To help offset the cost of adopting a child, the Canada Revenue Agency allows you to deduct your eligible expenses for each child under age 18 that you adopt up to a maximum amount. While many expenses are deductible, others are not. In some cases, the time that the expenses incurred dictates whether you can deduct them.
The Adoption Period
In order for the expenses to be deductible, your expenses must have been incurred during the adoption period. This period begins when you submit your application for adoption with an agency or with a Canadian court, and ends when either the adoption is finalized or when the child begins to live with you permanently.
Even if an adoption expense is normally considered deductible, you cannot deduct it if it falls outside of this period.
Eligible Adoption Expenses
The eligible adoption expenses can be claimed on line 31300 of your income tax and benefit return. You may deduct adoption agency fees from agencies licensed by provincial or territorial governments, as well as mandatory fees from foreign agencies. You may also deduct document translation fees and required provincial or territorial fees.
If you have to travel for the adoption, you can also deduct reasonable expenses incurred for you, the other adoptive parent and your child. The CRA also allows you to deduct mandatory immigration expenses.
Make sure to keep receipts for all of your expenses. Although you do not have to submit these receipts with your return, you will need them in case CRA requests them.
Ineligible Adoption Expenses
Expenses that do not fall under the CRA’s list of eligible adoption expenses cannot be claimed on your income tax return. For example; if your child lives with you before the adoption is finalized, you cannot claim the child’s living expenses during that time.
Similarly, you can only claim mandatory immigration expenses. These includes visa application fees, and the costs of mandatory medical exams or vaccinations. An example of a non-mandatory expense would be the cost of a new outfit for your child’s passport photo.
Although you can claim travel expenses, you can only claim necessary travel expenses. If you schedule a side trip or stay longer to sightsee, you cannot claim these expenses as adoption expenses.
Additionally, 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 day care expenses, or the cost of toys, furniture or other items for the child as adoption expenses.
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. However, you can claim any approved expenses as mentioned above.
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