December 18, 2006

TRADES TRAINING

B.C. training tax credit expands incentives

JEAN SORENSEN

Correspondent

VANCOUVER

The newly-introduced B.C. Training Tax Credit Program, effective January 1, 2007 subject to legislation approval, will provide incentive for apprentice programs not recognized federally but also curb apprentice drop-out rates, especially in the later phases.

The tax credit is refundable, meaning that it can be applied onto income taxes owing and unlike non-fundable tax credits, can yield a tax return cheque for corporations or an individual.

The new proposed training tax credit will only relate to those programs, which are administered through the Industry Training Authority. It is also different from the apprenticeship job creation tax credit applied to wages paid to employees introduced November 30 and applicable to wages paid back to May 1, 2006.

The proposed new training tax credit program, announced December 6, will have three components: a basic credit, completion credits and enhanced credits for First Nations individuals and persons with disabilities.

The tax credits apply to individuals engaged in apprenticeship programs as well as to their employers, including corporations, and sole proprietors.

“We got what we asked for,” says Kent Orrock, human resources project manager for the B.C. Road Builders & Heavy Construction Association, one of a group of equipment and construction associations that authored in January 2005 a report to the Ministry of Finance asking for a human resources tax credit similar to that found in provinces such as Quebec and Ontario.

The report recommended a refundable tax credit to supplement corporate training costs but mainly to encourage apprentices to finish programs. “We wanted to make sure there was a credit towards training for starting up the training programs and further credits for the people.

What happens with most training programs is a large dropout will happen – quite a large percentage as the program continues,” he said.

The group recommended an incentive to keep apprentices in their programs and complete them.

The road builders are expecting to introduce two new training programs in spring 2007, which they hope will be eligible for receiving tax credits. One is an operator technician program for heavy equipment, while the second a program for asphalt/paving laydown technicians.

The basic credit for training programs complements the federal government incentives now offered, although the federal program is limited to Red Seal programs and the first two years. It consists of a tax credit of 10 per cent of wages up to $2,000 for employers and a $1,000 taxable grant for apprentices. B.C.’s program will provide incentives for 79 B.C. recognized but non-Red Seal apprenticeship programs not eligible under the federal program.

The basic credit for employers will be 10 per cent of wages paid up to $2,000 per apprentice in the first two years of a non-Red Seal apprenticeship program. The basic credit for employees will be $1,000 per year for the first two years of any non-Red Seal apprentice programs.

Completion credits will apply to both Red Seal and non-Red Seal programs and provide incentives for employees who complete Level 3 and Level 4 of training programs. For Level 3 completion, the employee gets a tax credit of $2,000 while the employer gets a credit of 15 per cent of wages or $2,500 (whichever is less). Level 4 provides a tax credit of $2,500 for the employee and for the employer, 15 per cent of wages or $3,000, whichever is less.

Enhanced tax credits are being offered to First Nations and persons with disabilities who enter the trades as well as employers. There is a 50 per cent increase in the rate paid. For employers, those tax credits are: 15 per cent of wages up to $1,000 for each employee in the first two years of any Red Seal program and 15 per cent of wages up to $3,000 for each eligible employee in the first two years of any non-Red Seal program; and 22.5 per cent of wages up to $3,750 for completion of Level 3 of any Red Seal or non-Red Seal program and 22.5 per cent of wages up to $4,500 for each eligible employee that completes Level 4 of any apprenticeship program (Red Seal or non-Red Seal).

Enhanced credits for employees are $500 per year for each eligible employee in the first two years of a Red Seal apprenticeship program and $1,500 per year for each eligible employee in the first two years of any non-Red Seal program and $3,000 for each employee that completes Level 3 of an apprenticeship program and $3,750 for each employee completing Level 4.

Vancouver Regional Construction Association’s Keith Sashaw said industry was pleased with the announcement, which he felt, would help employers as well as employees. “We believe this will encourage the industry to take on more apprentices and it will encourage them to complete the programs.”

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