Hiring apprentices can help you build your workforce and lower payroll costs. The Apprenticeship Job Creation Tax Credit is a federal tax credit that helps employers pay for training new skilled trades workers. If you pay eligible apprentice wages, you may be able to claim up to $2,000 per apprentice, per year on your tax return.
Below is a step-by-step guide on how to claim the Apprenticeship Job Creation Tax Credit and avoid common filing mistakes.
The Apprenticeship Job Creation Tax Credit (AJCTC) is a federal, non-refundable investment tax credit for employers who hire apprentices in Red Seal trades.
Here’s how it works:
The program is managed by the Canada Revenue Agency (CRA) and is currently open.
You may be eligible if all of the following apply:
The apprentice must:
Only wages paid during the eligible apprenticeship period qualify.
You can claim:
Example:
If you paid an eligible apprentice $18,000 in their first year, you could claim $1,800. If wages were $25,000, your claim would be capped at $2,000.
The Apprenticeship Job Creation Tax Credit is non-refundable. This means it can reduce your taxes payable to zero, but you will not receive a cash refund.
Include only:
Do not include:
To claim the credit, file:
If you cannot use the full credit this year:
This makes the Apprenticeship Job Creation Tax Credit useful even if your business is not yet profitable.
Many provinces offer their own apprenticeship grants, wage subsidies, or tax credits. These provincial programs often work alongside the federal AJCTC, but each has its own rules.
If you hire apprentices in more than one province, check local rules to see what extra funding is available. GrantHub’s platform lets you compare federal and provincial programs side-by-side.
To get the most from the AJCTC:
Using a tool like GrantHub can help you find additional programs and avoid missing deadlines or eligibility requirements.
Claiming ineligible trades
Only Red Seal trades qualify. Non–Red Seal occupations are not eligible.
Claiming after year two
Wages paid after the apprentice’s second year do not qualify.
Forgetting to file Form T2038
The credit is denied if you only enter an amount on line 41200 without the form.
Assuming the credit is refundable
The AJCTC reduces taxes owed but does not generate a refund.
Q: Is the Apprenticeship Job Creation Tax Credit refundable?
No. It is a non-refundable investment tax credit. You can use it to reduce taxes payable to zero, but you will not receive cash back.
Q: Can corporations claim the Apprenticeship Job Creation Tax Credit?
Yes. Individuals, partnerships, and corporations can all claim the credit if they meet the eligibility rules.
Q: Can I deduct apprentice wages and still claim the AJCTC?
Yes. Eligible wages can still be deducted as a business expense. The AJCTC is claimed separately as an investment tax credit.
Q: What if I forget to claim the credit in a prior year?
You may be able to adjust a prior return or apply the credit using carryback rules, depending on your situation.
Q: Does this credit stack with provincial apprenticeship grants?
Often, yes. Federal tax credits can usually be combined with provincial wage subsidies or training grants, as long as you do not claim the same expense twice.
The Apprenticeship Job Creation Tax Credit is just one of many programs that support hiring and training in Canada. Tools like GrantHub’s eligibility matcher help you filter grants and tax credits by province, industry, and employee type.
GrantHub tracks hundreds of active grant and tax credit programs across Canada. You can quickly find wage subsidies and apprenticeship funding that fit your business profile.
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