Most people want to get their income taxes done and over with – they don’t see it as an opportunity. The cannabis community is no exception. An accountant may report to the CRA, but if you hire them, they are then also working for you. Regardless, potheads tend to proceed with caution – approaching only when necessary as opposed to proactively. That is crap. You owe it to yourself to take full advantage of your income tax return potential. If you don’t, the CRA will keep the money that you are entitled to anyway. So this year, let’s get you back every dollar that you deserve! Set your intention right now by making a plan and preparing for the year ahead.
A few things…
Before we begin, it’s important that we establish a few parameters:
- Every situation is unique and as such, these tips don’t apply to everyone.
- These suggestions and tips are meant to apply to your 2020 income taxes, although, some might apply to 2019. However, last year’s cards are laid. If you happen to have a few aces in your hand, let’s hope these tips help you spot them. But if not, don’t fret because ultimately, this is about setting you up for next year.
Stoner Income Tax Claim Option #1 – Claim your weed
According to the CRA, you can claim “the amounts paid for cannabis, cannabis oil, cannabis plant seeds, or cannabis products purchased for medical purposes from a holder of a license for sale (as defined in subsection 264(1) of the Cannabis Regulations). The patient must be a holder of a medical document (as defined in subsection 264(1) of the Cannabis Regulations). The Cannabis Regulations require that the patient be registered as a client of the holder of a license for sale and require the patient to make their purchases from the holder they are registered with.”
There are a few golden nuggets here because the language allows for a reasonable amount of variety, including cannabis in all forms. Think about all the things you spend money on that relate to your medical cannabis use; you can get money back on all of it! All the definitions in subsection 264(1) are beautifully vague, making it easier to make.
So, figure out how this applies to you right now. Consider the following:
- Do you have paperwork that defends your medical cannabis use?
- What can be included in your claim? What do you open your wallet for that relates to your medical cannabis use?
- What dispensaries do you go to? Do you buy products there that you can’t get anywhere else? Can you defend your purchases?
Stoner Income Tax Claim Option #2 – Donate to Charity
Making a donation is a killer way to boost up your tax return and cash isn’t your only option; your stuff, or “personal use property and inventory” is up for grabs too. Things like jewelry, stamps, coins, antiques and basically anything that you could sell for a capital gain or loss are considered to be capital property. You can claim it, as long as that charity writes you a receipt for the fair market value. Not only that, B.C. has sweetened the deal with additional credit, the First Time Donor’s Super Credit.
First Time Donor’s Super Credit
When it came to supporting charity, B.C. was looking cheap. So, the province created a little incentive. Basically, if you haven’t claimed any donations since 2007, you are eligible for the First Time Donor’s Super Credit. Your donation credit will literally be totaled a second time and that credit gets added to your tax return. Plus, you don’t have to give a lot to get money back and even $20 counts. You get an extra 25% back up to $1000.
Here’s what this looks like:
A professional glassblower wants to support a fundraiser auction for their favorite charity, so they donate their latest piece of work. Normally, they would price it at $500, so the charity gave them a receipt for that amount. This is the first time that they have ever claimed a registered charitable donation on their income tax filing.
The first $200 of charitable donations gets you $40.12 back.
Federal – $200 x 15% = $30
B.C. – $200 x 5.06% = $10.12
Charitable donations claimed in excess of $200, brings in $131.10.
Federal – $300 x 29% = $87
B.C. – $300 x 14.70% = $44.10
Additionally, you get the First-Time Donor’s Super Credit: $500 x 25% = $125
Instead of conducting a regular sale, that glass blower was able to support a cause to their maximum benefit and receive $296.22 for doing so.
Key to Success – Make a plan
Having a plan for the year ahead makes everything so much easier, and that means more money. So, here is what you need to set up:
Get an accordion file from the dollar stores to be your 2020 tax brain center – this will house everything related to this coming year’s income taxes.
- Mark one section as medical documents and then fill it up right away. Don’t wait to get your information together. If your paperwork is used too often to store in this folder, make a copy and leave it there. Come tax time, you will be very grateful that you don’t have to hunt for anything.
- Designate two sections for receipt data entry. One will be for receipts you have logged, the other will be for ones you haven’t.
Remember that you need to be able to defend these claims and every piece of paper you have helps you do that. However, a giant envelope full of paper is just not feasible to file. Plus, you have to keep a record as they might come back and ask for it. So, make it easy for yourself:
- Consider creating a cloud folder for scanned copies of your receipts. Medical documents and other relatable information could also live here.
- Start a spreadsheet to record each receipt and enter the data as you get it. This is going to save you so much time and energy; plus, It’s interesting to watch throughout the year.
On your spreadsheet record:
- the date you bought it.
- where you got it.
- what the item is
- the amount you paid
Now you have everything set up for the approaching year! You know what you plan to claim, and are saving the receipts from each purchase; not only that, you have a designated spot to store each of them online, as well as physically.
With a bit of preparation, you can maximize your tax return and ultimately, your life.
References and information are taken from the CRA website
Details of Medical Expenses
How to claim medical expenses