Apprenticeship Tax Credit

Do you currently have, or are looking to hire an apprentice? Do you know there are tax credits available if you do?

The federal and Ontario governments are currently offering employers of apprentices tax credits with respect to the apprentices’ wages.

The federal tax credit is equal to 10% of the eligible salaries and wages paid to the eligible apprentices in respect of their employment. There is a maximum credit for each apprentice of $2,000 per year. The salaries and wages must be paid to an eligible apprentice which the Canada Revenue Agency (CRA) defines as someone who is working in a prescribed trade (Red Seal Trade) in the first two years of their apprenticeship contract. The contract must be registered with a federal, provincial or territorial government under an apprenticeship program designed to certify or license individuals in the trade.

The Ontario tax credit is equal to a specified percentage (35% to 45%) of the eligible expenditures incurred by the corporation for a qualifying apprenticeship. The maximum credit available for each apprentice is $10,000 a year, with a maximum of $40,000 over the first 48 months of the qualifying apprenticeship.

The Ontario government has their own definition of qualifying apprenticeship:

  • the apprenticeship must be in a qualifying skilled trade approved by the Ministry of Training, Colleges and Universities (Ontario); and
  • the corporation and the apprentice must be participating in an apprenticeship program in which the training agreement has been registered with specific agencies.

Both of these credits must be included in your income in the year you receive them. This is generally the year after you apply for them.

In summary, your company could receive a maximum of $12,000 annually for each qualified apprentice. For further information on applying for this credit feel free to contact one of our advisors and they will be happy to assist you.