Federal-Apprenticeship Job Creation Tax Credit (AJCTC)

In its 2006 budget, the Federal government announced a new tax credit for employers who hire eligible apprentices, as well as a new Apprentice Incentive Grant (AIG) for first- and second-year apprentices.
The AJCTC is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices in respect of employment after May 1, 2006. The maximum credit is $2,000 per year for each eligible apprentice.
Any business that hires an "eligible apprentice" will qualify for the credit. An "eligible apprentice" is someone who is working in a prescribed trade in the first two years of their 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.
Employers will be able to claim the credit on their income tax returns. If you don't have enough taxes payable to claim the AJCTC in full, any unused credit may be carried back 3 years and carried forward 20 years. This tax measure applies to eligible salaries and wages payable to an eligible apprentice in respect of employment after May 1, 2006.
The AIG is effective January 1, 2007 and will provide a cash grant of up to $1,000 for apprentices in the first two years of an apprenticeship program.
Ontario-Apprenticeship Training Tax Credit (ATTC)

The (ATTC) is a refundable tax credit for corporations and unincorporated businesses employing apprentices in certain skilled trades during the first 36 months of an apprenticeship program. The maximum tax credit is $5,000 per qualifying apprentice per taxation year. Eligible employers are Corporations and proprietors with permanent establishments in Ontario.

Eligible expenditures are salaries and wages paid to an apprentice in a qualifying skilled trade for services performed by the apprentice for the corporation or unincorporated business after May 18, 2004 and before January 1, 2011. Eligible expenditures also include fees paid or payable to an employment agency by a corporation or unincorporated business for services performed by the apprentice in a qualifying apprenticeship after May 18, 2004 and before January 1, 2011.
This apprenticeship contract must be registered with a federal, provincial or territorial government under an apprenticeship program designed to certify or license individuals in the trade.
Corporations may claim the tax credit on their income tax return. Eligible employers operating unincorporated businesses may claim the credit on their personal income tax return. The tax credit will first reduce Ontario tax payable for the taxation year and the excess will be refunded. The full amount of the credit is considered to be taxable government assistance and is included in income in the taxation year of the claim.
If you have any questions or believe your company may qualify for these tax credits, please contact your local DJB office to discuss with one of our tax professionals