Apprenticeship Job Creation Tax Credit

1. What is the Apprenticeship Job Creation Tax Credit (AJCTC)?
2. Who qualifies?
3. Who is an "eligible apprentice"?
4. What is a prescribed trade?
5. What are "eligible salaries and wages"?
6. How do I claim the AJCTC?
7. What if I don't have enough taxes payable to deduct the AJCTC in full?
8. What happens when two or more related employers employ the same apprentice?
9. When does this tax measure take effect?
10. Where can I get more information about the AJCTC?

1. What is the Apprenticeship Job Creation Tax Credit (AJCTC)?
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.

2. Who qualifies?
Any business that hires an "eligible apprentice".

3. Who is an "eligible apprentice"?
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.

4. What is a prescribed trade?
A prescribed trade includes the trades currently listed as Red Seal Trades. The Minister of Finance may, in consultation with the Minister of Human Resources and Social Development, prescribe other trades.

5. What are "eligible salaries and wages"?
"Eligible salaries and wages" are those payable by the employer to an eligible apprentice for the apprentices' employment in Canada in the tax year and during the first 24 months of the apprenticeship. It does not include remuneration based on profits, bonuses, and taxable benefits including stock options, and certain unpaid remuneration.

6. How do I claim the AJCTC?
Employers will be able to claim the credit on their income tax returns, using either Form T2038(IND), Investment Tax Credit (Individuals) or Form T2SCH31, Investment Tax Credit - Corporations. Forms can be ordered on-line at www.cra.gc.ca/forms. You can also order forms and publications by calling us at 1-800-959-2221.

7. What if I don't have enough taxes payable to deduct the AJCTC in full?
Any unused credit may be carried back 3 years and carried forward 20 years.

8. What happens when two or more related employers employ the same apprentice?
Special rules apply to ensure that the $2,000 limit is allocated to only one employer.

9. When does this tax measure take effect?
This tax measure applies to eligible salaries and wages payable to an eligible apprentice in respect of employment after May 1, 2006.

10. Where can I get more information about the AJCTC?
Additional information will be available in the 2006 versions of the General Income Tax and Benefit Guide, Form T2038(IND), Investment Tax Credit (Individuals), Guide T4012, T2 Corporation - Income Tax Guide and Form T2SCH31, Investment Tax Credit - Corporations. These forms and publications are available on the CRA Web site at www.cra.gc.ca/forms. You can also call our Business Enquiries line at 1-800-959-5525.