The apprenticeship tax credit for Ontario employers

Training a tradesperson is expensive before it is profitable. There is a federal tax credit that takes some of the edge off, and there is a lot of outdated advice circulating about a provincial one that most Ontario employers can no longer claim.

Start with the part that still works.

The federal credit

The Apprenticeship Job Creation Tax Credit is worth 10% of the eligible salaries and wages you pay an eligible apprentice, capped at $2,000 per apprentice per year.

The cap is the part people repeat and the percentage is the part they forget. Ten percent of wages means you need roughly $20,000 of eligible wages paid to that apprentice in the year to reach the full $2,000. An apprentice who started in September and earned $9,000 by your year end generates a $900 credit, not $2,000.

To be eligible, the apprentice has to be:

• Working in a prescribed trade, which includes the trades currently listed as Red Seal trades
• In the first two years of the apprenticeship contract
• Under a contract registered with a federal, provincial or territorial apprenticeship authority

The credit is a non-refundable investment tax credit. It reduces tax payable rather than taxable income, which makes it worth more per dollar than a deduction, and it is only useful if there is tax to reduce. If your corporation has no tax payable this year, the unused amount can be carried back three years and forward twenty. It is not lost, it just waits.

One more piece that catches people: the credit reduces the salary and wage deduction you claim, or gets added back to income the following year. The net benefit is real, and it is smaller than the face amount.

Ontario's own credit is not available for new apprentices

The Ontario Apprenticeship Training Tax Credit was a separate refundable provincial credit worth up to $5,000 a year. It is not available for apprenticeship programs that commenced on or after November 15, 2017. Programs that started before that date could still be claimed under the old rules for their eligible period, and that window closed years ago for practical purposes.

If you have been told you can claim an Ontario apprenticeship credit for a hire made recently, that advice is wrong. We see the two credits confused constantly, usually because the federal credit's name gets attached to Ontario in older articles and grant directories. The Apprenticeship Job Creation Tax Credit is federal. Ontario does not currently run a parallel apprenticeship tax credit for new registrations.

What Ontario does run

The support that still exists on the provincial side is grant-based rather than a tax credit. Ontario's Achievement Incentive pays milestone amounts to registered sponsors as apprentices complete stages of their training, and there are group sponsorship and training supports that come and go with each budget. Amounts and eligibility have changed more than once, so confirm the current terms with the program directly before you build them into a hiring budget.

Grants of this kind generally reduce the expenditures you can claim elsewhere or count as income. They are worth having. They are not free money on top of everything else.

Making the claim stick

Register the contract. An informal arrangement where an experienced employee shows a new hire the work does not qualify, however good the training is. The contract has to be registered with the apprenticeship authority. Registration also has to be in place for the period you are claiming, so a hire in March with paperwork filed in November gives you a shorter eligible period than you think.

Track the wages separately. The credit is a percentage of eligible wages paid to that apprentice. If every field employee is coded to one wages account, someone is going to reconstruct the number from timesheets in the spring. Set up the payroll so each apprentice's wages are already isolated. That is a setup task, not an annual one, and it is worth doing when you first get the payroll running properly.

Know when the two years end. Eligibility runs on the first two years of the apprenticeship contract, not on your fiscal year and not on how long the person has worked for you. An apprentice hired mid-program by another shop may already be past the window.

Keep the supporting file. Registration confirmation, the trade designation, payroll records for the apprentice, and evidence of who the supervising journeyperson was. None of it is hard to produce at the time and all of it is unpleasant to reconstruct two years later.

Where the money actually comes from

The credit is a partial offset, and the real return on an apprenticeship is the productivity of a trained worker who stays. Apprentices reach useful output well before they certify, and a shop that trains its own people is less exposed to the going rate for experienced journeypersons in a tight market. That is the case for the program. The tax credit makes the first two years cheaper while you wait for it.

If you are hiring apprentices for the first time, the payroll, WSIB and subcontractor questions tend to arrive at the same moment. We deal with that whole cluster for trades and contractors, and the credit is usually the easiest part of it. The classification of everyone else on your crew is the part that costs money when it goes wrong.

Common ways employers lose the credit: claiming for apprentices past year two, claiming for a trade that is not prescribed, and assuming the federal claim automatically enrolls you in provincial programs. Each provincial program needs its own application.

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General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.