Claiming A Credit for Adoption Expenses

Key Takeaways

Adoption expenses can be claimed as a non-refundable credit.

Eligible adoption expenses must be reduced by any reimbursements or any other form of assistance received.

Eligible adoption expenses can only be claimed during the adoption period.

There is a maximum yearly deductible amount specified by the CRA.

When embarking on the journey of adoption, prospective parents encounter various costs associated with the adoption process. Fortunately, the Canadian tax system recognizes these expenses and allows adoptive parents to claim a portion of eligible expenses as a non-refundable credit on their income tax return. Eligible adoption expenses are expenses that are related to the adoption of a child who is under 18 years of age at the time that the adoption order is issued or recognized by a government in Canada. A non-refundable credit is a type of tax credit that reduces the amount of income tax you owe. Unlike a refundable credit, which can result in a tax refund even if you have no tax liability, a non-refundable credit only reduces your tax liability up to the amount you owe.

Eligible adoption expenses are (source: Canada.ca):

Fees paid to an adoption agency licensed by a provincial or territorial government

Court costs and legal and administrative expenses related to an adoption order for the child

Reasonable and necessary travel and living expenses of the child and the adoptive parents.

Document translation fees

Mandatory fees paid to a foreign institution

Mandatory expenses paid for the child's immigration

Any other reasonable expenses related to the adoption required by a provincial or territorial government or an adoption agency licensed by a provincial or territorial government.

Adoption expenses can only be claimed during the adoption period which commences at the earliest of any of the following:

When an application is made by an adoption agency approved by provincial/territorial governments, or a provincial/territorial body responsible for the registration of adoption; or

When an adoption application is made to a Canadian court.

Adoption period ends at the earliest of any of the following:

When the adoption order for the child is issued or recognized by any government or territory in Canada; or

When the adoption order for the child is issued or recognized by any government or territory in Canada; or

The adoptive parents can split the adoption expenses as long as the total combined claim for eligible expenses for each child is not more than the amount before the split. The adoption expenses that can be claimed by both parents is the lesser of the following:

Expenses incurred for the entire adoption period, or

Maximum annual allowable amount set by the CRA in the tax year that the adoption period ends. The prevalent rates are available at the Canada Revenue Agency website (Canada.ca) under “Adoption Expenses”.

Eligible adoption expenses can be claimed on Line 31300 of your return. If you are entitled to the corresponding Newfoundland and Labrador, Ontario, Manitoba, Alberta, British Columbia, or Yukon provincial or territorial non-refundable tax credit, the amount will be claimed on Line 58330 of your provincial or territorial Form 428.

For further information please contact Taxtron Support at 416-491-0333 or visit www.taxtron.ca