Apprenticeship Tax Credits

Ann Fuller, CPA, CGABlog, Consulting, HR, Tax, Tax Credit

Do you employ trades people or co-op students?

The federal and provincial governments offer tax credits to encourage businesses to train and hire apprentices. It is a great program to help businesses offset some of the training costs. The tax credits can be claimed by corporations, partnerships and proprietors

The federal tax credits are limited to Red Seal trade apprentices in their first 24 months of apprenticeship. The tax credits are calculated as percentages of the wages paid, up to $2,000 per employee per year. The credits are non-refundable which means they can only be used to reduce the taxes owing. There are about 53 Red Seal trades; some examples: cook, plumber, roofer, painter, welder, hairstylist, automotive service technician.

The Manitoba program, called the Manitoba Paid Work Experience tax credit, is much broader than the federal program. It includes credits for apprentices, newly graduated journeymen, co-op students and recently graduated co-op students, and some individuals who have completed high school training courses. The maximum credit per employee per year ranges from $2,500 to $5,000, depending on which tax credit is applicable. Credits are calculated based on wages, days worked, and a few other factors.

The Manitoba tax credit is refundable. For example, when the Manitoba tax credits earned are greater than the taxes payable, there is a refund. For the apprentice and journeyman credits, both Red Seal trades and provincial trades qualify.

Employers who provide work placement for students enrolled in a qualified post-secondary co-operative education program are eligible to claim the co-op credit. There is also a credit for businesses that hire co-op graduates in a related field of study.

If you haven’t applied in the past but think you might have qualified, you can amend your corporate tax returns two years back.

Please get in touch with us if you’d like us to help with this.