Frequently Asked Questions: Increasing the Adoption Expense Tax Credit

The Adoption Expense Tax Credit is a 15-per-cent non-refundable tax credit that allows adoptive parents to claim eligible adoption expenses relating to the completed adoption of a child under the age of 18. The credit recognizes the unique costs of adopting a child and may be claimed in the taxation year in which an adoption is finalized.

Adoptive parents may claim the credit on their income tax returns. The credit applies to eligible adoption expenses, including: adoption agency fees, immigration fees, document translation fees, court and legal expenses, mandatory fees paid to a foreign institution, and reasonable travel and living expenses for the child and adoptive parents. Prior to Economic Action Plan 2014, the Adoption Expense Tax Credit provided a tax credit on up to a maximum of $11,774 in expenses per child for 2014.

To provide further tax recognition of adoption-related expenses, Economic Action Plan 2014 increases the maximum amount of the credit to $15,000. This change will apply to adoptions finalized after 2013. Normal indexation will apply to the new maximum amount for taxation years after 2014.

This improvement builds on the Government’s previous action in Economic Action Plan 2013, which extended the period during which expenses are eligible for the Adoption Expense Tax Credit in order to better recognize the costs incurred by adoptive parents prior to being matched with a child, such as fees for a provincially required home study and mandatory adoption courses. As a result of this action, for adoptions finalized after 2012, the adoption period begins at the earlier of:

• the time that an adoptive parent makes an application to register with a provincial ministry responsible for adoption or with an adoption agency licensed by a provincial government; or
• the time that an adoption-related application is made to a Canadian court.

The Harper Government recognizes that families are the building blocks of our society.

The enhancement of the Adoption Expense Tax Credit builds on the Government’s record of targeted tax reductions and other measures that benefit Canadian families and individuals. For example, since 2006 the Government has:

• Increased the flexibility of Employment Insurance (EI) parental benefits to allow parents—including foster parents—to be eligible for EI parental benefits as soon as they have taken the necessary steps to adopt the child in their care.
• Introduced the Child Tax Credit, the Children’s Fitness Tax Credit and the Children’s Arts Tax Credit.
• Introduced the Universal Child Care Benefit, which provides families $100 per month for each child under the age of 6.
• Increased the amount of income that families can earn before the National Child Benefit supplement is fully phased out and before the Canada Child Tax Benefit base benefit begins to be phased out.
• Introduced the Registered Disability Savings Plan, a tax-assisted savings account that helps individuals with severe disabilities—and their families—save for their long-term financial security.
• Enhanced support to caregivers of infirm dependent family members by introducing the new Family Caregiver Tax Credit, and by removing the $10,000 limit on eligible expenses that caregivers can claim under the Medical Expense Tax Credit in respect of a dependent relative.
• Eliminated the “marriage penalty” for one-earner families by increasing the spousal amount to the same level as the basic personal amount.
• Provided further support to students and their families by exempting scholarship income from taxation, introducing the Textbook Tax Credit and making Registered Education Savings Plans more responsive to changing needs.

In total, the Government will have provided almost $160 billion in tax relief for Canadian families and individuals from 2008-09 through 2013–14.