alter, demolish, improve, manage, collect or receive income from, sell or convey, in whole or in part, land acquired by means of investment pursuant to paragraph (a) and the improvements on the land.
Conditions of investment	(2) The conditions under which an investment referred to in subsection (1) may be made are as follows:(a) the land shall, in the opinion of the Corporation, be suitable for a residential housing development;(b) the purchase price of the land shall be satisfactory to the Corporation;(c) the improvements to be effected and the cost thereof shall be satisfactory to the Corporation;(d) the company shall submit to the Corporation an application in a form satisfactory to the Corporation containing such information and accompanied by such material as the Corporation may prescribe;(e) the investment shall first be approved in writing by the Corporation; and(f) the company shall enter into an agreement with the Corporation in accordance with subsection (3).
In case of agreement Corporation to guarantee return and interest	(3) Where a company agrees with the Corporation(a) to acquire land and effect improvements thereon in accordance with this Part,(b) to maintain, in relation to the land, the expenses incurred in respect thereof, the improvements made thereon and sales made thereof, separate books and records satisfactory to the Corporation and open to its inspection at any time, and(c) to sell the land at such price as the Corporation may determine and on such terms and conditions as are satisfactory to the Corporation or as may be set out in the agreement,the Corporation shall guarantee to the company for as long as it retains ownership of the whole or any part of the land in which an investment is made pursuant to this Part but not longer than the time specified in the agreement, which shall not exceed five years after the date of acquisition of the land by the company, the return of an amount equal to the company’s investment in the land, together with interest thereon at a rate specified in the agreement but not in excess of three per cent per annum compounded annually.
Further provisions of agreement	(4) The agreement referred to in subsection (3) may also provide(a) that the company shall plan the development of the land in a manner satisfactory to the Corporation and, as a condition of the sale of the land, shall receive an undertaking from the purchaser that any structures erected on the land shall conform to the plan of the area and shall comply with standards of construction prescribed by the Corporation under this Act; and(b) for such other measures to be taken by the Corporation and the company as the Corporation may deem necessary or desirable to give effect to the purposes or provisions of this Part and to safeguard the interests of the Corporation.R.S., c. N-10, s. 20.
Corporation to determine amount of investment and interest and amount recovere	40. (1) At the end of the time specified in the agreement referred to in subsection 39(3), or when all the land has been sold by the company, whichever is the earlier, the Corporation shall(a) determine the aggregate amount of the investment by the company in the land and the interest thereon at the rate specified in the agreement compounded annually; and(b) determine the amount recovered by the company out of the land from sales thereof or otherwise.
When Corporation to pay excess	(2) If the aggregate amount determined pursuant to paragraph (1)(a) is in excess of the amount determined pursuant to paragraph (1)(b), the Corporation shall pay to the company the amount of the excess and the company shall transfer and convey to the Corporation all the unsold portion of the land.
When company to pay excess	(3) If the amount determined pursuant to paragraph (1)(b) is in excess of the amount determined pursuant to paragraph (1)(a), the company shall pay the amount of the excess to the Corporation.
Companies may join in purchase	(4) Two or more companies may join in the purchase and improvement of land for a residential housing development under this Part.R.S., c. N-10, s. 20.
Governor in Council may designate lenders as companies	41. (1) The Governor in Council may designate as a company, for the purposes of this Part,(a) an approved lender subject to the jurisdiction of Parliament, to which lender, if designated pursuant to this paragraph, sections 38 to 40 apply, with such modifications as the circumstances require, but the amount of its funds that may be invested shall not exceed five per cent of its assets in Canada or such amount as is approved by the Governor in Council for the purposes of this Part; and(b) an approved lender that is not subject to the jurisdiction of Parliament, but is empowered to make investments referred to in this Part, to which lender, if designated pursuant to this paragraph, sections 38 to 40 apply, with such modifications as the circumstances require, but the amount of investments in respect of which guarantees may be given under this Part shall not exceed five per cent of its assets in Canada or such amount as is approved by the Governor in Council for the purposes of this Part.
Regulations	(2) The Governor in Council may make regulations to provide for any matters concerning which the Governor in Council deems regulations are necessary or desirable to carry out the purposes or provisions of this Part.
Corporation may take necessary measures	(3) The Corporation may take such measures as it deems necessary or desirable to give effect to the purposes or provisions of this Part and to safeguard the interests of the Corporation.R.S., c. N-10, s. 20.
	PART IV LAND ACQUISITION AND LEASING
Land acquisitions of Corporation	42. (1) The Corporation may, for the purpose of leasing land at low rentals to non-profit corporations,(a) acquire land by way of purchase, lease or otherwise; and(b) install services in, and effect improvements to or in respect of, land acquired by it and develop and lay out the land for housing purposes.
Lease of land by Corporation	(2) The Corporation may lease land acquired under subsection (1) to non-profit corporations but the rentals charged thereon by the Corporation shall not be less than such amounts as are determined in such manner as may be prescribed by regulation.(3) and (4) [Repealed, 1992, c. 32, s. 35]R.S., 1985, c. N-11, s. 42; 1992, c. 32, s. 35.
	PART V
	[Repealed, R.S., 1985, c. 25 (4th Supp.), s. 23]
	PART VI REPAIR, REHABILITATION, IMPROVEMENT, AND CONVERSION OF BUILDINGS
Assistance for repair, etc.	51. (1) The Corporation may make loans and contributions for the purposes of the repair, rehabilitation, modification, improvement and conversion of housing projects, and may forgive amounts owing on those loans.
Terms and conditions	(2) The Corporation may determine the terms and conditions on which it makes a loan or contribution or forgives an amount under subsection (1), including, without limiting the generality of the foregoing,(a) conditions with respect to the operation or occupancy of a housing project;(b) restrictions on the disposal, leasing or charging of the project or any part of it or interest in it;(c) limits on the amount of the financial return that may be made from the project; and(d) provisions giving the Corporation the right to direct the use of any amount received in excess of any limits referred to in paragraph (c).R.S., 1985, c. N-11, s. 51; R.S., 1985, c. 20 (2nd Supp.), s. 9; 1992, c. 32, s. 36; 1999, c. 27, s. 7.52. to 55. [Repealed, 1999, c. 27, s. 7] 56. [Repealed, 1992, c. 32, s. 39]
	PART VII FACILITATION OF HOME OWNERSHIP AND OCCUPANCY
Owner-occupier loans, etc.	57. (1) The Corporation may make loans and contributions in respect of housing projects occupied or intended to be occupied by the owner of the project, make loans to refinance debt that, in the opinion of the Corporation, relates to such a housing project, and forgive amounts owing on those loans.
Terms and conditions	(2) The Corporation may determine the terms and conditions on which it makes a loan or contribution or forgives an amount under subsection (1).R.S., 1985, c. N-11, s. 57; 1999, c. 27, s. 8.
Loans, etc., for housing expenses	58. (1) The Corporation may make loans and contributions for the purpose of assisting in the payment of, or providing allowances for, expenses that, in the opinion of the Corporation, are related to housing accommodation, and may forgive amounts owing on those loans.
Terms and conditions	(2) The Corporation may determine the terms and conditions on which it makes a loan or contribution or forgives an amount under subsection (1).R.S., 1985, c. N-11, s. 58; 1991, c. 47, s. 740; 1999, c. 27, s. 8. PART VIII 59 and 60 [Repealed, 1999, c. 27, s. 8]
Loans, etc., to cooperative associations	61. (1) The Corporation may make loans and contributions to cooperative associations and to their members in respect of housing projects, make loans to cooperative associations and their members to refinance debt that, in the opinion of the Corporation, relates to a housing project, and forgive amounts owing on those loans.
Terms and conditions	(2) The Corporation may determine the terms and conditions on which it makes a loan or contribution or forgives an amount under subsection (1), including, without limiting the generality of the foregoing,(a) conditions with respect to the operation or occupancy of the housing project; and(b) restrictions on the disposal, leasing or charging of the project or any part of it or interest in it.R.S., 1985, c. N-11, s. 61; 1999, c. 27, s. 9.62. to 72. [Repealed, 1999, c. 27, s. 9]
	PART IX HOUSING RESEARCH, COMMUNITY PLANNING, AND INTERNATIONAL SUPPORT
Housing investigations and distribution of information	73. It is the responsibility of the Corporation to cause investigations to be made into housing conditions and the adequacy of existing housing accommodation in Canada or in any part of Canada and to cause steps to be taken for the distribution of information leading to the construction or provision of more adequate and improved housing accommodation and the understanding and adoption of community plans in Canada.R.S., c. N-10, s. 35.
General and special powers of Corporation	74. For the purpose of carrying out its responsibility under this Part, the Corporation may cause(a) investigations to be made into housing conditions and the adequacy of existing housing accommodation in Canada or in any part of Canada and into measures that may be taken for the improvement thereof;(b) studies to be made of investigations into housing conditions and housing accommodation made elsewhere than in Canada and into measures and plans or proposals taken or adopted or proposed elsewhere than in Canada for the improvement thereof;(c) investigations to be made into the factors affecting the cost of construction of housing accommodation and measures that may be taken to secure economies and increased efficiency in such construction;(d) plans and designs to be prepared for houses that have a low cost of construction and, in the opinion of the Corporation, will provide suitable accommodation, and arrangements to be made for the sale or distribution of the plans and designs in such manner as the Corporation sees fit;(e) information to be prepared and distributed and public lectures to be delivered to promote an understanding of the advisability of, and the principles underlying, land, community and regional planning;(f) studies to be made of land utilization and community planning and arrangements to be made for the furnishing of information and advice with regard to the establishment of community planning agencies, and the planning of regional areas, communities and subdivisions, in cooperation with any local or other authority having jurisdiction over community planning and land subdivisions or otherwise with a view to promoting coordination between local community planning and the development of public services; and (g) generally such steps to be taken as it may deem necessary or advisable to encourage the development of better housing and sound community planning and to promote construction of housing accommodation that, in its opinion, is sound and economical. R.S., c. N-10, s. 36.
Technical research and investigation, etc.	75. (1) Subject to subsection (2), the Corporation may(a) cause to be prepared and undertaken, directly or in cooperation with other departments or agencies of the Government of Canada or the government of any province or with any municipality, university, educational institution or person, programs of technical research and investigation into the improvement and development of methods of construction, standards, materials, equipment, fabrication, planning, designing and other factors involved in the construction or provision of improved housing accommodation in Canada and coordinate those programs or measures referred to in section 74 with other similar programs or measures undertaken in Canada;(b) enter into contracts for the production or development of materials, equipment or component parts for houses through the pilot-plant stage of production or development and for the testing of such materials, equipment or component parts;(c) undertake publication, and the distribution of publications, coordinating the results of the technical research, investigations and programs referred to in paragraph (a), and the testing referred to in paragraph (b), in such forms as may be most useful to the public or to the building industry;(d) conduct competitions to secure plans, designs and specifications suitable, in its opinion, for housing to be constructed at low cost and purchase the plans or otherwise compensate persons taking part in the competitions;(e) make available or cause to be made available, in such manner as it deems advisable or in cooperation with any other department or agency of the Government of Canada, with the government of any province or with any university, educational institution or person, any training program or educational facility that, in its opinion, will assist in the construction or designing of family housing units, in land planning or community planning, in the management or operation of housing projects or in the formulation and implementation of housing policy;(f) enter into a contract with a manufacturer of plumbing or heating equipment or other component parts of houses for the experimental production of the equipment or component parts in accordance with standardized designs that, in the opinion of the Corporation, may be manufactured or produced at low cost; (g) construct housing units for experimental purposes on land owned or to be acquired by the Corporation for the purpose; (h) make arrangements with a province or a municipality, with the approval of the government of the province in which that municipality is situated, to conduct special studies relating to the condition of urban areas, to means of improving housing or to the need for additional housing or urban redevelopment; (i) undertake or cause to be undertaken projects of an experimental or developmental nature that may assist the Corporation in the formulation and implementation of a housing policy designed to meet the needs of the various communities in Canada; and (j) carry out research and planning and provide services and information that relate to the financing of housing, housing affordability and choice, living environments or community planning, or that are intended to contribute to the well-being of the housing sector in the national economy.
Approval required	(2) The powers of the Corporation under paragraphs (1)(g) and (i) may be exercised only with the approval of the Governor in Council.
Underwriting sales	(3) The Corporation may, with the approval of the Governor in Council, enter into a contract with a manufacturer referred to in paragraph (1)(f) to underwrite the sale, at such price as may be agreed on and specified in the contract, of the equipment or component parts referred to in that paragraph, manufactured or produced for installation or use in homes, if the manufacturer manufactures or produces the equipment or component parts in such volume as may be agreed on and specified in the contract.
Contracts for sale and distribution	(4) The Corporation may, with the approval of the Governor in Council, enter into contracts with the manufacturer referred to in subsection (3) or any other person for the sale or distribution, in such manner as it may deem advisable, of the equipment or component parts referred to in that subsection.
Limitation	(5) The maximum contingent liability of the Corporation under contracts entered into under subsection (3) shall not at any time exceed ten million dollars, and any amounts required to be paid by the terms of those contracts may be paid under section 29 of the Financial Administration Act.R.S., 1985, c. N-11, s. 75; 1999, c. 27, s. 11.