Tax Filing Basics: Claiming Medical Marijuana After Legalization

With the 2018 legalization of marijuana in Canada, more taxpayers may wish to claim their purchase as a medical expense. That may be possible, but there are rules to follow to pass a CRA audit test. 

Medical marijuana, when obtained with a prescription, can be claimed as a medical expense and that’s been the case for a number of years. But previously, this was also the only way to legally purchase marijuana, making it easier for the CRA to verify whether the claims were in fact eligible medical expenses. Now that cannabis can be purchased legally and anyone can provide a receipt for a marijuana purchase, it’s of increased importance that medical users have their documentation in line.

What should you know to avoid an audit? Here are the requirements, according to the CRA:

• Receipts proving the purchases were made from an authorized source (after October 17, 2018, that means the government)
• A valid medical marijuana prescription issued by a practicing medical doctor (not a naturopath or holistic practitioner)
• For medical marijuana obtained prior to legalization, the same documentation from an approved medical dispensary must be provided

When claiming medical marijuana during tax filing, these claims get rolled into your total medical expense claims, which can total no more than 3% of your net income up to a maximum of $2,302 (for 2018 claims). More tips on claiming eligible medical expenses and digging for commonly missed opportunities are available here.

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