Line 315 - Gifts of medicine
Note
For gifts of medicine made after March 21, 2017, the additional
deduction for gifts of medicine is eliminated. You can carry
forward unused deductions in the five following tax years after the
gift has been made. If you are reporting nil net income or a loss
for the year, you cannot claim the deduction to create or increase
a loss.
The end of the additional deduction does not affect the general income tax treatment of donations, including gifts of medicine, that corporations make to registered charities.
Complete Part 5 of Schedule 2 if, during the tax year, one of the following occurred:
-
you made a gift of medicine before March 22, 2017
-
you are applying an additional deduction available for carryforward
-
your gifts of medicine were transferred from a predecessor corporation after amalgamation, or from a subsidiary corporation after wind-up
For eligible gifts of medicine made in the year and before March 22, 2017, you can claim the additional deduction from net income if the gift was made to a registered charity for charitable activities carried on outside Canada. An eligible gift was a gift of medicine that was part of the corporation's inventory immediately before being donated, that qualified as a drug within the meaning of the Food and Drugs Act, and generally met the requirements of that Act, but was not a food, cosmetic, or device (as those terms are used in that Act), a natural health product (as defined in the Natural Health Products Regulations) or a veterinary drug.
The registered charity had to be one that, in the opinion of the minister for International Development, met conditions prescribed by regulation. (If no such minister had been appointed, the opinion of the minister of Foreign Affairs was required.) Also, the eligible gift of medicine had to be available for the donee's use at least six months before its expiration date as defined in the Food and Drug Regulations (Food and Drugs Act).
The maximum deduction you can claim is the lesser of:
-
the cost to the corporation of the gifts of medicine
-
50% of the amount, if any, by which the proceeds of disposition of the donated medicine exceeded the cost to the corporation of the medicine
multiplied by
-
the eligible amount of the gift divided by the proceeds of disposition for the gift
If the amount of the gifts of medicine minus any other donations you claim is more than your net income for the year, you can carry the excess forward for up to five years.
Note
On line 655 of Schedule 2, enter the amount of any other
adjustments (these adjustments would apply to corporations that
have undergone an acquisition of control and whose donations
carryforward amounts that accrued before the acquisition of control
are not deductible after the acquisition of control).
Gifts of medicine are deducted in the order they were made (first-in, first-out rule).
On line 315, enter the amount for gifts of medicine you want to apply against your current year taxable income.
Complete Part 6 of Schedule 2 to establish the continuity of the gifts of medicine.
References
Paragraph 110.1(1)(a.1)
Subsections 110.1(8) and 110.1(9)
Regulation 3505
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