Hiring and training apprentices is a fundamental strategy for employers of skilled tradespeople. Yet for many employers, time and cash become obstacles to expand their team. Fortunately, the Government of Canada offers employers funding to offset the early-stage hiring and training costs of new apprentices. The Apprenticeship Job Creation Tax Credit (AJCTC) is one of several provincial and federal government tax credits for employers looking to train and hire new apprentices in high-demand trades.
The Apprenticeship Job Creation Tax Credit provides employers up to 10% of an apprentice’s wage or salary to a maximum $2,000 per candidate/year.
Because AJCTC is a tax credit, it is an entitlement to employers and can be claimed annually as a tax-deductible expense. This tax credit is claimed on an individual or corporate income tax return; unused credits can be carried back for three years or carried forward by 20 years.
What is the Apprenticeship Job Creation Tax Credit?
The Apprenticeship Job Creation Tax Credit is a federal apprenticeship tax credit for employers hiring and training a Red Seal Trade apprentice. Each year employers may claim up to $2,000 in value per qualified apprentice. This offset a variety of hiring and training costs, and helps employers mitigate the risk of bringing a new apprentice into the company.
Through the Apprenticeship Job Creation Tax Credit, employers may claim up to 10% of an apprentice’s wage or salary to a maximum $2,000 per candidate/year.
Both individual employers and corporations can apply for the tax credit, which increases the scope of support provided through this program. By providing incentives for sole proprietors and Canada’s leading skilled trades employers, more apprentices will be able to find employment and reduce talent gaps nationwide.
Apprenticeship Funding for Employers: Eligibility
To qualify for the Apprenticeship Job Creation 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 in one of 53 designated Red Seal Trades.
Apprentice Eligibility
Apprentices eligible for inclusion in an employer’s tax credit must be within the first two years of an apprenticeship contract and must be trained for one of Canada’s Red Seal Trades.
Eligibility of Trades
While there are over 300 apprentice-worthy trades across Canada, only 53 trades are designated as Red Seal Trades. For the Apprenticeship Job Creation Tax Credit, only Red Seal Trades are eligible for funding. Some of the common trades eligible for the program include:
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- Automotive Service Technician;
- Bricklayer;
- Cabinetmaker;
- Drywall finisher and Plasterer;
- Hairstylist;
- Industrial Electrician;
- Ironworker;
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- Landscape Horticulturist;
- Metal Fabricator;
- Plumber;
- Roofer;
- Tool and Die Maker; and
- Welder.
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How to Access the AJCTC Federal Apprenticeship Tax Credit
To access, the Apprenticeship Job Creation Tax Credit, employers must claim the credit on line 412 (Investment Tax Credit) by including either:
- Form T2038 for individuals; or
- Form T2SCH31 for Corporations.
Government Grants to Hire and Train Apprentices
In addition to tax credits, which are an entitlement for employers, businesses may be eligible to receive other forms of government funding for apprenticeships. Canadian government grants can support both hiring and training projects, but need to be planned and submitted prior to officially hiring or training the individual.
To learn more about developing a forward-looking government funding plan, consider downloading the How to Build a Proactive Funding Plan slide deck.
Update Info: Posted: February 26, 2013 by Mike Pearce. Updated: December 28, 2017 by Jeff Shepherd