Apprenticeship Job Creation Tax Credit
Highlights
This program is a great opportunity for your business because it offers a 10% tax credit on eligible salaries and wages paid to apprentices. You can claim up to $2,000 per year for each eligible apprentice you hire. This can significantly reduce your tax burden and free up funds for other business needs.
What You Get
- 10% tax credit on eligible salaries and wages
- Up to $2,000 per year for each eligible apprentice
- Ability to carry unused credits back 3 years or forward 20 years
Why Apply?
- Reduce your tax liability and save money
- Invest in skilled labor by hiring apprentices
- Easy qualification if your apprentices are in their first two years and registered in a recognized trade program
By participating in this program, you not only benefit financially but also contribute to the development of skilled tradespeople, which can enhance your business operations and reputation.
Financing Details
Type of Financing: Tax Credit
Repayment Terms and Interest Rates:
- This is a non-refundable tax credit, so there are no repayment terms or interest rates.
Eligible Expenses:
- Eligible salaries and wages payable to eligible apprentices.
- The credit is equal to 10% of these eligible expenses.
- The maximum credit you can claim is $2,000 per year for each eligible apprentice.
Use of Funds:
- The funds can be used to offset the costs associated with hiring eligible apprentices.
- The funds cannot be used for any other expenses outside of eligible salaries and wages.
Fees:
- There are no fees associated with claiming this tax credit.
Qualifications
- Must hire an eligible apprentice.
- Eligible apprentice must be working in a prescribed trade.
- Apprentice must be in the first two years of their apprenticeship contract.
- Apprenticeship contract must be registered with a federal, provincial, or territorial government.
Prescribed trade must be listed as a Red Seal Trade.
Disqualifications:
- Apprentices not working in a prescribed trade.
- Apprentices beyond the first two years of their apprenticeship contract.
- Apprenticeship contracts not registered with a federal, provincial, or territorial government.
Description
If your business hires apprentices, you can benefit from a tax credit. This credit is 10% of the eligible salaries and wages you pay to your apprentices. You can claim up to $2,000 per year for each eligible apprentice.
This credit helps you cover the costs of hiring and training new talent. It’s a great way to invest in your workforce while reducing your tax burden. The credit can be claimed on your income tax return, and any unused credit can be carried back 3 years or forward 20 years.
By taking advantage of this program, you can support the growth of your business and contribute to the development of skilled tradespeople. This is a valuable opportunity to save money and build a strong team.
Program Steps
Collect Required Documentation: Gather the necessary documents to support your application. You will need:
- Proof of the apprentice's registration in a federal, provincial, or territorial apprenticeship program.
- Details of the apprentice's employment and wages.
- Records showing the apprentice is in the first two years of their apprenticeship contract.
- Any additional documentation as specified by the Canada Revenue Agency (CRA).
Complete Form T2038(IND): Fill out Form T2038(IND), Investment Tax Credit (Individuals). This form is required to claim the Apprenticeship Job Creation Tax Credit (AJCTC).
File Your Tax Return: Include the completed Form T2038(IND) with your individual income tax return. Ensure you claim the AJCTC on line 41200 – Investment Tax Credit.
Review Special Rules: If your business is related to other employers who also employ the same apprentice, review the special rules to ensure the $2,000 limit is allocated correctly.
Submit Your Application: Submit your tax return and all supporting documents to the CRA by the required deadline.
Track Unused Credits: Keep track of any unused credits. You can carry these back 3 years or forward 20 years.
Consult CRA Resources: If you have any questions or need further assistance, consult the CRA’s resources or contact them directly for guidance.