Principal Issues: Whether medical marijuana and related services qualify as eligible medical expenses for purposes of the medical expense tax credit.
Position: Question of fact.
Reasons: The medical marijuana would have to meet the conditions specified in paragraph 118.2(2)(u) and the services would have to meet the conditions specified in paragraph 118.2(2)(a)
XXXXXXXXXX 2011-040519 J. Gibbons, CGA
September 20, 2011
Dear XXXXXXXXXX :
Re: Medical Marihuana - Medical Expense Tax Credit ("METC")
This is in reply to your letter dated March 10, 2011, concerning whether the cost of medical marihuana and related services qualify as eligible medical expenses for purposes of the medical expense tax credit ("METC") in subsection 118.2(1) of the Income Tax Act (the "Act").
In your letter, you indicated that your client, who provides medical marihuana and related services to patients who hold a legal license signed by a physician, has registered his business with the RCMP, local police and other government agencies.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Also, where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. Nonetheless, we are prepared to offer the following general comments.
Medical expenses which are 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) of 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.
Pursuant to paragraph 118.2(2)(u) of the Act, a patient who is authorized to possess marihuana for medical purposes under the Marihuana Medical Access Regulations (the "MMAR") or section 56 of the Controlled Drugs and Substances Act (the "CDSA") may include the cost of medical marihuana or marihuana seeds as an eligible medical expenses provided that they are purchased from persons specified in that provision (the "supplier"). In this regard, paragraph 118.2(2)(u) of the Act provides that medical marihuana may be purchased by an authorized patient from either Health Canada or a supplier who possesses, on behalf of the patient, a Designated-person Production license to produce marihuana under the MMAR or an exemption for cultivation or production under section 56 of the CDSA. The cost of marihuana seeds, on the other hand, may only be purchased from Health Canada in order to be eligible under this provision.
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, while a "medical service" means a service relating to the diagnosis, treatment or prevention of disease performed by a medical practitioner acting within the scope of his or her professional training. A list of authorized medical practitioners by province is listed on our website at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/ampp-eng.html.
Based on the above, the cost of medical marihuana purchased by a patient from your client appears to qualify as an eligible medical expense for purposes of the METC if the requirements of paragraph 118.2(2)(u) of the Act, as described above, are met.
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.
We trust these comments will be of assistance.
Yours truly,
G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch