9- Tax credits

Credit for Reporting Tips – Quebec

An employer who operates an establishment covered by the measures relating to employee tips must file an annual report of tips for each employee, no later than the last day of February of the following year. Employers are entitled to a refundable tax credit equal to 75% of employer contributions to the extent they cover the tips received directly by an employee as well as those attributed by the employer under an attribution mechanism. Indemnities paid on general statutory holidays or for family, parental or health leave under the Act Respecting Labour Standards are eligible for the credit.

Scientific Research and Experimental Development

For federal and Quebec purposes,⁷ individuals who carry out SR&ED work are entitled to a tax credit. In Quebec, the first $50,000⁸ in annual expenses does not give entitlement to the credit. To learn more about the rates, see the Corporate Taxation tables.

Apprenticeship and Training Credits

Apprenticeship Job Creation Credit – Federal

Employers may claim a non-refundable tax credit equal to 10% of salaries and wages paid in respect of apprentices who carry on a trade included in the Red Seal trades.⁹ The maximum annual credit is $2,000 per apprentice. Unused credits can be carried back three years and forward twenty years.

Credit for On-the-Job Training – Quebec

A taxpayer who engages a trainee or apprentice for eligible training is entitled to a refundable tax credit. Eligible expenses for this credit include the trainees’ or apprentices’ salaries as well as those of their supervisors. The eligibility conditions vary depending on the training provided.

The tax credit (for unincorporated taxpayers) is 12% of the eligible expenses and the weekly maximum for such expenses is $700 or $875 depending on the type of training. The maximum number of hours of training supervision varies from 10 to 20 hours per week.

The tax credit is increased to 16% and the maximums to $875 and $1,225 in respect of expenditures incurred to hire certain immigrant, handicapped or Aboriginal trainees or for training in an establishment of the taxpayer located in an eligible resource region. In addition, the number of supervisory hours is doubled.

The 12% and 16% credit rates are increased to 20% and 25%, respectively, when the following conditions are met:

• The trainee is a student trainee;
• It is at least the third consecutive taxation year for which the taxpayer is entitled to a tax credit for a student trainee;
• The eligible expenditure in respect of a student trainee is at least $2,500 for each of these three years.

Cooperative Education Tax Credit – Ontario

An employer who hires a student registered in a cooperative education program is entitled to a refundable tax credit of 25% to 30% of expenses, up to a maximum credit of $3,000 per apprenticeship (maximum of four apprenticeships for the same student). Expenditures include salaries, wages and payments by the business to a university or college, or a placement agency.

If you hire trainees, consult a tax specialist to ensure you claim all the credits to which you are entitled.

⁷ In Ontario and New Brunswick, the credits are only offered to corporations.

⁸ Excluded expenses threshold applicable to a taxpayer whose total assets amount to less than $50M (amount increased gradually up to $225,000 when the assets reach $75M).

⁹ For details, refer to: Red seal trades.