Where a business employs qualifying apprentices, an investment tax credit is available in respect of their salaries and wages paid after May 1, 2006. The maximum credit is $2,000 per apprentice annually, reached on annual wages of $20,000. Where the apprentice is employed by two or more associated employers during a year, the $2,000 annual limit is required to be shared between those employers.
The credit can be used to offset Federal taxes otherwise payable. There is no provision for a refund of credits in excess of Federal taxes otherwise payable, but unused credits can be carried back up to three years, or forward up to twenty years.
A qualifying apprentice is one working in a qualifying trade in the first twenty four months of a provincially registered apprenticeship contract. Wages paid after that 24 month period generate no credit. Employers who do not have a provincially registered apprenticeship contract will not be able to take advantage of this credit. Qualifying trades are currently limited to the Red Seal trades. To find out if your trade qualifies, visit http://www.red-seal.ca/.
The Income Tax Act applies a strict deadline for claiming of one year after the due date for filing the tax return for the year in which the relevant expenses are incurred. CRA has no discretion to allow claims filed after this deadline, so it is critical that these be filed in a timely fashion.