Co-operative Education Tax Credit

Eligibility for the Co-operative Education Tax Credit requires businesses to meet specific criteria related to their operations and the employment conditions they provide.

• The employer must be a corporation or unincorporated business with a permanent establishment in Ontario.
• The employer must be subject to Ontario corporate income tax or Ontario personal income tax.
• Salaries and wages, including taxable benefits paid to the student for the work placement, must be attributable to an Ontario permanent establishment.
• If government assistance is received, it will reduce the amount of eligible expenditure for the tax credit claim.
• The employer must supervise and evaluate the student's job performance during the work placement.

Who is eligible?

Who is not eligible

Some types of companies might not be eligible for the Co-operative Education Tax Credit. They could include:

• Limited partners in a partnership

Eligible expenses

This grant provides tax credits to Ontario businesses hiring students enrolled in qualifying co-operative education programs. The eligible activities concentrate on creating meaningful work placements that align with academic objectives and support experiential learning.

• Hiring students for work placements developed or approved by eligible educational institutions.
• Engaging students in productive work during their placement rather than mere observation.
• Offering work placements ranging from 10 weeks to 16 months, depending on the educational program type.
• Paying students for their work during the placement period.
• Supervising and evaluating student's job performance throughout the work placement.
• Ensuring educational institutions monitor the student's progress in the work placement.

Eligible geographic areas

Ontario businesses can apply for this tax credit as it targets employers with permanent establishments within the province. Eligible companies must be participating in co-operative education programs offered by institutions in Ontario.

• Businesses with permanent establishments in Ontario.

There are evaluation and selection criteria for this grant as follows:

• The employer must be an eligible corporation or unincorporated business with a permanent establishment in Ontario and subject to Ontario corporate income tax.
• The work placement must adhere to specific conditions such as duration, integration with academic studies, and student payment.
• Government assistance received for the work placement may impact the eligibility of expenditures for the tax credit.

Here are additional relevant details for this grant:

• Work placements for students in co-operative education programs must be certified by the educational institution, ensuring they meet the program requirements and duration criteria.
• The credit amount varies based on the employer's total payroll from the previous year, with maximum credit limits applicable per work placement.
• Employers may need to amend previous tax returns if changes to the credit claim are necessary and must do so within specific time frames depending on corporation type.
• The entire credit amount must be reported as income in the tax year it is received, impacting the business's taxable income.
• Employers should retain supporting documentation, such as a letter of certification from the student's educational institution, for at least seven years for possible audits.