2016-0646001M4 Tax relief for the cost of organic food

Principal Issues: Whether there is tax relief to compensate for the added costs of organic foods and natural products.

Position: There are no specific provisions in the Income Tax Act for organic foods and natural products; however, there are other current tax measures to assist individuals.

Reasons: See below.

Author: El-Kadi, Randa
Section: No provision currently exists specifically for these types of expenses

July 20, 2016

XXXXXXXXXX

Dear XXXXXXXXXX:

Your member of Parliament, XXXXXXXXXX, sent me a copy of your correspondence, which I received on April 29, 2016, about tax credits and other measures to offset the costs of organic foods and natural products.

The tax system offers a number of measures providing tax relief and benefits to individuals. These measures recognize that taxpayers may have a disability, above‑average medical expenses, or added costs of raising children or supporting a dependent adult, to list only a few examples. The most common tax measures currently available are:

*     non-refundable tax credits like the basic personal amount and the medical expenses tax credit, which you can find at www.cra.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/300-eng.html and www.cra.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330-331/,respectively;
*     tax deductions like the child care expenses deduction which you can find at www.cra.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214;
*     refundable tax credits like the working income tax benefit and the refundable medical expense supplement for individuals with low income, which you can find at www.cra.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/453-eng.html and www.cra.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/452-eng.html, respectively; and
*     income-tested benefits, like the goods and services tax/harmonized sales tax (GST/HST) credit and the proposed Canada child benefit (CCB), which you can find at www.cra.gc.ca/bnfts/gsthst and www.cra.gc.ca/gncy/bdgt/2016/qa01-eng.html, respectively.

The basic personal amount is available to all individuals filing a tax return to reduce the income tax payable. For the 2015 tax year, the credit was $1,699.

Generally, individuals can only claim the medical expense tax credit for expenses that are directly related to a disability or a medical condition. Expenses that are regularly incurred by individuals without a disability or a medical condition or that are incurred substantially for personal consumption or by choice are generally not eligible. Currently, individuals with celiac disease can claim the incremental costs associated with the purchase of gluten-free products as a medical expense, but a medical practitioner has to confirm that the individual needs such a diet because of the disease. However, there is no provision in the Income Tax Act allowing individuals to claim the cost of organic food as a medical expense.

The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low or modest incomes offset all or part of the GST or HST that they pay.

Budget 2016 proposed the CCB, which will replace the universal child care benefit (UCCB) and the Canada child tax benefit (CCTB). Starting in July 2016, the new CCB will provide a maximum annual benefit of $6,400 per child under the age of 6 and $5,400 per child aged 6 to 17. The benefit will be tax-free and paid monthly to eligible families to help them with the cost of raising their children. Individuals already receiving the UCCB or the CCTB do not have to apply for the new benefit.

Although certain tax measures, like the medical expense tax credit, are intended for a specific purpose, others, like the basic personal amount and income-tested benefits, allow individuals to spend their tax savings or the benefits they receive on things they value the most.

The Canada Revenue Agency administers and enforces the Income Tax Act, while the Department of Finance Canada is responsible for tax policy and changes to provisions of the Act. I am therefore sending a copy of our correspondence to the Honourable Bill Morneau, Minister of Finance, so that he can be made aware of your concerns.

I appreciate the opportunity to respond to your concerns and trust the information I have provided is helpful.

Sincerely,

The Honourable Diane Lebouthillier, P.C., M.P.

c.c.: XXXXXXXXXX

      The Honourable Bill Morneau, P.C., M.P.
      Minister of Finance
      House of Commons
      Ottawa ON  K1A 0L5

Randa El-Kadi
613-670-9054
2016-064600

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