This is probably the number one question asked when I meet with executives. My answer is always the same; explain to me what your company has done and plans to do. While not everyone is entitled to something more, quite often an overlooked item will come up during this discussion. The four most common items found are Scientific Research and Experimental Development (SR&ED) tax credits, Ontario Interactive Digital Media Tax Credits (OIDMTC), Apprenticeship Training Tax Credits (ATTC) and co-operative education tax.
I am not going to discuss SR&ED or OIDMTC tax credits in this blog, if you are interested in these credits check out some of my older blogs and keep an eye open for future ones (especially concerning OIDMTC). I will discuss both the ATTC and the co-op credits here.
The co-op credit is worth up to $3,000 or 30% of the co-op student’s salary in Ontario. You may be asking yourself why this would be missed so often considering that the company knows it employs co-op students. There are two main reasons for this; the first is that the company didn’t realize a credit was available for these employees. The second is that the current accountant didn’t know about the co-op students. It is for this reason that I annually, if not more often, ask my clients about their business rather than just prepare the financial statements and tax returns, allowing me to provide them with quality advice when it is needed.
The ATTC is available federally and provincially. Up to $2,000 of tax credits per year over the first 24 months of an apprenticeship is available to offset Federal taxes. This amount is not refundable. To qualify for this, the apprentices must be registered in one of the 55 qualifying red seal trades. The Ontario credit for apprentices is much more significant with up to $10,000 a year for the first 4 years of apprenticeship. For companies operating in trucking, construction or manufacturing, this can represent a significant amount of cash. One of the best parts about this credit is that it is refundable allowing companies that are in the early stages generating minimal or no revenue to receive some cash back.
If you think you may have overlooked one of these credits or you would just like to take a look at what you have and what might be available to you, give me a call at 613-236-9191 or send an email to [email protected] .
Joshua Smith, CPA, CA
Manager, Ottawa Office