How to claim medical cannabis on your own tax return?
Medical cannabis products are purchased directly from legitimate manufacturers but they cost a lot, sometimes hundreds of dollars monthly.Medical cannabis does not have a drug identification number (DIN) which is a mandatory mark of approval provided by Health Canada. As a result, it is usually not protected by the health insurance plans of third parties.However, there are some insurance companies that cover some costs. In 2018, Sun Life, a powerful insurance company, began to provide optional coverage for medical cannabis. Another insurance company named Manulife introduced optional coverage in collaboration with Shoppers Drug Market to engaged individuals and groups. While plenty of employers provide some type of coverage via their employee group benefit plans, the only financial aid for consumers is brought by the taxman. The Canada Revenue Agency (CRA) enables cannabis which is bought with a prescription to be considered as a “medical expense” removed from your federal income taxes. The following details the process.
Who is qualified to claim medical cannabis?
Anyone who has a prescription from a certified medical professional to buy medical cannabis from an authorized producer can claim it. Producers are obligated by law to give out receipts to consumers, which they will need to show during tax filing. So keep your written copies or make sure you know how to access them online. In the event of an audit or review, it is suggested by the CRA that you hold on to your receipts for at least six years.
What can you claim?
You can claim the amount that you pay for cannabis oil, cannabis seeds, cannabis plants and from fresh or dried cannabis that is acquired from a licensed producer. You can only claim costs from products and not those associated with accessories such as capsules.
How do you file?
By checking your receipts, you can find out the total amount you paid to obtain medical cannabis. Add this amount to any other permitted medical expenses that you want to claim on your Income Tax as well as Benefit Return. Give your receipts to a professional if they file your income tax returns. You will be required to include your medical expenses in the section of credits and deductions if you proceed with the tax software in order to complete your tax return. Medical expenses are generally calculated by any 12-month period which ends in the current tax year. Expenses can only be claimed once during this time period.
What is deducted?
The total amount of your legitimate medical expenses minus 3% of your net income which is roughly $2,302, is deducted. The criteria can be considerably high, according to your income and amount of medical expenses that are claimed.
The tax laws and policies differ across every province and territory. However, you are only required to submit one return via the CRA. Apart from Quebec, each province and territory allows the federal government to gather income taxes and manage the returns. For Quebec residents, both provincial income tax return and federal return have to be filed with Revenue Quebec and the CRA respectively.