Today might be April 20, but it is best known by many as 4/20, celebrated as the “highest” holiday, for all things marijuana. As we gear up towards filing our 2019 income taxes, it seemed like the best day to also mention how cannabis might impact our taxes.
In the last few years we’ve seen huge change in the industry, with the Cannabis Act coming into force on October 17, 2018, and then the addition of the production and sale of edible cannabis, extracts, and topicals, one year later on October 17, 2019.
As an individual tax filer:
Cannabis use has become a serious part of Canadian medical care, and as such medical cannabis is in some cases considered an allowable medical expense.
According to the CRA’s list of allowable medical expenses, you need to have had a prescription, and you can claim the amounts for cannabis, cannabis oil, plant seeds, or “products purchased for medical purposes”, from a licensed provider.
Like your other medical expenses, you can claim for any period of 12 months, not previous claimed, provided the final month falls within the tax year. For 2019, you can claim your total eligible medical expenses, less $2,397 (or 3% or your net income, whichever is less).
As a business:
Operating a cannabis business is like all other businesses. There are allowable business expenses that would be considered just as they would in any other business in Canada; the product of sale and some of the direct costs, just happen to be, or are used in the use, sale/production of, Marijuana.
Excise taxes apply to those businesses that are directly involved in the cultivating, producing, and/or packaging of cannabis products, and require a cannabis license under the Excise Tax Act. These businesses are required to file a cannabis duty and information return monthly.
GST/HST will also apply to sales and purchases of cannabis and related products, depending upon the province or territory in which the product is purchased.
We’re Here to Support You
If the thought of trying to deal with medical expenses makes you a little unsure…we’re here to help. To make tax season as simple as possible, TurboTax has created solutions that work for all situations and preferences, including:
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No matter your income or complexity of your return, you have an expert in your corner with TurboTax.
Accounting educator, business strategist, and advisor.
Turbo Tax Canada blog editor and writer.
Susan has been an accounting professional for over 20 years and has been working with businesses and individuals and their taxes for the past 13. Education is a passion for Susan, and when not writing or talking about tax for TurboTax Canada, she can be found speaking at events, teaching at Mohawk College, and working with many businesses, bookkeepers and accounting firms as part of her education offerings and her Find Our Bookkeeper™ recruitment program. Susan is known to be approachable but pulls no punches when it comes to the reality of business finance, taxes, and the importance of education.