The Apprenticeship Tax Credit is an attempt by the Canadian federal government to create long term jobs by encouraging Canadian employers to hire apprentices.
As explained on page 65 of the T4012 T2 Corporation - Income Tax Guide 2010:
"A corporation can earn an ITC equal to 10% of the eligible salaries and wages paid to eligible apprentices employed in the business in the tax year to a maximum credit of $2,000, per year, per apprentice."
Individual tax payers can also claim the Apprenticeship Tax Credit.
An ITC is an Investment Tax Credit. You will be able to claim the Apprenticeship Tax Credit on your income tax as an Investment Tax Credit on Line 412 of the T1 Individual Tax Form or on Line 652 of the T2 Corporation Income Tax Form. This will involve completing Form T2038 (IND): Investment Tax Credit (Individuals) or, if your business is a corporation, the T2SCH31: Investment Tax Credit – Corporations.
An eligible apprentice is an apprentice who is working in a prescribed trade (a trade currently listed as a Red Seal Trade) in the first two years of his or her apprenticeship contract.
The great thing about the Apprentice Tax Credit is that any unused portion of this tax credit can be carried back three years or carried forward 20 years, so you can choose when to use it for your best tax advantage. The bad thing, in my opinion, is that the Investment Tax Credit is only 10%; it should be higher in my opinion.
