Apprenticeship Tax Credit

Apprenticeship Tax Credit

There were significant changes to the Apprenticeship Training Tax Credit (ATTC) in the proposed 2015 Ontario budget. The cuts to this tax credit impacts the businesses hiring apprentices; and ultimately affect individuals going through apprenticeship training programs.

The Apprenticeship Tax Credit was created in 2004 to encourage employment in the trades. In 2009 as part of the economic recovery action plan, the ATTC benefit was more than doubled to further encourage employers to hire and train apprentices during the economic downturn. While the rate of employers utilizing this credit increased, the average rate of registration in the trades only grew approximately 3% from 2009-2014. The Ontario government cites this as the main reason for decreasing the ATTC back to pre-2009 levels. In this proposed budget, the following changes would affect apprentices who registered in the program after April 23, 2015.

Tax Credit Rates

  • General tax credit rate would decrease from 35% to 25%.
  • The rate for small businesses with salaries or wages under $400,000 per year would decrease from 45% to 30%.

Eligibility

  • The eligibility period to take advantage of these tax credits will reduce from the first 48 months of the apprenticeship program to the first 36 months.

The total impact for an employer hiring an apprentice through the first 48 months is reduced from a maximum $40,000 refundable tax credit to a maximum $15,000.

Although this budget is cutting credits for employers, it is increasing its support of colleges who teach apprentices by offering $19 million over three years for equipment upgrades. They are also renewing the Ontario Youth Jobs Strategy which gives $23 million over two years for the Apprenticeship Enhancement Fund and $13 million over two years for pre-apprenticeship programs.

Including the reduction to the list of eligible trades for IT-related trades in 2014, the tax credit benefit available to employers has been significantly decreased. The budget appears to be putting money into the apprenticeship programs for the students, however, the impact to the employers is detrimental to their hiring chances.

Joshua Smith, CPA, CA
Manager, Tax