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How to Claim Medical Cannabis Expenses on Your Tax Return

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June 27, 2018 9:00 AM

How-to-Claim-Medical-Cannabis-Expenses-on-Your-Tax-Return-compressorYou’ve probably heard by now that healthcare insurance providers will begin allowing patients to claim medical marijuana under their benefit plans. But did you know that current patients have the ability to claim it on their tax returns if private insurance won’t cover it? 

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The 2017 tax year might be done, but keep reading to learn how to claim this expense on your 2018 return.

Who Qualifies?

In 2015, the Canada Revenue Agency deemed medical cannabis an allowable medical expense for patients. It is considered a prescription drug, which means patients can claim it on their tax returns. The Income Tax Act recognizes that amounts paid for this medication are eligible on returns. For patients, these announcements are welcome news. 

It’s important to note that this authorization must be received from an authorized doctor or medical practitioner, and it must be purchased from a licensed producer, not a dispensary. Medical cannabis must be purchased in accordance with the Access to Cannabis for Medical Purposes Regulations and section 56 of the Controlled Drug and Substances Act

If you’re looking to make the claim next year, you’re likely already aware that you have to purchase this cannabis from a licensed producer, but you can always check Health Canada’s website to confirm. Licensed producers are required to issue receipts to patients, so be sure to hang onto those copies—they’ll come in handy next tax season.

What’s Eligible?

The claim itself includes the amount paid for fresh or dried cannabis, cannabis oils, and cannabis seeds and plants obtained from licensed producers. 

At this time, only the cannabis itself is considered eligible, while costs related to outside parts, items, and materials aren’t. This means that accessories, such as lights, storage, pipes, capsule fillers, as well as any growing items and related materials, cannot be added to your claim. 

As mentioned before, always ensure you’re keeping all your receipts from your licensed producer, whether they’re hard copies or electronic versions. If you still have questions, you can get more information about medical marijuana from these five places.

How Do Deductions Work?

Access to medical marijuana is improving, but cost is still a huge issue. Patients using medical marijuana pay for a costly treatment. Industry experts provide these figures as the best statistic to compare pricing: If a patient consumes one gram of cannabis a day, at $10.00 a gram, they’ll spend $3,650.00 a year on this medication. While dosages and product costs vary, the average cost is considered expensive.

The amount each person can claim varies on dosage and product type, but most taxpayers reach the necessary threshold. Deductions total 15% of your total medical expenses, less 3% of your net income, up to a maximum amount of $2,180. The threshold can be higher though, depending on how much you make and the amount of your medical expenses claimed.

Medical marijuana is claimed under line 330 of your personal tax return. It’s added to the total of other allowable medical expenses you plan to claim on your T1 Income and Tax Benefit Return form. Your total medical expenses include anything medical related, whether that applies to dental expenses or other prescriptions. Expenses can be calculated by any 12-month period ending in the current tax year.

As legalization nears, more health insurance companies are expected to offer medical cannabis coverage within their medical plans. For now, the ability to claim it is a huge benefit for users. For any questions about medical marijuana, speak to the doctors and nurse practitioners at Aleafia Health.


Topics: Medical Cannabis

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