Embracing Children Humanitarian Organization

ADOPTION TAX CREDIT
Last update: March 21, 2008

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Federal Budget Proposes Adoption Tax Credit (MARCH 2005)

The budget proposes that a percentage of expenses for the completed adoption of a child under the age of 18 years be deductible from tax payable.

Eligible adoption expenses will include:

Fees paid to an adoption agency licensed by a provincial or territorial government; Court, legal and administrative expenses; Reasonable travel and living expenses for the child and the adoptive parents; Document translation fees; Mandatory fees paid to a foreign institution; Any other reasonable expenses required by a provincial or territorial government or an adoption agency licensed by a provincial or territorial government.

The maximum eligible deduction in respect of any particular adoption will be 16% of the lesser of $10,000 or total expenses. This amount will be indexed for taxation years after 2005. The credit may be split between two adoptive parents, but the combined expenses claimed for an adopted child cannot exceed $10,000.

To be eligible for the credit, a parent must submit proof of an adoption in the form of a Canadian or foreign adoption order, or otherwise demonstrate that all of the legal requirements of the jurisdiction in which the parent resides have been met in completing the adoption.

Parents will be able to claim the credit only for the taxation year in which an adoption is finalized, and will be able to include expenses incurred from the earlier of the time the child’s adoption file is opened with the provincial or territorial ministry responsible for adoption or a licensed adoption agency, and the time, if any, that an application related to an adoption is made to a Canadian court.