Apprenticeship Tax Credits

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Posted by Sharon Perry on November 01, 2012 in Blog, Tax Tips
Apprenticeship Tax Credits

Is Your Job a Certified Trade?

Did you know that the profession of Decorator is considered a trade?  How about Baker? Professional Cook? Hair Stylist? These are all jobs that, if you meet the certification requirements, you can get a certified trades designation for it.  And better yet, you may be eligible for additional tax credits if you achieve that designation!!

There are tax credits available for apprenticeship, certification and Red Seal Certification (Inter-provincial certification).  You may already be working in a trade, however, if you are not registered with the Industry Training Authority (ITA) you will not be eligible for the tax credits.

Both employers and employees who are engaged in apprenticeship programs administered through the ITA are eligible to claim tax credits. The three main training tax credits are:

  • basic credits for non-Red Seal training programs;
  • completion credits for both Red Seal and non-Red Seal training programs; and
  • enhanced credits for First Nations individuals and persons with disabilities.

Employees are entitled to refundable tax credits, meaning the government reimburses you upon completion of the credits, of up to a $2,500 per year for both Red Seal and non-Red Seal apprentices – depending on the trade and level completed.

Employers that hire apprentices registered in the program can claim a percentage of the employees’ wage.  An employer can claim 10% of wages up to a maximum of $2000 per year for the first 24 months of registration for a Red Seal apprentice and 20% of wages up to a maximum of $4000 per year for the first 24 months of registration for a non-Red Seal apprentice.  The employee is NOT required to complete technical training during this time, nor are there any requirements to submit work-based training hours in order to claim this credit.

Additionally, there is an Apprenticeship Incentive Grant (AIG) available to apprentices registered with the ITA after they have successfully completed the requirements for the first and second level of training in a Red Seal trade. Of course, different trades have different level requirements.

If you already work in a trade but are not certified you may be thinking – “I don’t want to waste time by going back to school for classes to get certification for a job that I’m already doing!!”  BUT, although there are requirements that must be met in order to qualify for a tax credit level, the requirements are not only based on the level of technical training completed, but also on the completed work hours in that trade.  Maybe you took some of the courses ‘way back when’ but never took the certification exams because you got a job.  You can take your transcripts or proof of the hours you worked in the profession and challenge the exam.  Effective June 2010, you may be eligible for a Certification Tax Credit if you have successfully challenged the exam.

The ITA may also grant you credits towards your apprenticeship if you have trained in a Red Seal program somewhere else in Canada or worked in a profession that is relevant to your current apprenticeship.

Having a “Certified Trades Ticket” can be a key to unlocking work opportunities that may otherwise be unavailable to you!  Although you may be able to find a trades job without the certification, having that Ticket can open doors to Industries that ONLY employ certified trades-persons   These Industries may restrict hiring by requiring the certification, however, those with the designations that fit the bill will see a higher rate of compensation.

As an Employer with apprentices on staff, you are ensured that your employee is learning their trade at the Industry level and be eligible for tax credits for a portion of their wages.  If you are interested in or already working in a trade, the time and effort it takes to look into getting a Trades Certification is worthwhile.  Not only will it increase your earning capacity after, you may be eligible for tax credits and save money while you do it!!

Remember, always speak with a Professional Accountant to make sure you qualify.