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Medical Tax Credit: Claim the Green to Get the Green

Medical Tax Credit: Claim the Green to Get the Green 1200 900 Coverleaf

Out of pocket medical cannabis costs add up.

Because medical cannabis doesn’t have a drug identification number (DIN) issued by Health Canada, medical cannabis generally isn’t covered by most insurance plans. For those that do – like Manulife and Sun Life – any medical expense that is reimbursed to you cannot be deducted. The real benefit is in having your medical costs covered.

For most of us without insurance coverage, the only financial relief we can expect comes from medical tax credits.

Here’s how it works

The Canada Revenue Agency (CRA) allows Canadians who bought cannabis with a prescription to claim it as a medical tax credit on your federal income taxes. Canadians can claim medical expenses, minus either $2,268 or 3% of your total net income – whichever is less.

For example, John Smith had an income of $40,000 in 2019 and his medical cannabis expenses were $3,000. John’s 3% of total income will come out to $1,200 ($40,000 x 3%). Since this is less than $2,268, John needs to subtract $1,200 from his total eligible medical expenses ($3,000 – $1,200 = $1,800) in medical deductions.

However, this medical expense is a non-refundable federal tax credit. This means the amount you actually get in credits is 15% (federally) on the amount you claim.

So, while John is claiming $1,800, only $270 (15% of $1,800) will be applied to his total tax payable. John won’t see this $270 directly, but it will reduce his overall federal taxes payable.

Which medical expenses are deductible?

The CRA allows Canadians to deduct preventative care expenses, treatments, surgeries, and dental and vision care as a medical tax credit. Prescription medications like medical cannabis are deductible.

Medical expenses eligible include: cannabis, cannabis oil, cannabis plant seeds, and cannabis products purchased for medical purposes.

Keep in mind you can only claim medical cannabis if:

  • You have a valid medical document to support your claim;
  • You are registered as a client with a licenced producer; and
  • You purchase from that licenced company.

This tax credit applies to you, your spouse and any children under the age of 18.

What’s not deductible?

To be clear: you can only claim the amount for dried medical cannabis, cannabis oils, and cannabis seeds and plants. Recreational cannabis and costs related to growing or accessories such as lights, containers, fertilizers, vaporizers, and pipes cannot be claimed.

Claiming the medical expenses deduction

For you to claim your cannabis as a medical expense on your taxes, it needs to be prescribed to you for medical purposes. You need to make sure that you have a prescription from an authorized medical practitioner.

If you can claim medical expenses on line 33099 or line 33199 of your tax return under Step 5 – Federal tax. Your total eligible medical expenses with then need to subtract the lesser of $2,352 or 3% of your net income (see line 23600 of your tax return).

Be diligent in keeping your receipts and prescription records. Come tax filing time these document will be essential in helping you to claim for a tax credit.

How We Can Help?

Looking to make sense of medical cannabis? 

Call Coverleaf today and connect with a health practitioner. Our medical team will assist you in selecting a medical cannabis producer that is right for you. We can even guide you through the steps required to grow your own medical cannabis. If you have questions about medical cannabis, contact Coverleaf at info@coverleaf.ca.