Shipbuilding and ship repair industry tax credit
The shipbuilding and ship repair industry tax credit is a tax credit for eligible employers that employ apprentices in the B.C. shipbuilding and ship repair industry.
An eligible employer is an employer whose principal business is constructing, repairing or converting ships. An eligible apprentice is an employee who is registered as an apprentice with the Industry Training Authority (ITA) and is enrolled in an eligible apprenticeship program.
For the purpose of the credit, ships are defined as sea-going vessels propelled by engine but do not include vessels ordinarily used for personal or recreational purposes.
If you employ apprentices but do not qualify for the shipbuilding and ship repair industry tax credit, you may be eligible for the training tax credit.
The shipbuilding and ship repair industry tax credit is based on the salary and wages you pay an eligible apprentice before December 31, 2024.
You can claim the following amounts:
- Basic tax credit – 20% of salary and wages (up to $5,250) paid to an apprentice in the tax year during the first 24 months of an eligible Red Seal or non-Red Seal program. The basic credit does not require the apprentice to complete any technical training or a set number of hours. Wages paid before October 1, 2012, do not qualify for this credit.
- Completion tax credit – 20% of salary and wages (up to $5,250) paid to an apprentice in the 12 month period prior to the apprentice completing the requirements for tax credit level 3 or higher of an eligible program. The completion tax credit is claimed in the tax year the level is completed, so long as the level is completed after September 30, 2012. Wages paid before October 1, 2012, qualify for this credit.
- Enhanced tax credit – the basic and completion tax credits are enhanced by 50% (up to $2,625) for apprentices who are eligible First Nations individuals or persons with disabilities. This is in addition to the basic credit or the completion credit. First Nations individuals are persons registered as Indians under the Indian Act (Canada). Persons with disabilities are individuals who qualify for the federal disability tax credit.
Claiming the credit
The shipbuilding and ship repair industry tax credit is refundable, but must first be applied against total income tax payable. If you are completing the tax return for a corporation, use Schedule 430, British Columbia Shipbuilding and Ship Repair Industry Tax Credit, of the T2 return. If you are otherwise eligible for this tax credit and are not a corporation and required to file a T1 return, complete form T1014-2, British Columbia Shipbuilding and Ship Repair Industry Tax Credit (Employers), with your T1 return.
You must claim the basic tax credit and enhanced basic tax credit no later than 36 months after the end of the tax year for which the eligible salaries and wages are paid.
You must claim the completion tax credit and the enhanced completion tax credit no later than 36 months after the end of the tax year in which the employee completed the requirements for a tax credit level.
The deadline to claim this tax credit for claims required to be made between March 13, 2020 and December 30, 2020 was extended to six months from the original due date or to December 31, 2020, whichever was earlier.
The following legislation applies to the shipbuilding and ship repair industry tax credit:
- Income Tax Act (B.C.) Part 9 Division 3.1
- Training Tax Credits (Prescribed Requirements and Date) Regulation