Apprenticeship Job Creation Tax Credit
At a glance
- Max. $2,000
- 10% of project cost
- Open Date : November 14, 2019
- Mining, quarrying, and oil and gas extraction
- Utilities
- Construction
- Manufacturing
- Canada Revenue Agency
- Government of Canada
Overview
Eligibility criteria
The eligibility criteria for the Apprenticeship Job Creation Tax Credit (AJCTC) are:
- An eligible apprentice must be working in a prescribed trade in the first two years of their apprenticeship contract registered with a government apprenticeship program.
- The prescribed trade includes the Red Seal Trades listed in the Red Seal Program.
Who is eligible
Eligible companies for the Apprenticeship Job Creation Tax Credit (AJCTC) include businesses that hire eligible apprentices in prescribed trades under registered apprenticeship programs. The credit is available to employers who employ apprentices in the first two years of their apprenticeship contract.
- Businesses employing apprentices in prescribed trades
- Employers with apprentices registered under apprenticeship programs
Eligible expenses
There are eligible expenses for the apprenticeship job creation tax credit (AJCTC). Employers can claim the credit for eligible salaries and wages paid to eligible apprentices in prescribed trades during the first two years of their apprenticeship contract.
- Salaries and wages paid to eligible apprentices
- Costs associated with apprentices working in prescribed trades
How to apply
- Step 1: Determine if the apprentice is eligible
- Verify that the apprentice is working in a prescribed trade in the first two years of their apprenticeship contract.
- Ensure that the apprenticeship contract is registered with a federal, provincial, or territorial government under an approved apprenticeship program.
- Step 2: Claim the credit
- As an employer, file the AJCTC on your individual income tax return, on line 41200 – Investment tax credit, by submitting Form T2038(IND), Investment Tax Credit (Individuals).
- Keep track of the maximum $2,000 per year limit per eligible apprentice when claiming.
- Step 3: Consider unused credit options
- Unused credit can be carried back for 3 years or carried forward for 20 years to maximize tax benefits.
- Step 4: Special rules for related employers
- If multiple related employers hire the same apprentice, follow the special rules to allocate the $2,000 limit to one employer only.
Summary of the Apprenticeship Job Creation Tax Credit (AJCTC)
The AJCTC is a non-refundable investment tax credit available to employers who hire eligible apprentices in prescribed trades. Employers can claim up to $2,000 per year for each eligible apprentice to support apprenticeship programs.
Understanding the Apprenticeship Job Creation Tax Credit (AJCTC)
The Apprenticeship Job Creation Tax Credit (AJCTC) is designed to incentivize businesses to hire and train apprentices in designated trades. Employers can claim a non-refundable investment tax credit of 10% of eligible salaries and wages for eligible apprentices in the first two years of their apprenticeship contract. The maximum credit an employer can claim is $2,000 per year for each eligible apprentice, providing financial support for businesses investing in workforce development through apprenticeship programs.
To be eligible for the AJCTC, apprentices must be working in a prescribed trade and be in the initial two years of their apprenticeship contract. The contract must be registered with a federal, provincial, or territorial government under an official apprenticeship program that certifies or licenses individuals in the trade. The list of prescribed trades includes Red Seal Trades, which are nationally recognized and offer certification upon completion of the apprenticeship.
Employers who hire eligible apprentices can claim the AJCTC on their individual income tax return by reporting it on line 41200 - Investment tax credit and filing Form T2038(IND), Investment Tax Credit (Individuals). Any unused credit can be carried back up to 3 years and carried forward up to 20 years, providing flexibility for businesses to utilize the credit effectively. Special rules are in place to allocate the $2,000 limit to only one employer if multiple related employers employ the same apprentice.
Forms and publications related to the AJCTC include the Federal income tax package, T4012 - T2 Corporation Income Tax Guide, and Form T2SCH31 - Investment Tax Credit for Corporations. Employers can also explore Apprenticeship Grants for additional resources and support in workforce development through apprenticeship programs.
By taking advantage of the AJCTC, employers can not only support the professional development of apprentices in key trades but also benefit from a tax credit that promotes job creation and skills training within their organizations. This incentivizes businesses to invest in the growth and success of their workforce, contributing to a skilled labor force and economic prosperity.
