Principal Issues: Whether employer can claim apprenticeship job creation tax credit in respect of its apprenticeship expenditures.
Position: Matter referred to TSO for resolution. General comments only.
Reasons: Question of fact.
September 14, 2009
XXXXXXXXXX
Dear XXXXXXXXXX :
The Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on July 14, 2009, asking how to claim the Apprenticeship Job Creation Tax Credit (AJCTC) and whether your company is able to claim the credit for apprentice electricians that have been employed since 2006.
The AJCTC is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices for employment after May 1, 2006. The maximum credit is $2,000 per year for each eligible apprentice. An unused credit can be carried back three years to tax years ending after May 1, 2006, and carried forward 20 years.
An eligible apprentice is someone who is working in a prescribed trade in the first two years of his or her apprenticeship contract. This contract must be registered with a federal, provincial, or territorial government under an apprenticeship program designed to certify or license individuals in the trade.
A prescribed trade includes trades currently listed as Red Seal trades. You may be interested to know that a construction electrician is included among the list of Red Seal trades and would therefore be a prescribed trade for the purposes of claiming the AJCTC. You can view a current list of Red Seal trades on the Interprovincial Standards Red Seal Program Web site at www.red-seal.ca/Site/trades/aig_province.htm.
Eligible salaries and wages are salaries and wages payable by the employer to an eligible apprentice for the apprentice's employment in Canada in the tax year and during the first 24 months of the apprenticeship. However, they do not include remuneration based on profits, bonuses, and taxable benefits including stock options, and certain unpaid remuneration.
In answer to your first question, a corporate employer can claim the AJCTC on its income tax return by filling out Form T2SCH31, Investment Tax Credit - Corporations. Parts 21 - 23 of the form relate to expenditures for apprenticeship job creation. Form T2SCH31 can be found on the Canada Revenue Agency (CRA) Web site at www.cra.gc.ca/E/pbg/tf/t2sch31.
With regard to your second question, whether your company is able to claim the AJCTC for electrician apprentices employed since 2006 depends on whether the above conditions are met. In that regard, I invite you to contact Mr. Harvey Stenz, Assistant Director of Audit at the Regina Tax Services Office, by calling 306-780-7883. The CRA accepts collect calls. Mr. Stenz is aware of our correspondence and will be pleased to assist you in making a determination.
I trust that the information provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
c.c.: Mr. Harvey Stenz
Assistant Director, Audit
Regina Tax Services Office
Post Office Box 557
Regina SK S4P 3A3
Tim Fitzgerald, CGA
Tel. (613) 957-8967
2009-033268