Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether an employer qualifies for the AJCTC even though the registered apprenticeship contract is between the province and a trade union?
Position: Question of fact but it is possible.
Reasons: See analysis.
XXXXXXXXXX
J. Nichols
2013-050441
October 9, 2013
Dear XXXXXXXXXX:
Re: Apprenticeship Job Creation Tax Credit ("AJCTC")
We are writing in reply to your email dated September 11, 2013, and further to our telephone conversation on October 7, 2013 (Nichols/XXXXXXXXXX), wherein you requested our views whether an employer qualifies for the AJCTC under subsection 127(5) of the Income Tax Act (the "Act") where the particular employee's registered apprenticeship contract is between a province and a trade union.
Our Comments
Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html. Where a particular transaction has already been completed, a review of the relevant facts and circumstances surrounding the situation would be required. Such review would normally be conducted by the applicable Tax Services Office during the course of an income tax audit which, if undertaken, would be carried out after the particular taxpayer has prepared and filed its income tax return for the year. Notwithstanding the foregoing, we are prepared to provide the following comments that may be of assistance.
Whether a taxpayer has an "apprenticeship expenditure" in a particular taxation year is determined with reference to the expression "eligible salary and wages", providing that the taxpayer employs in the taxation year an "eligible apprentice" to whom such eligible salary and wages are payable by the taxpayer.
An "eligible apprentice" is defined in subsection 127(9) of the Act to mean an individual who is employed in Canada in a trade prescribed "in respect of a province or in respect of Canada" during the first 24 months of the individual's apprenticeship contract registered with the province or Canada, as the case may be, under an apprenticeship program designed to certify or license individuals in the trade.
The expression "eligible salary and wages", as defined in subsection 127(9), means salary and wages payable by a taxpayer to an eligible apprentice in respect of the first 24 months of the apprenticeship contract (excluding remuneration that is based on profits, bonuses, amounts described in section 6 or 7 of the Act, and amounts deemed to be incurred by subsection 78(4) of the Act).
Section 7310 of the Income Tax Regulations ("Regulations") provides that a prescribed trade in respect of a province means, at all times, in a taxation year, a trade that is, at any time in the taxation year, a Red Seal trade for the province under the Interprovincial Standards Red Seal Program. Further information about the Red Seal program can be found on its website at: http://www.red-seal.ca/w.2lc.4m.2@-eng.jsp.
In our view, the fact that a particular employee's registered apprenticeship contract is between a province and a trade union, will not, in and of itself, preclude the employer from claiming the AJCTC provided all the other required conditions are met.
We trust that these comments will be of assistance.
Yours truly,
Michael Cooke, C.P.A., C.A.
Manager
Business and Capital Transaction Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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