If your business hires apprentices in the skilled trades, the federal government is essentially offering to pay part of their wages back to you — and most Alberta employers are not claiming it. The Apprenticeship Job Creation Tax Credit (AJCTC) is a federal non-refundable investment tax credit worth 10% of eligible wages paid to qualifying apprentices in years one and two of their program. When stacked with the Alberta provincial credit, a Calgary employer hiring a first-year Red Seal apprentice can recover up to $8,000 per apprentice per year. That is a meaningful amount of money sitting unclaimed on corporate and personal tax returns across the province.
The AJCTC is a federal investment tax credit available to Canadian employers who hire eligible apprentices registered in a Red Seal trade. It applies equally to corporations, partnerships, and sole proprietors — there is no minimum business size requirement. Whether you run a small electrical contracting outfit or a mid-size mechanical firm, you can claim the credit on your annual tax return.
The credit is calculated at 10% of eligible wages and salaries paid to a qualifying apprentice during the first two years of their apprenticeship. The maximum eligible wage base per apprentice per year is $20,000, which produces a maximum federal credit of $2,000 per apprentice, per year. Across two years of apprenticeship, that is up to $4,000 in federal credits per apprentice before provincial credits are added.
The AJCTC is non-refundable, meaning it reduces your federal Part I tax payable but will not generate a cash refund on its own. However, unused credits are not lost. You can carry the credit back three years to recover taxes already paid, or carry it forward up to 20 years to offset future tax liability. This makes the credit valuable even in years where your business reports lower taxable income.
Not every apprentice arrangement qualifies. CRA requires that the apprentice meet all of the following conditions:
Year three and beyond do not qualify, even if the apprentice is still in the Red Seal program. This credit is specifically targeted at the early stages of the apprenticeship when employers are absorbing the highest training costs relative to the apprentice's productivity.
The Red Seal program covers a broad list of skilled trades. Common qualifying trades include electricians, plumbers, carpenters, welders, steamfitters and pipefitters, refrigeration and air conditioning mechanics, motor vehicle body repairers, heavy equipment technicians, ironworkers, bricklayers, millwrights, sheet metal workers, and industrial electricians, among others. If a trade carries a Red Seal endorsement under the Interprovincial Standards Program, apprentices in years one and two of that program will generally qualify.
Alberta has a strong concentration of these trades across construction, oil and gas, manufacturing, and HVAC sectors. If your business operates in any of these industries and you have hired apprentices in the past few years, there is a good chance you have unclaimed AJCTC credits sitting in your filing history.
Eligible wages include regular wages and salaries paid directly to the apprentice for work performed during year one or year two of their apprenticeship. The calculation is straightforward: total eligible wages paid, up to the $20,000 cap, multiplied by 10%.
Several amounts are specifically excluded from the eligible wage calculation. Signing bonuses do not qualify. Vehicle allowances are excluded. The employer's share of Canada Pension Plan contributions and Employment Insurance premiums also do not count toward the eligible wage base. Only the core wage or salary amount is used in the credit calculation.
The form you use to claim the AJCTC depends on your business structure.
Corporations filing a T2 return accumulate the AJCTC on Schedule 31 — Investment Tax Credit (Corporations). The credit calculated on Schedule 31 flows through to reduce Part I tax payable on the T2. If the credit exceeds tax payable in the current year, the corporation can carry the excess back three years by filing an amended return for a prior year, or carry it forward up to 20 years.
Sole proprietors and unincorporated businesses filing a T1 return claim the credit using Form T2038 — Investment Tax Credit (Individuals). The calculated credit reduces federal tax payable on line 41200 of the T1 return. Carryforward and carryback rules apply in the same way as for corporations.
In either case, you will need documentation to support the claim: the apprentice's provincial registration certificate, records confirming their year of apprenticeship at the time wages were paid, and payroll records showing the eligible wages. CRA can request this documentation on audit, so maintaining a clean file for each apprentice is important.
Separate from the federal AJCTC, Alberta offers the Alberta Apprenticeship Training Tax Credit (ATTC) — and the two credits are fully stackable. This is where the combined benefit becomes particularly compelling for Calgary and Alberta employers.
The Alberta ATTC is structured as follows:
When you add the federal and provincial credits together, the combined benefit per apprentice is:
For a Calgary mechanical contractor with three first-year apprentices on staff, that is potentially $24,000 in combined tax credits in a single filing year. The Alberta ATTC is refundable for Canadian-controlled private corporations (CCPCs), which means eligible corporations can receive the provincial credit as a cash refund even if no Alberta tax is owing — making it even more valuable than the federal non-refundable credit for smaller incorporated businesses.
Despite the size of the benefit, a large proportion of Alberta employers who qualify for the AJCTC and ATTC are not claiming them. This happens for a few reasons: payroll departments and bookkeepers are not always aware of investment tax credit schedules, owner-operators filing their own returns may not know the credits exist, and accountants who are not actively looking for them will simply not find them. Unlike deductions that reduce income, investment tax credits require specific forms and schedules to be filed — they do not appear automatically.
If your business has hired Red Seal trade apprentices in any of the past three to four years and has not claimed these credits, it is worth reviewing prior filings. Federal carry-back provisions allow you to recover taxes paid in the prior three years by amending those returns. At Swift Accounting Calgary, we regularly identify unclaimed AJCTC and ATTC credits when reviewing new clients' prior-year filings, particularly in the trades and construction sectors.
To claim the AJCTC for the current or prior years, gather the following for each qualifying apprentice: their provincial apprenticeship registration or certificate, confirmation of which year of apprenticeship they were in during the relevant tax year, and payroll records showing wages paid. Then ensure Schedule 31 (T2 filers) or Form T2038 (T1 filers) is completed and filed with the return. For prior-year claims, a T1-ADJ or amended T2 return is required.
If you are unsure whether your apprentices qualify, or if you want to recover credits from prior years, speaking with an accountant who is familiar with investment tax credits is the most efficient path. The paperwork is straightforward once you know what is required, and the credits are legitimate and well-supported by CRA guidance.
Swift Accounting works with Calgary-area contractors, tradespeople, and construction businesses to identify and claim these credits as part of annual tax planning. If you have apprentices on your payroll and have not claimed the AJCTC or the Alberta ATTC, contact us to review your situation.
Yes. The credit is based on wages paid during the eligible period — year one or year two of the apprenticeship. If the apprentice was properly registered and in an eligible year when you paid their wages, you can claim the credit for those wages even if the apprentice later left the program or did not complete their Red Seal certification. CRA does not require the apprenticeship to have been completed in order to claim wages paid during the qualifying period.
The federal AJCTC applies to eligible apprentices anywhere in Canada, provided they are registered in a Red Seal trade program in any province or territory. The Alberta ATTC is a separate provincial credit that only applies to Alberta employers. If you are a Calgary business, you are entitled to claim both. Employers in other provinces may have their own provincial apprenticeship credits in addition to the federal AJCTC, though the structure and amounts vary by province.
The federal AJCTC is non-refundable, so if your federal tax payable is less than the credit amount, the excess is not refunded. However, you can carry unused federal credit back three years or forward up to 20 years to offset tax in other years. The Alberta ATTC, by contrast, is refundable for CCPCs — meaning the provincial portion can be paid out as a cash refund even if no Alberta corporate tax is owing, which is particularly useful for early-stage or lower-income businesses.
CRA generally allows reassessments for individuals within three years of the original notice of assessment, and for most CCPCs within four years. If you have qualifying apprentice wages from prior years that were not claimed, you can file a T1-ADJ (for personal returns) or an amended T2 (for corporations) to recover those credits within the applicable limitation period. Given the carry-back and reassessment windows, reviewing the past three to four years of filings is worthwhile if you have been hiring Red Seal apprentices and have not been claiming these credits.
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