2014 Federal Budget (Part 2)

Personal Income Tax Measures

Adoption Expense Tax Credit

The Adoption Expense Tax Credit ("AETC") under section 118.01 of the Tax was first introduced in 2006, effective for the 2005 and later taxation years. The AETC provides a 15% non-refundable tax credit for certain eligible adoption expenses incurred by adoptive parents who adopt a child under the age of 18. The credit may be claimed in the taxation year in which the adoption is finalized. The maximum annual expense per child was $10,000 when the credit was first introduced, but has been indexed since 2005 such that it would have been $11,774 per child for 2014.

The Budget proposes to increase the maximum eligible expenses to $15,000 per child for 2014, which will continue to be indexed for inflation for taxation years after 2014. The expansion of the AETC's scope is intended to recognize the unique costs of adopting a child including fees paid to provincially licensed adoption agencies and legal costs