Claiming Adoption-Related Expenses

When can I claim adoption expenses?

You can claim adoption expenses during what’s called the adoption period—which is the time when you start the adoption process until you officially take custody of the child. This period is important because to claim adoption expenses on your income tax return, they must occur during this time.

The CRA defines the beginning of the adoption period as the day you submit your application with an adoption agency or a Canadian court. The period ends on the day the child begins to live with you permanently or after the adoption order is finalized by the province, whichever is later. After this period, expenses can no longer be claimed.

For example, a child often comes home to live with you before an adoption is legally finalized. Say the length of time is 8 months. You would claim the adoption tax credit in the tax year that your adoption was completed.

What are eligible adoption expenses?

The CRA allows you to claim most of the reasonable and mandatory expenses you incur as part of the adoption process. These are eligible expenses. For example, you can deduct the fees from registered provincial or territorial adoption agencies. If you have to travel for your adoption, you may claim the cost of travel-related expenses, including meals and accommodations.

You may also claim court costs, legal fees, and administrative fees, as well as any adoption expenses required by your province or territory.

If you adopt a child from outside of the country, you may deduct mandatory agency fees, travel costs, and immigration fees. Also, all mandatory immigration expenses can be claimed, such as visa application fees and the costs of medical exams or vaccinations. (The keyword here is mandatory!)

What adoption expenses are ineligible to claim?

Expenses that do not fall under the CRA’s list of eligible adoption expenses cannot be claimed on your income tax return. For example, you can only claim reasonable and direct travel costs. If you add a few days to your journey or take an indirect route, you cannot claim these costs as they would be ineligible expenses.

Similarly, you can only claim mandatory immigration expenses, like visa fees. A non-mandatory expense would be the cost of a new outfit for your child’s passport photo.

And, although you can claim most agency fees as adoption expenses, there are some exceptions. For example, if you choose to work with a private adoption agency that is not recognized by your province or territory, you cannot claim its fees as allowable adoption expenses.

Finally, you cannot claim expenses related to raising your adopted child as adoption expenses. In particular, you cannot claim daycare expenses or the cost of toys, furniture, or other items. So, for example, if your child lives with you before the adoption is finalized, you cannot claim the child’s living expenses during this time.

What if I have reimbursed expenses?

If you have been reimbursed by your employer, a private charity, or anyone else for your adoption expenses, you cannot claim these expenses on your income tax return. So you must reduce your eligible expenses by any reimbursements or other forms of assistance that you received.

Are there any limits on adoption expenses?

As of 2020, the maximum claim for each child is $17,131. It’s important to note that unless you have adopted multiple children, both adoptive parents may only claim $17,131 in total. You can split the claim in any way on your income tax returns, but the total must not exceed that amount.

How to file your income tax return

To claim this deduction, add up all of your eligible expenses and input the total on line 31300 of your income tax return.

Remember it is a non-refundable tax credit. While it can offset your tax owed, it alone cannot qualify you for a refund. As a result of this, you may want to apply the adoption expenses to the adoptive parent with the higher income.