The program is administered by the Canada Revenue Agency through the federal income tax system.

The Ontario government provides a refundable tax credit for businesses hiring students enrolled in a recognized post-secondary co-operative education program

Eligible employers include corporations and unincorporated businesses that:

• have a permanent establishment located in Ontario,
• are subject to Ontario income tax, and
• incur eligible expenditures associated with hiring co-op students enrolled in an Ontario university or college.

Eligible employers must hold a certified document from an eligible educational institution that confirms the employer has provided a placement to a student in respect of a qualifying co-op work placement.

Although members of a partnership may share the CETC, limited partners are not entitled to this credit.

Eligible expenditures made by a business in respect of a qualifying work placement are:

• salaries and wages including taxable benefits (i.e., the amounts reported on the T-4 slip) paid or payable to the student in respect of the qualifying work placement at an Ontario permanent establishment (place of business).
• fees paid or payable to an employment agency in respect of the qualifying work placement for the services of a student carried out primarily at an Ontario place of business.

The 2009 Budget introduced enhancements to the CETC for expenditures incurred after March 26, 2009. The credit reimburses businesses 25 to 30 per cent of eligible expenditures up to a maximum tax credit of $3,000 for each qualifying co-operative education placement of an Ontario student. Businesses with payrolls of $400,000 or less in the preceding taxation year earn the CETC at 30 per cent. The enhanced rate is gradually phased-out for taxpayers that have payrolls greater than $400,000 and less than $600,000. Taxpayers with payrolls of $600,000 or more are entitled to the CETC at 25 per cent.

For expenditures incurred prior to March 27, 2009 the CETC reimburses businesses 10 to 15 per cent of eligible expenditures up to a maximum tax credit of $1,000 for each qualifying co-operative education placement.

Tax Credit Administration:
For taxation years ending before January 1, 2009 corporations may claim the tax credit on Schedule 113 of their CT-23 or CT-8 tax return.

For taxation years ending after December 31, 2008 corporations may claim the tax credit on Schedule 550 of their T2 Corporation Income Tax Return.

Eligible employers operating unincorporated businesses claim the credit on Form ON479, "Ontario Credits" included in their personal income tax return.

Interpretation Bulletin 3021R1, November 2007 ‘Co-operative Education Tax Credit in Respect of Ontario Students' is available on the Ministry of Revenue's website at: http://www.rev.gov.on.ca/english/bulletins/ct/3021.html or it may be obtained by contacting the Canada Revenue Agency at 1-800-959-5525.

Education and Training, Tax Credits, Youth

General Enquiries:

Canada Revenue Agency
Telephone: 1-800-959-5525

Unincorporated businesses may contact or write:

Ministry of Revenue
Tax Advisory Services Branch
Income Tax Related Programs Section
33 King Street West
P.O. Box 624
Oshawa ON L1H 8H8
Ministry of Revenue website: http://www.rev.gov.on.ca/en/bulletins/ct/3021.html

June 2009/CB