November is adoption awareness month. If you’ve been reading for a while, you know that adoption is an issue that is near and dear to my heart, and a path that we have been considering for our family for quite some time. Apparently, it’s an issue that is on the government’s radar as well since there have been a few changes to tax credits and policy over the last little while.
The adoption expenses tax credit was introduced in 2005. A post I wrote last year went into the details of how the credit works, and gave the back story on our family’s journey. You can read that here. The 2013 Federal Budget changed the time period for when expenses can be claimed (a change that works in adoptive families’ favour). You can read details of that one here.
On October 16, 2013, Governor General David Johnston’s Throne Speech included the promise to “Make adoption more affordable for Canadian families.” Exactly what that means is anybody’s guess.
International adoption and domestic private adoption are both expensive, but cost does not appear to be the barrier to these adoptions being completed. Because there are more prospective parents than children available, wait times keep increasing and many countries have closed their programs.
The costs associated with domestic adoption from the public system are low. Home study costs and other fees are covered by the public purse. Once the child is placed in the adoptive family, he or she is treated the same way as a biological child for the purposes of child tax credits, benefits, etc. There are no additional ongoing income tax credits. This has always made sense to me – the government is not my kids’ daddy.
That being said, back in the spring when I was talking to a Children’s Aid Society (CAS) representative about pursuing the adoption of “Alex” and “Bethany”, she mentioned that these children have weekly therapy sessions. Given their background, this made total sense and it would obviously be in their best interest to continue. Being an accountant, I did the math quickly in my head… 2 kids times a very conservative estimate of $100 each per week comes to over $10,000 in therapy costs over the course of a year. Yikes! At the most, we would be able to get $1,000 back from our insurance, $1,800 from the medical expense income tax credit, leaving $7,200 out of pocket for therapy alone. It was enough to make me pause. What would we cut from our household budget to fit that in?
CAS decided to place Alex and Bethany with a family who has gone through the home study process and training already (which we have not). This decision makes total sense logically, but was still hard to swallow. The issue of unusual child-rearing expenses for adoptive families remains. I’m guessing that most children coming from CAS are there because of family trauma and are going to need therapy of some kind. Should there be financial assistance for these types of expenses?
A targeted adoption subsidy has recently been introduced. Parents who adopt children who are 10 years of age or older or adopt sibling groups of 2 or more children receive $11,400 annually (tax free) for each eligible child as long as their family income is less than $85,000.
Children who are older are harder to place in permanent families. Sibling groups are also harder to place. If having a subsidy of this nature gets more children placed in loving homes then it’s a good thing! From an economic perspective, the costs of having a child in foster care surely exceed the amount of the subsidy.
The structure of this subsidy is somewhat troubling. From the wording on this site, it seems to be an all or nothing thing. If your family income is $85,000, you get a payment of an additional $11,400 tax free. If your family income is $85,001, you get nothing. How does that make sense?! Any good tax accountant would tell their clients to make sure they put that extra dollar in their RRSP to bring their income down to get the subsidy.
Giving adoptive parents a subsidy could attract the wrong type of people. The amount of the subsidy is significant. Do we want to run the risk that people who are being motivated by the money are going to bring these troubled kids into their homes? Presumably the screening process would weed out these people, but part of me is still wincing at the idea of paying people to adopt.
What do you think? Should the government take measures to make adoption more affordable? If so, how?