Co-operative Education Tax Credit

Co-operative Education Tax Credit Summary

The Co-operative Education Tax Credit is a refundable tax credit available to employers in Ontario who hire students enrolled in a co-operative education program. Employers can claim up to 25% of eligible expenditures, with a maximum credit of $3,000 per work placement.

Co-operative Education Tax Credit Detailed Explanation

The Co-operative Education Tax Credit (CETC) is a valuable opportunity for Ontario businesses to receive financial benefits while supporting students in gaining practical work experience. This tax credit is designed to incentivize employers to hire students enrolled in co-operative education programs at Ontario universities or colleges.

Eligible employers, including corporations, partnerships, and individuals with unincorporated businesses, can claim the CETC based on the salaries and wages paid to students during their work placements. The credit amount is calculated at 25% of eligible expenditures, with small businesses qualifying for a higher rate of 30%. Each work placement is capped at a maximum credit of $3,000.

To qualify for the tax credit, businesses must hire students enrolled in post-secondary co-operative education programs that meet specific criteria. These programs must integrate academic studies with practical work experience, have a designated work placement period, and be approved by the educational institution. Students must be paid for their work, and their performance is supervised and evaluated by the employer.

The CETC is administered by the Canada Revenue Agency on behalf of Ontario, providing a seamless process for eligible employers to claim the credit. Corporations can file for the tax credit on Schedule 550 of their T2 Corporation Income Tax Return, while unincorporated businesses can utilize Form ON479 for their personal income tax return. Partnerships can claim their share of the credit on their respective tax returns.

It is essential for businesses to maintain proper documentation, including a letter of certification from the student's educational institution, to support their tax credit claims. This document should include details such as the student's name, employer, educational institution, duration of the work placement, and the co-operative education program's discipline.

Overall, the Co-operative Education Tax Credit serves as a win-win opportunity for employers and students, fostering collaboration between educational institutions and businesses while providing financial incentives to support student learning and workforce development in Ontario.