18 October 2018 External T.I. 2017-0700781E5 - 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: Is the cost for the following considered as eligible costs under Medical expense tax credit (i) the purchase of marihuana; (ii) the annual [block fee] cost of monitoring, counselling and assistance for the use of the marihuana, and (iii) the purchase of a vaporizer.

Position: (i) Yes, if they meet the requirements of 118.2(2)(u) or (v); (ii) Question of fact, but likely no based on the facts provided; (iii) Question of fact but likely no.

Reasons: The legislation and previous positions.

XXXXXXXXXX					2017-070078
						Eric Wirag, CPA, CMA
October 18, 2018

Dear XXXXXXXXXX:

Re: Medical Marihuana

This is in reply to your letter of April 28, 2017, regarding the eligibility of certain costs related to the purchase of medical marihuana for purposes of the medical expense tax credit (METC). More specifically, you are asking if the cost of the medical marihuana, annual block fees for services including monitoring, counselling and assistance provided by a holistic health centre, and the cost of a vaporizer to use the medical marihuana would be eligible expenditures for purposes of the METC. You state that the items were purchased by an individual who was provided a medical license to use the medical marihuana. We apologize for the delay in our response.

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 particular transactions 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 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

Medical expenses eligible for the METC are limited to those described in subsection 118.2(2) of the Act. If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2), 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.

Medical marihuana

Pursuant to paragraph 118.2(2)(u) of the Act, if a patient is authorized to possess marihuana, marihuana plants or seeds, cannabis or cannabis oil for their own medical use under the Access to Cannabis for Medical Purposes Regulations (ACMPR) or section 56 of the Controlled Drugs and Substances Act (CDSA), the cost of marihuana, marihuana plants or seeds, cannabis or cannabis oil purchased in accordance with the ACMPR or section 56 of the CDSA qualifies as a medical expense for purposes of the METC. The marihuana, marihuana plants or seeds, cannabis or cannabis oil must have been purchased on or after August 24, 2016 to qualify.

Where medical marihuana is purchased after June 6, 2013 and before August 24, 2016, the cost may qualify as a medical expense for METC purposes under paragraph 118.2(2)(v) of the Act. If a patient is authorized to possess marihuana for medical purposes under the Marihuana for Medical Purposes Regulations (MMPR) or section 56 of the CDSA, the cost of the medical marihuana purchased during this period may qualify if it was purchased from:

• a licensed producer (as defined in subsection 1(1) of the MMPR), in accordance with a medical document (as defined in subsection 1(1) of the MMPR);
• a health care practitioner (as defined in subsection 1(1) of the MMPR) in the course of treatment for a medical condition;
• a hospital, under subsection 65(2.1) of the Narcotics Control Regulations, or
• an individual who possesses an exemption for cultivation or production under section 56 of the CDSA.

Block fees

With regard to any related medical services provided in conjunction with the supply of marihuana, paragraph 118.2(2)(a) of 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. A 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 purposes of the medical expense tax credit can be found on the Government of Canada website www.canada.ca.

Concerning any services that may be provided in relation to the supply of marihuana, such services would have to meet the requirements of paragraph 118.2(2)(a) in order to qualify as medical services provided by an authorized medical practitioner, as described above. As explained in paragraph 1.28 of Income Tax Folio S1-F1-C1, Medical Expense Tax Credit available at https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-1-individuals/folio-1-health-medical/income-tax-folio-s1-f1-c1-medical-expense-tax-... payments made to a corporation, partnership, society or association for medical services rendered by their employees or partners are eligible medical expenses only where the person providing the medical services is a medical practitioner.

Marihuana vaporizer

Under paragraph 118.2(2)(m) of the Act, an amount paid for a device or equipment may also qualify as an eligible medical expense if certain conditions are met. Generally, to qualify, the device or equipment must be prescribed by a medical practitioner, must be included in the list of qualifying devices or equipment described in section 5700 of the Income Tax Regulations (the “Regulations”) and must meet such conditions as are prescribed by the Regulations as to its use or the reason for its acquisition.

A description of the devices and equipment that would qualify for the METC can be found beginning at paragraph 1.118 of folio S1-F1-C1. The cost of a vaporizer for medical marihuana and associated equipment is not included in this list and therefore would not be an eligible medical expense for purposes of 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