Dear Herb: Can medical cannabis be claimed as a medical expense for tax purposes?
Herb puts on his green eyeshades to answer a question about tax accounting and cannabis
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Hey there, time traveller!
This article was published 18/07/2018 (1660 days ago), so information in it may no longer be current.
Dear Herb: My elderly mother has started to use legal CBD products for chronic pain. These products are pricey and she is low income.
Is she able to claim her receipts as a health benefit on her income tax as she does for other health-related products? Thank you for your ongoing excellent information! — Writing Off Mom’s Medication
Dear Writing Off: Yes, your mother can indeed claim cannabis for medical purposes as an eligible medical expense when she files her annual tax return with the Canada Revenue Agency, but only if she’s buying that cannabis from a government-licensed producer in accordance with the legal medical cannabis regulations.
You can even find medical marijuana (or medical marihuana, in the CRA’s language) on this official list of claimable medical expenses. It covers cannabis or cannabis oil, as well as plants or seeds if she’s legally cultivating her own.
Canadians have actually been able to claim legal medical marijuana for tax exemption for at least the last 10 years, according to Philippe Lucas, a vice-president at licensed cannabis producer Tilray, who also chairs the medical board at the cannabis industry group Cannabis Council of Canada.
"It makes it clear that this is an allowable medical expense," he said.
When it comes time for your mom to file her taxes, she should add up the total paid for medical cannabis during the tax year in question, add that sum to any other medical expenses, and then find out if that total surpasses the CRA’s threshold for deducting medical expenses. (In short, she can claim the total amount of her medical expenses minus either three per cent of her net income or $2,268, whichever is lower. Note that the $2,268 figure is for the 2017 tax year, and could be different for 2018.)
Since your mother has a low income, it’s likely she’ll be able to write off more of her total medical expenses, especially if she’s spending a lot on medical cannabis.
"Medical cannabis patients, on average, spend about nine dollars a day, and so the typical patient cost — although there’s a wide range — will be about $3,000 a year, so it’s not an insignificant amount," said Lucas.
"So I think that there’s a high percentage of these patients who will will qualify to get those expenses back in terms of taxation."
Still, Lucas said requiring medical cannabis users to seek tax relief after the fact is not ideal.
"Of course, a much better, more logical, more compassionate scenario would be to have medical cannabis zero-rated so that it’s not taxed at all at any of the levels of government, provincial or federal. And that’s something that myself and other patient advocates have been pushing for for well over ten years."
Like any other medical expense that’s eligible for a tax write-off, your mom doesn’t have to actually send the CRA the receipts for her legal medical cannabis when she files her taxes, but she should keep them for her records in case the taxman wants to see them later. She should also hang onto a copy of her doctor’s medical authorization allowing her to use medical cannabis in the first place.
Finally, if your mother is having trouble affording legal medical cannabis, she might want to ask her producer whether they have a compassionate pricing program. Some licensed producers will offer a discount on their products for low-income clients — if so, they’ll probably ask to see your mom’s most recent CRA notice of assessment as proof of income.
I hope this helps your mom find some tax relief on top of the pain relief.
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