By Grant Gilmour
There are two Apprentice Tax credits that a corporation can apply for, one Federal and one Provincial. The purpose of the credits is to encourage employers to hire new apprentices, thereby creating jobs and addressing an anticipated skills shortage.
In 2006 the Federal Budget introduced the Apprenticeship Job Creation Tax Credit. An eligible apprenticeship is someone who is working in a “Red Seal” trade for the first two years of their apprenticeship contract. The credit provides a non-refundable tax credit equal to the lower of $2,000 or 10% of the apprentices’ salaries or wages. A corporation must claim the credit within 18 months of the corporation’s year end.
A similar Training Tax Credit was introduced by the BC government effective January 1, 2007. Again the apprenticeship must be an eligible one. However, the trade is not restricted to Red Seal trades. An eligible training program is one administered by the BC Industry Training Authority. There are three main elements to the BC provincial credit:
Basic credits — for each of the first two years of a non-Red Seal program the corporation can claim the lower of $4,000 or 20% of eligible wages or salaries.
Completion credits — Additional credits are available for those apprenticeships that have completed a third and fourth year of their Red Seal or non-Red Seal programs. The credit in year three is the lower of $2,500 or 15% of salary and wages. The credit in year four is the lower of $3,000 or 15% of salary and wages.
Enhanced credits— these are available for apprenticeships that are First Nation individuals and hold Status Indian cards or those who are eligible for the disability amount on their personal tax return. These credits can be claimed in addition to the basic or completion credits and can range from $1,000 to $6,000 depending on whether the apprentice is a Red Seal or non-Red Seal program and what year of the program is being claimed.
The credit must be claimed by the corporation within 36 months of the corporation’s year end.
If you have questions about apprentice tax credits, please contact us at Gilmour Knotts Chartered Accountants for our help on this issue.
Grant Gilmour B.SC. MBA, CPA, CA is the International Tax Partner of Gilmour Knotts Chartered Accountant. To connect with Grant visit: www.gilmour.ca