Apprenticeship Job Creation Tax Credit
Canada
Tax credit for hiring apprentices
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|maxCount
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|openingDateNovember 14, 2019
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Construction
- Manufacturing
- Transportation and warehousing
grant_single|grantors
- Government of Canada
- Canada Revenue Agency (CRA)
grant_single|status
grant_card_status|open
grant_single_labels|preview
Get a non-refundable tax credit equal to 10% of the salaries and wages paid to your apprentices from a Red Seal Trade, up to a maximum of $2,000/year for each apprentice.
grant_single_labels|projects
grant_single|admissibleProjectsExample
$2,000
Launching a Red Seal electrical apprenticeship program
$2,000
Creating a carpentry apprenticeship program for Red Seal certification
$2,000
Establishing a culinary apprenticeship program for Red Seal chefs
$2,000
Implementing a new welding program to train Red Seal apprentices
$2,000
Developing an automotive service technician apprenticeship program for Red Seal certification
$2,000
Setting up an HVAC apprenticeship program for Red Seal certification
grant_single_labels|admissibility
An employer must meet certain criteria to qualify for the Apprenticeship Job Creation Tax Credit.
- The employer must hire an eligible apprentice, defined as someone working in a prescribed trade.
- The apprentice must be in the first two years of their apprenticeship contract.
- The apprenticeship 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 trades must be listed as Red Seal Trades.
grant_eligibility_criteria|who_can_apply
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
grant_eligibility_criteria|eligible_expenses
The Apprenticeship Job Creation Tax Credit (AJCTC) is designed to support employers hiring eligible apprentices in prescribed trades. It provides financial incentives for businesses to invest in the training and development of apprentices during the initial stages of their apprenticeship program.
- Employing eligible apprentices in prescribed trades listed under the Red Seal Trades program.
- Providing training and development opportunities for apprentices within the first two years of their apprenticeship contract.
grant_eligibility_criteria|zone
The apprenticeship job creation tax credit covers eligible expenses related to salaries and wages for apprentices.
- Eligible salaries and wages payable to eligible apprentices.
grant_single_labels|register
- Step 1: Verify Apprentice Eligibility
- Ensure the apprentice is working in a prescribed trade listed as a Red Seal Trade.
- Confirm the apprenticeship is in the first two years of their contract.
- Make sure the apprenticeship contract is registered with the federal, provincial, or territorial government.
- Step 2: Calculate Eligible Salaries and Wages
- Determine the total eligible salaries and wages payable to the eligible apprentice.
- Calculate 10% of these salaries and wages to find the eligible tax credit.
- Ensure the credit does not exceed $2,000 per apprentice per year.
- Step 3: Prepare Tax Documents for Credits
- Gather necessary documentation including salary records and the apprenticeship contract.
- Complete the required Form T2038(IND) for individuals or T2SCH31 for corporations.
- Ensure accuracy and completion before filing.
- Step 4: Submit on Income Tax Return
- Claim the AJCTC on your individual or corporate income tax return.
- Input the calculated credit on line 41200 of your tax return.
- Review the application for accuracy and completeness before submission.
- Step 5: Await Confirmation and Processing
- Submit your tax return through the appropriate federal channels, either electronically or by mail.
- Keep a copy of the submitted tax return and related documents for your records.
- Monitor communications for confirmation of processing and credit application.
grant_single_labels|otherInfo
Here are additional relevant details for this tax credit:
- The AJCTC can be claimed by individuals on their income tax return using line 41200, with the appropriate form, Form T2038(IND).
- For corporations, the credit is claimed using Form T2SCH31 as part of their corporate tax filings.
- The income tax package and guides such as the T4012 provide necessary information for claiming the credit.
- Unused credits have a carry-back period of 3 years and a carry-forward period of 20 years, allowing for flexible use in tax management.
- There are specific rules for allocating the credit among related employers to ensure compliance with the $2,000 limit per apprentice.
Apply to this program
Boost Your Business with the Apprenticeship Job Creation Tax Credit
Employers in Canada can benefit from the Apprenticeship Job Creation Tax Credit (AJCTC), which provides financial incentives for hiring eligible apprentices in designated trades. This tax credit helps reduce employment costs and encourages the development of skilled tradespeople.
Detailed Overview of the Apprenticeship Job Creation Tax Credit
The Apprenticeship Job Creation Tax Credit (AJCTC) is a strategic financial incentive designed to encourage businesses to participate actively in the training and development of skilled tradespeople in Canada. This non-refundable credit offers a substantial 10% investment tax credit (ITC) on the eligible salaries and wages of apprentices working in prescribed trades. These trades are primarily those recognized under the Red Seal Program, which is a mark of skills excellence in the trades.
Introduced in May 2006, the AJCTC has been aiding businesses in reducing the financial burden associated with the training and employment of apprentices. This credit supports employers by reimbursing them up to $2,000 annually for each eligible apprentice hired. By alleviating some of the financial barriers, the credit aims to foster the employment of apprentices, ensuring a steady flow of skilled professionals into the workforce.
Eligible apprentices are those who are in their first two years of their apprenticeship in a trade that is formally prescribed by federal, provincial, or territorial apprenticeship certification programs. The apprentice must also have their contract officially registered, affirming the legitimacy of their training and employment arrangement. This requirement ensures that the credit specifically supports structured training that leads to certification or licensing in recognized trades.
In addition to its immediate financial benefits, the AJCTC also encourages businesses to invest in the long-term training and development of their workforce, crucial for sectors experiencing skills shortages. By supporting apprenticeships, the credit contributes to a more skilled and competitive workforce, ready to address industry demands across Canada.
Moreover, businesses can optimize their tax planning due to the flexibility of the credit. Any unused portion of the tax credit may be carried back for up to three years or carried forward for up to twenty years, providing businesses with clever tax management options to suit their financial planning strategies. This ensures that the benefits of employing apprentices under the AJCTC program can be maximally utilized over time, even during fluctuating business cycles.
Employers keen on claiming this credit should familiarize themselves with the necessary forms outlined in the federal income tax package, including the T4012 and the T2SCH31 forms for corporations. For individual employers, the claim can be made on Form T2038(IND) under line 41200—this numbering was formerly known as line 412 before 2019. Understanding the proper documentation is critical for seamlessly integrating the credit into annual tax submissions.
Special consideration is also given to situations where multiple related employers hire the same apprentice. In such occurrences, specific regulations are in place to ensure that the total credit does not exceed the $2,000 cap per apprentice, maintaining fairness and compliance within the program's framework.
The AJCTC represents a valuable opportunity for businesses across Canada to invest in the future of their workforce while benefiting from immediate financial returns. It epitomizes a cooperative approach between government and industry in shaping a more skilled, productive, and adaptable labor market. This initiative not only addresses current labor shortages but also contributes to the economic growth and sustainability of Canadian industries by nurturing the next generation of skilled tradespeople.
