Ontario Co-operative Education Tax Credit
Effective March 27, 2009, the Co-operative Education Tax Credit will reimburse businesses 25% of eligible expenditures up to a maximum of $3,000 for each qualifying co-op work term. Businesses with a payroll of less than $400,000 will be reimbursed 30% of eligible expenditures to a maximum tax credit of $3,000 for each qualifying co-op work term.
- Eligible employers include all Ontario corporations or unincorporated businesses with permanent establishments in Ontario, subject to Ontario corporate income tax. Ineligible employers include hospitals, Federal and Provincial Governments, municipalities, schools, and not-for-profit organizations.
QUALIFYING CO-OP WORK TERMS
- The co-op work term must be a minimum of 10 weeks in duration, and be a requirement for graduation from a qualifying co-operative education program.
- Most co-op work terms are four months in length. Should an employer have a student for an eight, twelve or sixteen-month co-op work term, each four-month period is considered a separate co-op work term qualifying for the maximum cap of $3,000.
- Should an employer have a student for a nine-month co-op work term the employer can claim a tax credit for two four-month co-op work terms only. The ninth month does not meet the minimum 10 weeks duration criteria and therefore a third four-month tax credit cannot be claimed.
- Employers hiring students from non-Ontario educational institutions will not qualify for the Ontario Co-operative Education Tax Credit.
- Only one tax credit letter will be issued per student, per required work term required for graduation.
- Should an employer have more than one co-op student on a co-op work term, each student on a qualifying co-op work term is considered for the tax credit for the maximum cap of $3,000 for each student.
- Employers hiring co-op students from a qualified Ontario educational institution but working through a personnel agency can claim the Ontario Co-operative Education Tax Credit.
- All taxable income and taxable benefits reported by the employer on the students.
- T-4 slips. The student’s remuneration must be attributable to an Ontario permanent place of business.
- Any payments made to a personnel agency for the hiring of co-op students during the qualifying co-op work terms for the services of a student carried out primarily at an Ontario place of business.
- Payments by the employer to a qualifying Ontario educational institution where the T-4 slip is issued by the educational institution to the student for the co-op work term.
- Any Government assistance received by the business in respect of the co-op work term (other than the tax credit itself) will reduce the amount of the expenses eligible for the credit.
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