The process of adopting a child is often a lengthy one, in which a myriad of requirements must be met and legal processes followed. Where the adoption is an international one, the process can be even lengthier and more complex, as often the legal requirements of more than one government must be satisfied, and international travel is required.
No matter whether an adoption takes place entirely in Canada or involves another country, there are numerous costs which must be met and expenses incurred. Families which incur such costs and expenses can, however, claim a federal tax credit for a significant amount of expenses incurred. And, in six of the 10 Canadian provinces as well as the Yukon Territory, a provincial or territorial tax credit can be claimed for adoption-related expenses.
Under Canadian tax law a tax credit can usually be claimed only on the return for the tax year in which the related expense is incurred. That’s not the case for the adoption expenses tax credit, which recognizes that the process of completing an adoption can take a number of years from start to finish, especially in the case of international adoptions. The rules governing the adoption expense tax credit provide that all eligible expenses incurred between the start of the adoption process and its completion can be claimed for purposes of the credit, but that that tax credit claim must be made on the return for the year in which the adoption process is completed.
For purposes of the tax credit, the adoption process is considered to have started at the earlier of the following dates:
- when an application is made for registration with either a provincial or territorial ministry responsible for adoption or an adoption agency licensed by a provincial or territorial government; OR
- when an application related to the adoption is made to a Canadian court.
Similarly, the Canada Revenue Agency provides rules to determine when the adoption process is considered to be complete, meaning that the tax credit for adoption expenses can be claimed on the return for that year. For purposes of the tax credit, the adoption process is considered to be complete at the later of these dates:
- when an adoption order is issued or recognized by a government in Canada for the child; OR
- when the child first starts to live permanently with their adoptive parents.
Once the adoption process is complete, the adoptive parents can claim an adoption expenses tax credit for each of the following types of expenses:
- Fees paid to an adoption agency licensed by a provincial or territorial government;
- Court costs and legal and administrative expenses related to an adoption order for the child;
- Reasonable and necessary travel and living expenses of the child and the adoptive parents;
- Document translation fees;
- Mandatory fees paid to a foreign institution;
- Mandatory expenses paid for the child’s immigration;
- Any other reasonable expenses related to the adoption required by a provincial or territorial government, or an adoption agency licensed by a provincial or territorial government.
The total costs incurred throughout the entire adoption process can be significant, and the federal government does set a limit on the amount of such expenses which can be claimed for purposes of the adoption expenses tax credit. That federal limit for the 2025 tax year is $19,580 for all such expenses incurred during the adoption process. The provincial and territorial governments also impose expense limits for purposes of the credit, and a listing of those limits can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31300-adoption-expenses.html. The dollar limit imposed by the province of Québec is available on the Revenu Québec website at https://www.revenuquebec.ca/documents/en/formulaires/tp/tp-1029.8.63-v%282015-10%29.pdf.
As is generally the case for tax credit or deduction claims, a claim can be made only for eligible expenses which were incurred by the adoptive parents and for which they did not receive assistance or reimbursement.
Adoption, especially international adoption, can be a lengthy and sometimes stressful process which makes physical, emotional, and financial demands on the prospective adoptive parents. While our tax system can’t do anything to lessen the physical and emotional stress involved, it can help to mitigate the sometimes considerable financial costs which must be incurred. More information on how to reduce those costs by making a claim for the adoption tax credit can be found on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31300-adoption-expenses.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
