How to receive $3K in Tax Credits for Hiring a Co-op Student

Business Employees Group

Co-operative education options at Canadian colleges and universities are on the rise; this is good news for both students and employers. Many Canadian post-secondary institutions have a wide range of co-op programs that support a variety of industries. In fact, the University of Waterloo offers the world’s largest co-op program, growing over 58% in the last 10 years and leading to nearly two-thirds of their students enrolling in one of +140 co-op programs at the Ontario university (Source). This extensive pool of talented and educated individuals are eager to prove their knowledge in a real world setting. Ontario employers can tap into this young talent via a co-op work term, receiving a number of direct benefits, including up to $3,000 in tax incentives through the Ontario Co-operative Education Tax Credit (OCETC).

Eligibility Factors for the Ontario Co-operative Education Tax Credit

Businesses looking to hire co-op students under the OCETC must be established in Ontario. They must also be hiring a current student on a paid co-op work term related to their university or college’s co-operative education program. Most internships must span a minimum of 10 consecutive weeks up to a maximum of four months, however employers can hire co-op students for multiple work terms.

What coverage does this tax credit provide to Ontario employers?

Businesses interested in this Ontario tax incentive for hiring can benefit from one or multiple co-op students. The Ontario Co-operative Education Tax Credit covers up to 25% of eligible expenses, however small businesses with less than $400,000 in total annual payroll are eligible for up to 30% coverage. The maximum tax credit awarded per work placement is $3,000.

How to Apply for the Ontario Co-operative Education Tax Credit

Employers interested in benefitting from this government funding opportunity can consult their co-op student’s post-secondary Career Services and/or Co-operative Education departmental contact (ie. Co-op Coordinator) in order to receive further direction. Incorporated businesses may claim the tax credit on Schedule 550, filed with the corporation’s T2 Corporation Income Tax Return. Unincorporated businesses can also apply via Form ON479, Ontario Credits, as part of their personal income tax return.

Has your Co-op Student Graduated? Receive Small Business Funding Grants for Hiring Grads

Once your co-op student graduates, they may be eligible for further government funding support via hiring grants for businesses. A wide range of programs exist, launched periodically throughout the year, that cover a percentage of the wages of recent graduates, ranging from $10,000 to $20,000 in hiring grant funding per employee. Please note that these programs are for new hires, not employees who are already on your payroll, so you will need to apply before you make a commitment to hire the graduate. Feel free to use our free Wage Subsidy Identifier Tool to determine whether hiring grants are available for your upcoming hires.

Are you interested in training grants or project-based funding as well? Attend one of our upcoming free funding webinars and workshops to discover government grants and loans for business initiatives.

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