28 March 2019 External T.I. 2018-0777751E5 - Medical marihuana

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether the cost of goods and services related to growing and producing medical marihuana are considered eligible medical expenses for the purpose of the medical expense tax credit?

Position: Services - Question of fact, but likely no; cost of related goods, no.

Reasons: See response.

XXXXXXXXXX							2018-077775
C. Underhill
March 28, 2019

Dear XXXXXXXXXX:

Re: Medical marihuana

We are writing in response to your letter in which you asked whether the costs of goods and services related to growing and producing medical marihuana are considered eligible medical expenses for the purpose of the medical expense tax credit (“METC”).

You have specifically asked if the costs and services related to the growth and production of medical marihuana, such as pots, soil, nutrients, lights, nitrogen, grow boxes, and the cost of electricity are considered to be eligible medical expenses for the purpose of the METC. You have confirmed that you hold a medical licence to possess and grow medical marihuana for your own personal use.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (the “Act”) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of a particular transaction proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R8, Advance Income Tax Rulings and Technical Interpretations.

The METC is a 15% non-refundable tax credit that provides tax relief for individuals who have incurred significant medical expenses for themselves or certain dependants. The Canada Revenue Agency’s general views regarding the METC are contained in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the “Folio”). You can access the Folio online by going to Canada.ca and typing the document title into the search box in the top right-hand corner of the screen.

Medical expenses eligible for the METC are limited to those described in the Act. If a particular expenditure is not described as an eligible medical expense in the Act, or if the conditions under which the expenditure would qualify are not met, the expenditure does not qualify for purposes of the METC, even though the expenditure may have been incurred for medical reasons.

Services

The Act provides that amounts paid by an individual to a medical practitioner, a dentist or a nurse (a “medical practitioner”) for medical services are qualifying medical expenses for the METC. The medical practitioner must be authorized to practice their particular profession according to the laws of the jurisdiction in which the service is rendered. Medical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training. The listing of Authorized medical practitioners for the METC can be found online at Canada.ca.

Regarding any services that may be provided in relation to the supply, growth and production of medical marihuana, such services would have to qualify as medical services provided by an authorized medical practitioner, as described above. As explained in paragraph 1.28 of the Folio, payments made to corporations, partnerships, societies, and associations for services rendered by their employees or partners are eligible medical expenses only where the person providing the service is a medical practitioner and the services provided are medical services.

Cost of medical marihuana, marihuana plants or seeds, cannabis or cannabis oil

If a patient is authorized to possess marihuana, marihuana plants or seeds, cannabis or cannabis oil (“products”) for their own medical use and the supply is purchased in accordance with the regulations for accessing these products for medical purposes, the cost of these products would qualify as a medical expense for the METC. The products must have been purchased on or after August 24, 2016 to qualify.

Related costs to grow and produce medical marihuana

A description of the devices and equipment that would qualify for the METC can be found in paragraphs 1.118 and 1.122 of the Folio. The cost of pots, soil, nutrients, lights, nitrogen, and grow boxes to grow and produce medical marihuana are not described in these paragraphs since these items are not provided for in the Act. Therefore, these costs would not be an eligible medical expense for purposes of the METC. Since such costs are not listed in the Act and do not qualify for the METC, the cost of electricity to operate the equipment and devices to grow and produce medical marihuana would also not qualify for the METC.

We trust our comments will be of assistance to you.

Yours truly,

Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch