Tax Credits for Families Created through Adoption

Jean Lucas

As February comes to an end and we start finding tax slips in the mail and our inboxes, it’s important for prospective adoptive families and those who recently adopted to know about Adoption Tax Credits available to help offset costs involved in the adoption process.

If you adopt a child under the age of 18, Canada Revenue Agency (CRA) allows you to claim up to $15,453 in eligible adoption expenses on your income tax return (line 313). In addition to the federal tax credit, residents of Alberta may also be entitled to claim an additional $12,619 of eligible expenses with the provincial tax credit (on line 5833).

The tax savings provides relief for families in the year their adoption is finalized, with maximum federal tax savings of $2,317 (at 15% tax rate) and provincial tax savings of $1,261 (at 10%) - for a total max of $3578.

Remember to keep your records and receipts from the start. CRA recognizes that the adoption period usually covers more than one year, but eligible expenses for the entire adoption period must be claimed in the year the adoption is finalized (when adoption order is issued or the child first begins to live with you, whichever date is later).

Eligible adoption expenses include fees paid to adoption agencies and foreign institutions, court and legal costs, and document translation fees. Parents may also claim travel and living expenses related to the adoption and mandatory expenses for an adopted child’s immigration. For expenses to qualify, they must be incurred during the adoption period, from time of application to finalization.

For more information about the Adoption Tax Credit, visit Canada Revenue Agency’s website at: www.cra.gc.ca.