Co-operative Education Tax Credit
ON, Canada
Ontario co-op student tax credit
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- grant_single|projectCostPercent
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- grant_single|openingDateNovember 14, 2019
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Tax Credits
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- grant_single|allIndustries
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- Ontario Ministry of Finance
- Government of Ontario
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Access a refundable tax credit of 30% to a maximum of $3,000 per placement to hire co-op students.
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The Co-operative education tax credit supports Ontario businesses that hire post-secondary students in co-operative education programs, encouraging experiential learning and hands-on job experience.
- Providing employment duties to students enrolled at eligible educational institutions under a qualifying co-operative education program.
- Developing or approving work placements meeting specific duration requirements.
- Paying students for productive work performed during the placement.
- Supervising and evaluating students' job performance.
- Ensuring educational institutions monitor students' progress.
grant_single|admissibleProjectsExample
$3,000
Ottawa
Engaging a student to assist with community outreach program development for six months
$3,000
Toronto
Hiring a co-op student to support IT helpdesk operations for two months
$3,000
Toronto
Hiring a co-op student to support digital marketing efforts for four months
$3,000
Vancouver
Bringing on a co-op student to optimize operational processes for three months
$3,000
Montreal
Engaging a co-op student for conducting market research for a new product line over five months
$3,000
Waterloo
Bringing a co-op student on board to develop a new mobile application for six months
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The Co-operative education tax credit is available to Ontario businesses that hire students enrolled in a post-secondary co-operative education program to provide experiential learning opportunities.
- All corporations or unincorporated businesses with permanent establishments in Ontario subject to Ontario corporate income tax or Ontario personal income tax
- Members of a partnership (other than a limited partner) may share the credit for each qualifying work placement
- If an eligible student has consecutive work placements with two or more associated corporations, the associated corporations will be considered to be one employer
- A work placement must be for a student enrolled at an eligible educational institution performing employment duties under a qualifying co-operative education program
- The work placement is developed or approved by the eligible educational institution
- The student must be engaged in productive work and paid for their work during the placement
- The work placement must run for at least 10 consecutive weeks (for non-internship programs) or 8-16 consecutive months (for internship programs)
- The employer must supervise and evaluate the student's job performance during the placement
- The educational institution must monitor the student's progress during the placement
- The co-operative educational program must provide credit towards a post-secondary degree, diploma, or certificate granted by an eligible educational institution
- Eligible educational institutions include recognized Ontario universities, colleges of applied arts and technology, The Michener Institute of Applied Health Sciences, The Ontario College of Art and Design, and Redeemer University College
- Expenditures must include salaries, wages, and fees paid to employment agencies for the work placement, and be reasonable in amount
- Government assistance received for the work placement will reduce the eligible expenditure amount
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Eligible types of companies for the Co-operative Education Tax Credit include corporations and unincorporated businesses with permanent establishments in Ontario, which are subject to Ontario corporate income tax or Ontario personal income tax. Employers who are members of a partnership (except limited partners) may also share the credit for each qualifying work placement.
- Corporations with permanent establishments in Ontario
- Unincorporated businesses with permanent establishments in Ontario
- Employers who are members of a partnership (excluding limited partners)
grant_eligibility_criteria|eligible_expenses
Eligible expenses for the Co-operative Education Tax Credit include reasonable expenditures made by a business in respect of a qualifying work placement. These include salaries, wages, and fees paid to an employment agency for the services of a student.
- Salaries and wages including taxable benefits paid or payable to the student for the work placement
- Fees paid or payable to an employment agency for the work placement for services of a student
- Repayment of government assistance received for a work placement
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The eligible geographic zones for this grant are limited to companies operating in Ontario, Canada. Businesses must have permanent establishments in Ontario.
- Ontario, Canada
- Permanent establishments in Ontario
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- Step 1: Ensure eligibility
- Confirm that your business is an eligible employer with a permanent establishment in Ontario, subject to Ontario corporate income tax or Ontario personal income tax.
- Verify that the student is enrolled in an eligible co-operative education program at an eligible educational institution.
- Step 2: Hire a co-op student
- Ensure the work placement is developed or approved by the eligible educational institution.
- The student must be engaged in productive work, not just an observer, and be paid for the work performed during the placement.
- The work placement should meet the duration requirements: 10 consecutive weeks for standard co-op programs, or 8 to 16 consecutive months for internship programs.
- Step 3: Supervise and evaluate student performance
- Employers must supervise and evaluate the student's job performance during the placement.
- The educational institution should monitor the student's progress throughout the placement.
- Step 4: Obtain certification from the educational institution
- Request a letter of certification from the eligible educational institution confirming the details of the work placement.
- The letter should include the name of the student, the employer, the educational institution, the term of the work placement, and the name/discipline of the co-op program, and be signed by an appropriate faculty member.
- Step 5: Calculate the tax credit
- Determine the eligible expenditures, including salaries and wages paid to the student.
- Calculate the tax credit based on the employer’s total payroll in the previous taxation year (30% for payroll ≤ $400,000, 25% for payroll ≥ $600,000, sliding scale for payroll between $400,000 and $600,000).
- The maximum credit per work placement is $3,000.
- Step 6: Claim the tax credit
- For corporations, claim the credit on Schedule 550 and file it with the T2 Corporation Income Tax Return.
- For unincorporated businesses, claim the credit on Form ON479 included in the Personal Income Tax Return.
- Members of partnerships should claim their share on their own corporate or personal tax returns.
- Step 7: Retain supporting documents
- Keep a copy of the letter of certification for at least 7 years to support your tax credit claim in case of an audit.
- Step 8: Amend previous tax credits if necessary
- Request an amendment to the relevant tax return if you need to claim a previous year’s credit or change the amount previously claimed.
- Attach relevant supporting information, such as revised financial statements and schedules, to the amendment request.
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The Cooperative Education Tax Credit program requires specific documentation and has potential regulations for amending claims. The credit is administered by the Canada Revenue Agency and must be reported as taxable income.
- Businesses must keep the letter of certification for at least 7 years for potential audits.
- The credit is taxable and must be reported as income.
- Corporations claim the credit on Schedule 550 with their T2 Corporation Income Tax Return.
- Unincorporated businesses claim the credit on Form ON479 with their Personal Income Tax Return.
- Partnership members claim their share of the credit on their own returns.
- Amendments to previous claims require specific documentation and timelines depending on the business structure.
- Contacting the Canada Revenue Agency for questions: 1-800-959-5525 (English) or 1-800-959-7775 (French).
Apply to this program
Ontario Co-operative Education Tax Credit
The Ontario Co-operative Education Tax Credit offers a 25-30% refundable tax credit to Ontario businesses that hire students enrolled in post-secondary co-operative education programs, with a maximum credit of $3,000 per work placement. This initiative encourages businesses to provide valuable work experiences to students, thus bridging the gap between academia and industry.
Understanding the Ontario Co-operative Education Tax Credit
The Ontario Co-operative Education Tax Credit is an essential initiative aimed at aligning Ontario’s educational framework with the needs of its businesses. This collaboration between educational institutions and businesses has proven fruitful in creating a workforce that is both knowledgeable and experienced, ready to contribute to the province's economy immediately upon graduation.
Overview of the Credit
The Co-operative Education Tax Credit is administered under Section 88 of the Taxation Act, 2007. It provides a financial incentive for Ontario businesses to hire students from eligible post-secondary institutions enrolled in co-operative education programs. By offering a refundable tax credit between 25-30% of the eligible expenditures, Ontario encourages businesses to invest in the practical education of future professionals.
Eligibility Criteria
Eligible Employers
Entities that qualify for this credit include corporations and unincorporated businesses with permanent establishments in Ontario, subject to Ontario corporate or personal income tax. Members of partnerships (excluding limited partners) can also share the credit for each qualifying work placement. For companies within the same corporate family, the associated corporations must designate which among them will claim the credit, treating them as a single employer for the purposes of this tax credit.
Qualifying Work Placements
To qualify for the tax credit, a work placement must meet several criteria:
- The student must be enrolled in a recognized educational institution.
- The work placement must be approved or developed by the educational institution.
- The student must engage in productive work during the placement, not merely observe.
- The duration of the placement must be a minimum of 10 consecutive weeks (or between 8 and 16 consecutive months for internships).
- The student must receive payment for their work.
- There should be supervision and evaluation of the student's performance by the employer.
- The educational institution must monitor the student’s progress throughout the placement.
Co-operative Education Programs
Non-Internship Programs
These programs integrate academic learning with work placements, meeting requirements set by Co-operative Education and Work‑Integrated Learning Canada (CEWIL Canada). Each work placement should be at least 10 consecutive weeks, with total work placements forming 30-75% of the academic program. At least half of these placements must be mandatory.
Internship Programs
Internship co-operative education programs offer optional placements lasting 8-16 consecutive months, with work placement time constituting 30-75% of the total academic study period. These placements need to be finished before the student's final academic term and recorded on their transcripts.
Eligible Educational Institutions
Qualifying institutions include any Ontario university or college of applied arts and technology, such as The Michener Institute of Applied Health Sciences, The Ontario College of Art and Design, and Redeemer University College.
Eligible Expenditures
The primary expenditures eligible for this credit include:
- Salaries, wages, and taxable benefits paid to the student for their work placement (as reported on a T-4 slip).
- Fees paid to employment agencies for placing the student if the work is carried out primarily at an Ontario business location.
It is important to note that any government assistance, such as grants or subsidies received for the work placement, will reduce the creditable amount. However, certain deductions, such as the Ontario research and development tax credit, are not considered government assistance for this purpose.
Participating in the Tax Credit Program
Educational institutions play a crucial role in certifying the work placements. The certification process involves confirming the student’s enrollment in a qualifying program, ensuring the work aligns with program objectives, and verifying the completed work period meets the set duration requirements. This certification typically takes the form of a declaration or a letter, including key details about the student, employer, institution, and work placement specifics.
Calculating the Tax Credit
Credit Rates
The tax credit is calculated based on the employer’s total payroll in the previous taxation year:
- 30% credit rate for employers with total payroll of $400,000 or less.
- 25% credit rate for employers with total payroll of $600,000 or more.
- A prorated rate between 25%-30% for employers with payroll between $400,000 and $600,000.
There is a maximum credit of $3,000 per work placement. For example, if an employer with a total payroll of $300,000 hires a student for a 12-week placement at $950 per week, the credit would be $3,000, as the calculated credit (30% of $11,400) exceeds the maximum limit.
Handling Extended Placements
For placements longer than four months, each additional four-month period (or part thereof, if longer than 10 weeks) is treated as a separate placement. Conversely, smaller time increments falling below these thresholds may be integrated into the prior period for credit calculation purposes.
Claiming the Credit
The credit can be claimed in the taxation year the work placement ends, reducing tax payable for that year and providing refundable benefits for any excess credit.
Corporate Claims
Incorporated businesses can claim the credit on Schedule 550 of their T2 Corporation Income Tax Return.
Unincorporated Claims
Unincorporated businesses must use Form ON479, included in the Personal Income Tax Return. For partnerships, non-limited partners will claim their share on their respective corporate or personal tax returns.
Businesses should retain the certification letter from the educational institution for at least seven years to support their tax credit claims in case of an audit.
Amending a Tax Credit Claim
Should an error or omission occur, businesses can request an amendment to a previous year's credit. Incorporated businesses must send their request to the relevant tax centre, including details such as the corporation’s name, Business Number, and additional support documentation. Canadian-controlled private corporations have three years to make this request, whereas other corporations have four years. Unincorporated businesses can follow instructions on the federal Income Tax and Benefit packages or contact the Canada Revenue Agency (CRA) directly.
Contact Information
The CRA administers the Co-operative Education Tax Credit. For further information or inquiries, businesses can contact the CRA at:
- English: 1‑800‑959‑5525
- French: 1‑800‑959‑7775
- TTY: 1‑800‑665‑0354
This tax credit is an excellent opportunity for Ontario employers to engage in the educational development of future professionals, thus ensuring a workforce ready to meet the challenges of tomorrow’s economy. By participating in this program, businesses not only gain access to fresh talent but also contribute to the broader socio-economic development of the province.