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Is medical cannabis tax-deductible in Canada? We have the answer

May 26, 2020

Like last-minute Christmas shopping, preparing the taxes is an annual source of stress for Canadians, many of whom spend every April awash in a sea of receipts. The filing deadline was extended from April 30th to June 1st this year in response to the COVID-19 pandemic. The date is different, but the anguish is the same.

Right now, millions of Canadians are scratching their heads, trying to figure out which expenses they can claim. That includes hundreds and thousands of medical cannabis patients.

That prompted Leafly to reach out to MNP, one of the largest chartered accountancy and business advisory firms in Canada. Glenn Fraser, co-leader of the firm’s cannabis services team, answered some of the questions most frequently asked by cannabis patients.

Leafly: According to the Canadian Revenue Agency, if you have a prescription for cannabis (i.e. a medical document) you can claim the amounts for cannabis, cannabis oil, plant seeds, or related products purchased for medical purposes. Does this mean you can claim accessories such as vaporizers, pipes, etc?

Glenn Fraser: The short answer is yes. Some additional items that you can claim include edible cannabis and topicals. In addition, accessories such as rolling papers or wraps, holders, pipes, water pipes, bongs and vaporizers can be eligible if they are used to consume cannabis for medical purposes.

How much can I claim? 

Fraser: You can claim your total eligible medical expenses, minus three percent of your net income or $2,352, whichever amount is less.

Medical expenses are a non-refundable tax credit, so a claim is only valuable to you if you have federal or provincial tax payable against which to offset it. However, I understand that, in certain cases, you may be able to claim the refundable medical expense supplement. What should we know about that?

Fraser: Essentially, the Refundable Medical Expense Supplement (RMES) is applicable to individuals with low income and high medical expenses.

It is a refundable credit of $1,248 or 25 percent of your medical expenses, whichever amount is less. The RMES is reduced by five percent of your net income that exceeds $27,639. So, if your net income is $37,639, the RMES is reduced by five percent of $10,000. That amounts to $500.

To be eligible, you must be a Canadian resident throughout the year and be at least 18 years old at the end of the year. You must also have a net employment or self-employment income of at least $3,645. Also, your net income cannot be higher than $52,599.

Keep in mind, you cannot claim both the non-refundable tax credit, known as the Medical Expense Tax Credit (METC), and the RMES.

What tips could you offer medical cannabis patients when it comes to filing taxes? What information might they find especially useful?

Fraser: There are several points worth noting.

As with all other areas of tax filing, keeping good records is always important. To claim the medical expense described above, you don’t have to include attachments of medical records when you file. However, you should definitely keep all receipts for the expenses and any prescriptions in case of a future audit.

Keep in mind: You must be registered with a Licensed Producer of medical cannabis to claim the medical deductions.

You can claim medical expenses for any 12 month period that ended in 2019. That means you may be able to claim some expenses from 2018 if you haven’t already done so.

In the case of couples, it is generally beneficial to have the lower-income spouse claim medical expenses because that allows for more eligible expenses. Medical expenses for dependents can also be claimed.

Keep in mind, you must be registered with the seller of medical cannabis and making your purchases from that seller.

Last but not least, be thorough and accurate because the CRA is quite thorough when it comes to checking medical expenses.

Randi Druzin's Bio Image
Randi Druzin

Randi Druzin is an author and journalist in Toronto. She has worked at several major media outlets, including the National Post and the CBC, and has written for dozens of publications, such as The New York Times, Time magazine, ESPN The Magazine, and The Globe and Mail.

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