Principal Issues: [TaxInterpretations translation] Can "Red Seal" trades that are not provincially regulated qualify for the Apprenticeship Job Creation Tax Credit?
Position: All Red Seal trades are either regulated or supervised in such a way that a relatively uniform control exists.
Reasons: In Quebec, for example, Emploi Québec is the agency responsible for certification, contractual agreements and the delivery of training programs, except for the construction trades. They have instituted a system of competency certificates, qualification certificates and contract registration that allows both the apprentice and the employer to meet the administrative requirements for the tax credit. The Commission de la construction du Québec (CCQ) is the organization responsible for those tasks for the construction trades in Quebec.
XXXXXXXXXX 2007-022275 Nancy Turgeon, CGA March 12, 2008
Dear Madam,
Subject: Apprenticeship job creation tax credit subsection 127(9).
This is in response to your letter dated January 31, 2007, in which you asked whether "Red Seal" trades that are not regulated and do not have standards in a particular province are eligible for the apprenticeship job creation tax credit.
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act (the "Act").
Our Comments
The situation you have indicated in your letter appears to relate to an actual situation involving a specific taxpayer. As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is our practice not to issue written opinions on proposed transactions otherwise than by way of advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you. These comments may, however, under certain circumstances, not apply to your particular situation.
The 2006 federal budget introduced the apprenticeship job creation tax credit. In that regard, the definition of investment tax credit in paragraph 127(9)(a.4) refers to an apprenticeship expenditure in respect of an eligible apprentice. An eligible apprentice is defined in subsection 127(9) as “an individual who is employed in Canada in a trade prescribed in respect of a province or in respect of Canada, during the first two years of the individual’s apprenticeship contract registered with the province or Canada, as the case may be, under an apprenticeship program designed to certify or license individuals in the trade.”
A prescribed trade is one that is currently designated as a "Red Seal" trade, as set out in section 7310 of the Income Tax Regulations. The list of "Red Seal" trades is specific to each Canadian province.
In Quebec, for example, the apprentice must have either a competency certificate from the Commission de la construction du Québec (CCQ) or a certificate of vocational qualification or workplace learning certificate, both of which are issued by Emploi Québec. Their standards are based on the establishment of a professional training plan, hours of practice, apprenticeship, etc. It is our understanding that a trade designated as "Red Seal" in Quebec is, at no time, not subject to regulation or supervision by either the CCQ or Emploi Quebec.
We hope that these comments are of assistance.
Best regards,
Randy Hewlett
Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate.