If your business employs skilled tradespeople, then hiring and training apprentices should be a part of your business plan and strategy. However, time and cash flow may often become obstacles to expand and train your team. Luckily for you, the Government of Canada offers a tax credit to those who have employees within their first or second year, who are under an eligible red seal trade, funding to offset the early-stage hiring and training costs of new apprentices.
The Apprenticeship Job Creation Tax Credit is meant to help both individual employers and corporations increase support by providing incentives for sole proprietors and Canada’s leading skilled trades employers, so more apprentices will be able to find employment and reduce talent gaps nationwide. This tax credit is equal to 10% of the eligible salaries/wages paid to an eligible apprentice after May 1, 2006, up to a maximum of $2,000 – meaning an employee only needs to earn $20,000 of gross pay for the business to recognize the full credit offered.
To qualify for the tax credit, employers must hire an eligible apprentice and register them under a federal, provincial, or territorial government’s apprenticeship program. Employers must also be designated to certify an apprentice. This apprentice must be in one of the designated Red Seal Trades, which consists of:
- Agricultural Equipment Technician
- Appliance Service Technician
- Auto Body and Collision Technician
- Automotive Refinishing Technician
- Automotive Service Technician
- Baker
- Boilermaker
- Bricklayer
- Cabinetmaker
- Carpenter
- Concrete Finisher
- Construction Craft Worker
- Construction Electrician
- Cook
- Drywall Finisher and Plasterer
- Electric Motor System Technician
- Floorcovering Installer
- Gasfitter — Class A and B
- Glazier
- Hairstylist
- Heavy Duty Equipment Technician
- Heavy Equipment Operator:
- Dozer,
- Excavator, and
- Tractor-Loader-Backhoe
- Industrial Electrician
- Industrial Mechanic (Millwright)
- Instrumentation and Control Technician
- Insulator (Heat and Frost)
- Ironworker:
- Generalist,
- Reinforcing, and
- Structural/Ornamental
- Landscape Horticulturist
- Lather (Interior Systems Mechanic)
- Machinist
- Metal Fabricator (Fitter)
- Mobile Crane Operator
- Motorcycle Mechanic
- Oil Heat System Technician
- Painter and Decorator
- Parts person
- Plumber
- Powerline Technician
- Recreation Vehicle Service Technician
- Refrigeration and Air Conditioning Mechanic
- Rig Technician
- Roofer
- Sheet Metal Worker
- Sprinkler Fitter
- Steamfitter/Pipefitter
- Tile setter
- Tool and Die Maker
- Tower Crane Operator
- Transport Trailer Technician
- Truck and Transport Mechanic
- Welder
An eligible apprentice is considered as someone who is working in an eligible red seal trade and in their first 24 months of the program. The date of registration in the employee’s blue book is the date used to determine the starting point of when a business can start claiming the tax credit.
For the employer to claim the Apprenticeship Job Creation Tax Credit, they must claim the credit under “Investment Tax Credit”. One thing to note: when there are two or more related employers who employ the same apprentice, special rules apply so that the $2,000 credit can only be used once. Be sure to communicate with your accountant, as they will ensure the proper forms and fields are filled when it comes tax-time so that your company receives the largest benefit available.
If you think your business could apply for this credit or need additional information simply contact KBH Chartered Accountants at info@kbh.ca.
Written by:
Mark Kuzyk, CPA
Mark started with KBH in 2014, obtained his CPA designation in 2016 and is in the process of obtaining his Chartered Business Valuation designation. Mark has a love for sports, especially baseball where he played in the US while obtaining his degree. He is also giving back to the baseball community by serving on the board for the Strathcona Baseball Association.