In order to help Ontario’s university and college students gain work experience and enhance their future employment opportunities, the Ontario government provides a refundable tax credit for businesses hiring students enrolled in a recognized post-secondary co-operative education program.
How Does the Tax Credit Work?
For each qualifying co-op work placement ending in the taxation year, a business that is an eligible employer may claim a refundable tax credit equal to the lesser of:
- 25% (30% for small businesses) of the eligible expenditures made in respect of that co-op work placement; and
- $3,000 of the eligible employer’s total tax credit for the taxation year is equal to the sum of the tax credits for each qualifying co-op placement.
How Do I Claim the Tax Credit?
Eligible employers will claim the tax credit on their Ontario income tax returns. Corporations will claim the tax credit on the CT-23 or CT-8 return. Employers operating unincorporated businesses will claim the tax credit on the Ontario Tax Credits form T-1C (ONT) included in their personal income tax return. The tax credit will be available to businesses in the taxation year in which the qualifying co-op placement ends.
Who is an Eligible Employer for the Purposes of this Tax Credit?
An eligible employer includes all Ontario corporations or unincorporated businesses with permanent establishments in Ontario subject to Ontario corporate income tax or Ontario personal income tax.
What is a Qualifying Co-op Work Placement?
A qualifying co-op work placement must be a minimum of 10 weeks in duration and must be a requirement for graduation from a qualifying co-operative education program. Where a work term lasts longer than four months, each subsequent four-month period will be considered as a separate qualifying co-op work placement.
What is a Qualifying Co-operative Education Program?
All Centennial College three-year Business and Engineering Technology and Applied Sciences co-op education programs qualify for the Ontario Co-operative Education tax credit.
What is an Eligible Expenditure?
Eligible expenditures are the following expenditures made by a business in respect of a qualifying co-op work placement:
- All salaries and wages including taxable benefits reported by the employer on the student’s T4-slip; or
- Payments by the employer to Centennial College in respect of the placement where the T-4 slip is issued by the College to the student.
What Documentation is Necessary to Support a Claim?
The Confirmation of Employment letter which Centennial College provides upon placement of the student is adequate documentation to support the claim. To help reduce paper burden, eligible employers need not attach the letter to their tax return. It must however, be retained by the employer and be available during any subsequent review of the Ontario Co-operative education tax credit by Revenue Canada or the Ontario Ministry of Finance.
For More Information
Contact the Career Services & Co-operative Education office at:
Click here, to read an Information Bulletin on how the Co-operative Education Tax Credit program works.