ADOPTION TAX CREDIT
If you adopt a minor child (under the age of 18), you will normally qualify for the adoption tax credit.
The federal credit equals 15% of up to $15,000 of your “eligible adoption expenses”. Each province has a similar credit.
For the federal credit, the expenses must be incurred during the “adoption period”, which is generally the period between your application for the adoption and the later of the time of the final adoption order and when the child begins to reside with you.
If you are married or in a common-law relationship, you and your spouse (partner) can share the credit. Alternatively, one of you can claim the entire credit. If you are single, you will claim the entire credit.
The eligible adoption expenses include:
• fees paid to an adoption agency licensed by a provincial government;
• court costs and legal and administrative expenses related to the adoption order;
• reasonable and necessary travel and living expenses of you and the child (e.g. when you visit the child during the adoption process);
• translation fees;
• mandatory fees paid to a foreign institution (often required for foreign adoptions); and
• mandatory expenses paid in respect of the immigration of the child to Canada.
If the adoption period covers more than one taxation year, you must claim the credit for the year in which the adoption order is finalized.
Once the adoption is complete, your newly adopted child is considered your child for all tax purposes, including various tax credits and the child-care expense deduction.