Medical Cannabis & Your Taxes

The Canada Revenue Agency (CRA) permits the inclusion of medical cannabis expenses as part of the Medical Expense Tax Credit (METC) on your federal income tax return. This means that, similar to other medical expenses, costs associated with medical cannabis can be claimed to potentially reduce your taxable income.

Who Qualifies?

To be eligible to claim medical cannabis expenses:

  • You must possess a valid medical document (as defined in subsection 264(1) of the Cannabis Regulations) from an authorized healthcare practitioner.
  • Purchases must be made for medical purposes from a holder of a license for sale (as defined in subsection 264(1) of the Cannabis Regulations).
  • The patient must be registered as a client of the licensed seller and make purchases exclusively from the seller with whom they are registered.

Eligible and Ineligible Expenses

Eligible medical cannabis expenses include amounts paid for:

  • Cannabis
  • Cannabis oil
  • Cannabis plant seeds
  • Other cannabis products purchased for medical purposes from a licensed seller

It’s important to note that if you are authorized to produce cannabis for your own medical purposes, the costs associated with growing and producing cannabis—such as pots, soil, nutrients, and lights—are not eligible medical expenses. However, the cost of cannabis plant seeds remains an eligible expense.

Calculating Your Claim

The amount you can claim for your medical expenses is the total expenses you paid minus the lesser of:

  • 3% of your net income, or
  • $2,759 (for the 2024 tax year)

Additionally, only expenses that were not reimbursed by provincial or private insurance plans are eligible for the METC.

Example Calculation

Suppose your net income for the year is $50,000, and you incurred $2,000 in medical cannabis expenses.

  1. Calculate 3% of your net income:
     0.03 × $50,000 = $1,500
  2. Determine the lesser amount between $2,759 and $1,500:
     The lesser amount is $1,500.
  3. Subtract this lesser amount from your total medical expenses:
     $2,000 (total medical expenses) – $1,500 = $500

Therefore, you can claim $500 as a medical expense on your tax return.

Claiming the METC

You can claim eligible medical expenses on line 33099 or line 33199 of your tax return under Step 5 – Federal tax:

  • Line 33099: For medical expenses incurred for yourself, your spouse or common-law partner, and your dependent children under 18.
  • Line 33199: For medical expenses incurred for other dependents.

For detailed information on claiming medical expenses, refer to the CRA’s guidelines on eligible medical expenses.

Important Considerations

  • Ensure all claimed expenses are supported by receipts and that purchases were made from a licensed seller.
  • Only out-of-pocket expenses that were not reimbursed by insurance plans are eligible.
  • The METC is a non-refundable tax credit, meaning it can reduce your tax payable but will not result in a refund beyond your tax liability.

By understanding these guidelines, you can effectively incorporate your medical cannabis expenses into your tax planning and potentially reduce your taxable income.

If you are currently using cannabis without a prescription and would like to be assessed for medical cannabis, apply now.