The Taxation of Apprenticeship Grants

The federal government has developed an apprenticeship incentive program that pays up to $2,000 as a grant for qualifying apprenticeships. If you were the beneficiary of such a grant, you need to report it as income on your tax return.

The Apprenticeship Incentive Grant takes the form of a cash payment of $1,000 per year, up to a maximum of $2,000 per person. To receive it, qualifying apprentices must have successfully finished their first or second year of an apprenticeship program in what is known as the Red Seal trades.

The federal government is now offering AIG-W, this is a grant offered to women to encourage them to enter the apprenticeship programs and get certified in Red Seal Trades. The incentive is cash grant of $3,000 per year up to a maximum of $6,000 if you qualify. Please see this link for more information. And this one to apply.

The Red Seal trades encompass all of the typical trades in fields such as construction, hospitality, the auto industry, and many more. An exhaustive list can be found on the Red Seal Program’s website.

Apprentices can apply online using the Service Canada website. To do so, you will need to provide the following information:

• Your Social Insurance Number (SIN)
• Your provincial apprentice ID number
• The name and phone number of your financial institution along with a voided cheque for direct deposit purposes
• If you reside in Ontario, you will also need to provide complete information about your on-the-job training employer and training institution.

After filling out the application form, you will need to submit to a Service Canada Centre your proof of registration in a designated Red Seal trade program, as well as your proof of progression in the apprenticeship program for the year for which you are applying.

Grant payments and tax slips

• Once the request is processed, payment of the grant is made by direct deposit.
• The grant is taxable, and the apprentice will receive a T4A slip in the mail from the government in February.
• Residents of Quebec will also receive a Relevé 1 slip.
• These slips will be sent to the address you provided when you filled out the application form, and are required to report the income in your tax return.

A T4A slip is used by payers of what is known as “other income” to indicate the amounts that payees have received. Because grants are not employment income in the traditional sense, they are reported as “other income”.

• The amount of your grant will be shown in box 130 of your T4A slip, which also has your name and social insurance number on it. Service Canada will send a copy of the slip to the Canada Revenue Agency, who will match it with your return.
• When filling out your tax return, report the amount on the T4A slip in your income on line 130. On the left side of line 130, there is a space where you should indicate the nature of the income, which is, in this case, an apprenticeship grant.
• Residents of Quebec must also declare the grant as income on their separate provincial income tax returns.