Foster Parents

If you take care of foster children or adults, you receive payments from the foster agency or government to help you with their care. These social assistance payments are designed to help cover basic living expenses of the foster persons, and they are not taxed.

The amount of your social service payments can vary depending on the foster person’s needs and other factors. In some cases, if the foster person requires special care that forces you to work less, you may receive additional payments to help offset the cost and time of that care. However, even in those cases, social assistance payments are not considered employment income.

In most cases, you are required to report social assistance payments to the Canada Revenue Agency on your income tax return. However, if you receive social assistance payments on behalf of a foster child or adult, you don’t have to report those payments.

Social assistance payments that your receive so that you can take care of a foster person are not taxed, and they are not taken into account when determining your eligibility for certain programs.

At the beginning of each year, you receive a T5007 slip showing the social assistance payments you have received in the previous year. If you only received social assistance payments on behalf of a foster person, you don’t have to report anything from slip T5007 on your income tax return.

However, if you received social assistance payments for a foster person and for other people in your home, you have to report a portion of the payments on your income tax return.

Determine how much of your social assistance payments were related to your foster child; if you don’t have notes in your records, contact the foster agency for numbers. Then, subtract this amount from the total amount of social assistance payments show in box 11 of slip T5007. Note the remainder on lines 145 and 250 of your income tax return.

If you have social assistance payments you need to report, and you are married or in a common-law partnership, the spouse or partner with the highest net income should report these payments on his return.

Social assistance payments are taken into account when assessing your family’s eligibility for the Canada Child Benefit, the Old Age Security supplement, the GST/HST credit, and a range of other territorial credits and non-refundable tax credits.

However, the payments you receive on behalf of your foster child are not taken into account when determining your eligibility for those benefits, and social assistance payments are never subject to income tax regardless of for whom they were received.