Co-operative Education Tax Credit
Highlights
This program is perfect for your business because it offers a refundable tax credit for hiring students from co-operative education programs. This means you can get back a portion of the wages you pay to these students, reducing your overall costs.
Key Benefits:
- Receive up to $3,000 per work placement.
- Claim 25% of eligible expenditures (30% for small businesses).
- Flexible claim options for both incorporated and unincorporated businesses.
Why Apply?
- Financial Relief: Reduce your tax burden and improve cash flow.
- Talent Acquisition: Access motivated students who bring fresh ideas and skills.
- Simple Qualification: If you hire students from an Ontario university or college co-op program, you qualify.
By participating, you not only gain financial benefits but also invest in the future workforce, making it a win-win for your business and the community.
Financing Details
Type of Financing: Refundable Tax Credit
Repayment Terms and Interest Rates:
- There are no repayment terms or interest rates because this is a tax credit, not a loan.
Eligible Expenses:
- Salaries and wages paid to students in a co-operative education work placement.
- Fees paid to an employment agency for the services of a student.
Use of Funds:
- Funds can be used to cover salaries, wages, and employment agency fees related to the co-op placement.
Restrictions on Use of Funds:
- Funds cannot be used for any expenses unrelated to the co-operative education work placement.
Fees:
- There are no fees associated with applying for or claiming this tax credit.
Qualifications
- Must be an Ontario business.
- Must hire students enrolled in a post-secondary co-operative education program at an Ontario university or college.
- Must have a permanent establishment in Ontario.
- Must be subject to Ontario corporate income tax or Ontario personal income tax.
- Must provide a work placement that is:
- Developed or approved by the eligible educational institution.
- Not less than 10 weeks for co-operative education programs or 8-16 months for internship programs.
- Paid and supervised by the employer.
- Monitored by the educational institution.
Must keep a letter of certification from the student’s university or college for at least 7 years.
Disqualifications:
- Limited partners in a partnership.
- Employers who cannot provide supporting documentation when requested.
Description
This program offers a refundable tax credit for businesses that hire students from co-operative education programs at Ontario universities or colleges.
You can receive 25% of the wages you pay to a student during their work placement. If you run a small business, you can get 30% back. The maximum credit you can claim for each work placement is $3,000. Most placements last between 10 weeks and four months.
This tax credit can help you manage the cost of hiring and training new talent. It reduces your overall tax bill and any excess credit will be refunded to you. This means more savings and less financial strain on your business.
Program Steps
Gather Required Documentation:
- Letter of certification from the student’s university or college.
- Details of the student’s work placement, including the term and discipline.
- Employment records showing the student’s wages and employment period.
Download Necessary Forms:
- For corporations: Schedule T2SCH550, Ontario Co-operative Education Tax Credit.
- For unincorporated businesses: Form ON479, Ontario Credits.
- For partnerships: Ensure each member has the appropriate forms for their corporate or personal tax returns.
Complete the Forms:
- Fill out the downloaded forms with accurate information about the student’s work placement and wages.
- Ensure all details match the supporting documentation.
File the Tax Return:
- Corporations: Attach Schedule T2SCH550 to the T2 Corporation Income Tax Return.
- Unincorporated businesses: Include Form ON479 with your personal income tax return.
- Partnerships: Each member should file their share of the credit on their respective tax returns.
Retain Supporting Documents:
- Keep the letter of certification and all related documents for at least 7 years.
- Be prepared to provide these documents if requested by the Canada Revenue Agency.
Submit and Monitor:
- Submit your completed tax return with the attached forms.
- Monitor for any requests for additional information or documentation from the tax authorities.
Receive and Report the Credit:
- Once approved, the tax credit will reduce your tax payable for the year.
- Report the full amount of the credit as taxable income in the year it is received.