TECCanada

Kick Start Your Business With Apprenticeship Tax Credits

Mitch Silverstein, Speaker Visit Website

A famed U.S. automaker once said, “In business, the competition will bite you if you keep running; if you stand still, they will swallow you."
 
Is your business running? The question may not resonate with those of the construction industry, which has enjoyed phenomenal growth over the past decade. In good times, it’s easy to become complacent and run things “business as usual," but in times of hardship this attitude can be disastrous.
 
Unfortunately, the golden years of uninterrupted expansion may be coming to an end. Experts in the industry point to an ever-growing shortage of skilled trades. This could have a damaging impact on the sector as a whole, and on your business in particular.
 
So, what is your company currently doing to prepare itself for the potentially difficult times ahead? More importantly, what is your competition doing?
 
The federal and provincial governments have acknowledged this impending crisis and have implemented programs designed to increase labour capacity and reward those companies who invest their resources towards workplace-based training. Allow me to briefly describe the government programs that companies, such as yours, are currently taking advantage of. 
 
Ontario’s Apprenticeship Training Tax Credit (ATTC)

Designed to encourage the hiring of apprentices in the construction, industrial and manufacturing sectors, the ATTC became law in December 2004. The objective of the tax credit is to make apprenticeship training programs more affordable for employers to implement, and to build a solid foundation for supporting economic growth in the years to come.
 
Corporations, proprietorships and general partnerships can obtain a refundable credit equivalent to 25 percent of eligible expenditures paid for each qualified apprentice they employ. Smaller businesses with payrolls under $500,000 are eligible for an even higher tax credit rate of up to 30 percent. This equates to substantial tax savings and potential cash refunds!
 
Let’s put this into perspective. For each qualified apprentice your business employs, you can receive a maximum refundable credit of $5,000 per taxation year, for the first three years of their work placement - up to a maximum of $15,000 over this three-year period. The refundable credit first reduces the Ontario taxes payable for the taxation year, and any excesses are refunded as cash.

For example, if you employ five apprentices and pay each a salary and taxable benefits of $16,700 per year for the first three years, your business may be eligible for a total refund of $75,000 over this period ($5,000 x five apprentices x three years = $75,000 refund). This means that the amount you would actually be paying each apprentice is only $11,700. The government is willing to absorb the difference, which is $5,000 per year for each apprentice.
 
So, who qualifies? There are over 100 different employment codes that are eligible for the Apprenticeship Training Tax Credit. They include such trades as sheet metal workers, plumbers, construction and maintenance electricians, hoisting engineers, brick and stone masons, general carpenters, roofers, drywall acoustic applicators, etc. 
 
Canada’s Apprenticeship Job Creation Tax Credit (AJCTC)

Although not as generous as the Ontario Apprenticeship Training Tax Credit, the AJCTC is still worth pursuing. The AJCTC is a non-refundable credit equal to 10 percent of the eligible salaries and wages of apprentices to a maximum credit of $2,000 per year for each apprentice. To be eligible, the salaries and wages must be payable by the employer during the first 24 months of the apprenticeship. Also, the prescribed trade must be listed as a Red Seal Trade which currently includes approximately 80 percent of the total trades workforce in Canada.
 
We have all complained at some point that the government just doesn’t do enough to help stimulate business; that it is blind to the challenges faced by the Construction industry. Well, the government now appears to be doing something to help lower your labour costs and assist in strengthening the labour supply. Are you benefiting? Rest assured your competition is.