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What is Apprenticeship Job Creation Tax Credit (AJCTC)?
Post Date: Jan. 16, 2016
If you hire an apprentice, you can receive a tax credit equal to 10% of their salary. The maximum credit is $2,000 per year. You must hire an apprentice who is:
  • in a trade listed under the "Red Seal Trades" or approved by the Minister of Finance;
  • in the first two years of an apprenticeship program registered with a federal, provincial or territorial government;
  • working towards getting a certificate or licence in that trade.
You don't have enough taxes payable to deduct all of the AJCTC? Any unused credit may be carried back three years or carried forward twenty years. In the federal budget of October 2006, the Canadian government announced a tax measure aimed at encouraging companies to create jobs for apprentices. The Apprenticeship Job Creation Tax Credit (AJCTC) offers a maximum credit of $2,000 per year for the creation of jobs for apprentices. This credit is claimed on the income-tax return by filling out the appropriate form and sending it, with the income-tax return, to the Canada Revenue Agency (CRA), which will apply the tax measure under the following conditions:
  • The credit is applicable only for apprentices employed by the company on or after May 1, 2006
  • Only apprentices performing a "Red Seal" trade are eligible (the trades of elevator mechanic, plasterer, shovel operator, and heavy equipment operator are excluded)
  • The credit applies for the first 24 months of the apprenticeship
  • The tax credit is equivalent to 10% of the eligible salary paid to eligible apprentices up to a maximum of $2,000 per year for each eligible apprentice
  • If a single apprentice works for more than one employer over a single year, the CRA will ensure that the maximum allocation of $2,000 is not surpassed for a single apprentice
  • Employers will be able to claim the credit on their income-tax returns using form T2038(IND) for independent contractors or form T2SCH31 for companies. These forms indicate the documentation to supply as needed