You need to include all children of the principal applicant whether they are Canadian citizens or permanent residents. This applies to all dependents of the principal applicant on whose behalf the principal applicant is filling out IMM5406.
The confusing part in the instruction is this line: "You (the principal applicant) must fill out this form for yourself and on behalf of any of your family members 18 years of age or older who are not already Canadian citizens or permanent residents. "
So the principle applicant must fill all generic mandatory forms:
- Generic Application Form for Canada (IMM 0008)
- Additional Family Information (IMM 5406)
- Schedule A – Background/Declaration (IMM 5669)
- Supplementary Information: Your Travels (IMM 5562)
The principle applicant must fill ALL of these forms above on behalf of all family members 18 and above who are not already Canadian citizens and permanent residents.
For example you are sponsoring your parents and this is the family composition:
Example 1:
Parent1, Parent2, biological Child1 (sponsor), and biological Child2.
Let's say Child1 is sponsoring based on the invite as a result of winning the PGP lottery.
Let's say Child2 is also a Canadian citizen but did not will the PGP lottery.
Let's say Parent1 is the primary applicant. Parent1 who is the primary applicant, must fill IMM 0008, IMM 5406, IMM 5669, and IMM 5652 for themselves and also on behalf of Parent2. They don't need to fill this form out for Child2 as they are already a Canadian citizen
Example 2:
Parent1, Parent2, biological Child1 (sponsor), and biological Child2.
Let's say Child1 is sponsoring based on the invite as a result of winning the PGP lottery.
Let's say Child2 is over 18 but not a Canadian citizen or permanent resident.
Let's say Parent1 is the primary applicant. Parent1 who is the primary applicant, must fill IMM 0008, IMM 5406, IMM 5669, and IMM 5652 for themselves and also on behalf of Parent2 and Child2.
This does not exclude the Parent1 from listing both Child1 and Child2 in IMM 5406 in both examples. Additionally, Parent2 must also list Child1 and Child2 on IMM 5406
TL;DR: List ALL children, including adopted children and step-children, regardless of age and status in Canada.