This document has been updated on October 24th, 2017 and reflects the state of the Law, including draft amendments, at that date.

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 or parental 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 $50,000in annual expenses does not give entitlement to the credit. To learn more about the 2017 rates, see Table C5 in the Corporate Taxation and U.S. Federal Tax Folder at the end of the “Tax Planning Guide”.

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).

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 $600 or $750 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 $750 and $1,050 in respect of expenditures incurred to hire certain immigrant or handicapped trainees. In addition, the number of supervisory hours is doubled.

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

  • 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.

Apprenticeship Training Credit – Ontario

Individuals who carry on a business are entitled to a refundable tax credit varying between 25% and 30% on expenses incurred with respect to eligible trainees. The maximum 30% tax credit rate is attained when the business’s payroll for the previous year does not exceed $400,000. The employer is entitled to a maximum tax credit of $5,000 per trainee annually up to a maximum of $15,000 for the first 36 months of the apprenticeship training program.

The trainee has to work in a specialized trade, i.e. a trade in the industrial, construction or motive power sectors or a trade related to services such as electronic service technician, microelectronic manufacturer, cable network specialist or information technical support analyst.

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.