(Trail Times file image)

Do you qualify for an Adoption Tax Credit?

Tax Tips & Pits with Ron Clarke, Trail Times contributor

Bringing a child into your life is a wonderful experience, and introduces a whirlwind of expense. Just as a natural child, this also applies in the case of adoption – both the wonderment and the expense.

In fact, adopting a child often involves a set of expenses not borne by those having a baby. And Canada’s tax policy acknowledges this reality. If you adopt a child, defined as a person under the age of 18, you will likely qualify for the Canada Revenue Agency’s (CRA) adoption tax credit.

Allowable expenses are quite broad and include fees paid to a licensed agency, legal fees and court costs attributable to an adoption order, necessary travel and accommodation expenses for a parent and the child if the child is visited during the adoption process. In the case of a foreign adoption, allowable expenses include mandatory fees paid to Canada and to a foreign country for the immigration of the child, along with translation fees.

Timing is important to making the claim. For an expense to be eligible for inclusion in the claim, the expense must have been incurred after the adoption process has officially begun and before it is completed. This is referred to as the adoption period, and regardless of the length of time of the adoption period, the claim on your tax return must be made in the year of the completion of the adoption.

For 2018 tax prep, the federal adoption tax credit is a maximum $13,840 non-refundable tax credit with a matching credit offered by the BC Government.

As further explanation to this credit, although the credit can include up to $13,840 of expenses, the actual credit value used to reduce your actual tax liability is 15% of your expenses, so a max of $2,072.

Note that it is a non-refundable credit, meaning only the amount of the credit needed to reduce your taxes to zero qualifies, and any balance remaining is not refunded to you.

To this end, it’s important to know that for couples adopting a child, CRA permits the adoption credit to be claimed entirely by either spouse, or split between them as they so choose, so be sure to calculate and claim this credit to take full advantage of it for you and your spouse.

Finally, and sticking with the kid theme, for those couples unable to conceive a child and trying various natural methods, or as CRA states, “pursing the medical intervention to conceive a child,” the associated medical costs can be claimed on their T1 medical schedule as an expense. Although not a stand-alone credit like the adoption tax credit, the net effect is the same.

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.

Just Posted

Rossland Legion supports youth activities

Legion members donate to Canadian Tire Jumpstart Program

Trail Sk8 Park Celebration

The all-wheel park is in a scenic location near the Gyro Park boat launch

Trail Major All Stars poised for provincial little league championship

Trail Major All Stars open BC Little League championships against Coquitlam in Vancouver on Saturday

Market and music tonight at Gyro Park

Grapevine: Local events from July 18 to July 24

Fort Shepherd restrictions unchanged after public meeting

TLC held an informational session in Trail on Monday

Feds lowered poverty line, reducing the number of seniors in need: documents

Liberals introduced a poverty line that was below the prior low-income cutoff

Justin Trudeau’s carbon footprint revealed in ranking of world leaders

Travel company ranks 15 world leaders’ foreign flight CO2 emissions

“Does Kirby care?” B.C. First Nation’s group using geo-targeted ads in Houston, Texas for justice

The Heiltsuk Tribal Council has called out Kirby Corporation for the Nathan E. Stewart oil spill

Trudeau announces $79M investment for 118 more public transit buses across B.C.

Contributions from municipal to federal level to fund more buses in a bid to cut commutes

B.C. woman wins record $2.1 million on casino slot machine

‘That night was so surreal … I wasn’t able to sleep or eat for the first two days,’ she said

West Kootenay U16 Rebels take home provincial gold

West Kootenay Rebels fastball team battle hard to win the BC U16C Fastball Championship

After B.C. dad’s death, Technical Safety BC wants changes to trampoline park rules

Jay Greenwood, 46, did ‘a series of acrobatic manoeuvres prior to a fall that caused serious injury and cardiac arrest’

$900M settlement reached in class action on sexual misconduct in Canadian military

After facing criticism, the government moved to begin settlement proceedings in early 2018

Tax take stays ahead of increased B.C. government spending

Tax revenue $2.1 billion higher than budget in 2018-19

Most Read