Is medical hashish tax deductible in Canada? We now have the reply
Randi Druzin May 26, 2020
Income tax returns are due on June 1, 2020. If you are a registered medical cannabis patient, your purchases can be claimed as medical expenses.
Like last minute Christmas shopping, tax preparation is an annual source of stress for Canadians, many of whom spend a sea of receipts every April. Due to the COVID-19 pandemic, the registration period has been extended from April 30 to June 1 of this year. The date is different, but the agony is the same.
Millions of Canadians are scratching their heads and trying to figure out what expenses they can claim. That includes hundreds and thousands of medical cannabis patients.
This prompted Leafly to contact MNP, one of the largest accounting and management consultancy firms in Canada. Glenn Fraser, co-leader of the company's cannabis service team, answered some of the questions that cannabis patients asked most frequently.
Leafly: According to the Canadian Revenue Service, if you have a prescription for cannabis (i.e., a medical document), you can change the amounts of cannabis, cannabis oil, plant seeds, or related products that have been purchased for medical purposes to assert. Does this mean that you can request accessories such as evaporators, pipes, etc.?
Glenn Fraser: The short answer is yes. Some additional items that you can claim are edible cannabis and current products. In addition, accessories such as roll paper or wraps, holders, pipes, hookahs, bongs and vaporizers can be used when they are used to consume cannabis for medical purposes.
How much can I claim?
Fraser: You can claim all of your eligible medical expenses minus three percent of your net income or $ 2,352, whichever is less.
Medical expenses are a non-refundable tax credit. Therefore, a claim is only valuable to you if you have to pay a federal or provincial tax with which you can offset it. However, I understand that in certain cases you may be able to claim the reimbursable medical expenses surcharge. What should we know about it?
Fraser: Essentially, the Refundable Medical Expense Supplement (RMES) applies to people with low incomes and high medical costs.
It's a refundable credit of $ 1,248, or 25 percent of your medical expenses, whichever is less. The RMES is reduced by five percent of your net income, which exceeds $ 27,639. If your net income is $ 37,639, the RMES will be reduced by five percent from $ 10,000. That's $ 500.
To be eligible, you must be resident in Canada all year round and at least 18 years of age at the end of the year. You must also have a net employment or self-employment income of at least $ 3,645. In addition, your net income may not exceed $ 52,599.
Note that you cannot claim both the Medical Expense Tax Credit (METC) nonrefundable tax credit and the RMES.
What tips could you give medical cannabis patients when it comes to filing taxes? What information could you find particularly useful?
Fraser: There are some points worth mentioning.
As in all other areas of the tax return, it is always important to keep good records. In order to claim the medical costs described above, you do not need to attach medical file attachments when submitting. However, you should definitely keep all receipts for expenses and any recipes for future review.
You can claim medical expenses for any 12-month period that ended in 2019. This means that you may be able to claim some expenses from 2018 if you haven't already.
In the case of couples, it is generally beneficial for the lower-income spouse to claim medical expenses, as this enables more eligible expenses. Medical expenses for relatives can also be claimed.
Remember that you must be registered with the medical cannabis seller and do your shopping with that seller.
Last but not least, be thorough and accurate because the CRA is pretty thorough when it comes to checking medical expenses.
Randi Druzin is an author and journalist based in Toronto. She has worked in several major media outlets such as the National Post and the CBC and has written for dozens of publications, including the New York Times, Time Magazine, ESPN The Magazine and The Globe and Mail.