What Ontario tax credits are available for hiring Ontario employees?
Ontario employers hiring in the province can access: (1) the Ontario Co-operative Education Tax Credit up to $3,000 per qualifying co-op placement, (2) provincial and federal Apprenticeship Job Creation Tax Credit for eligible Red Seal trades apprentices, (3) the Ontario Job Creation Tax Credit for eligible Ontario Interactive Digital Media hires and eligible film/TV production, and (4) federal training and hiring supports under CRA and ESDC programs.
Ontario Co-operative Education Tax Credit (CETC). Refundable credit administered through CRA on behalf of Ontario. For 2026, eligible employers claim 25% (30% for small businesses with total payroll below $600,000) of qualifying expenditures paid to a co-op student on a qualifying work placement of at least 10 weeks and 100 hours, capped at $3,000 per placement. Claim on T2 Schedule 550.
Federal Apprenticeship Job Creation Tax Credit (AJCTC). Non-refundable ITC of 10% of eligible salaries and wages paid to a first- or second-year Red Seal apprentice, to a maximum credit of $2,000 per apprentice per year. Claim on federal T2 Schedule 31.
Ontario Interactive Digital Media Tax Credit (OIDMTC). Refundable 40% of eligible Ontario labour expenditures (35% for products developed under fee-for-service arrangements) for interactive digital media products. Highly-specific eligibility – narratives, games, e-learning modules developed in Ontario by an Ontario corporation.
Example: an Ontario SaaS CCPC hires an engineering co-op student for a 16-week placement at $30/hour full-time (~$19,200 wages). CETC = 30% x $19,200 = $5,760, capped at $3,000 per placement. Refundable credit of $3,000 offsets or refunds cash. Combined with the SR&ED credit on the co-op wages while they perform R&D work, effective net cost is meaningfully below the $19,200 gross wage.
Note: Ontario budget 2025 expanded some innovation-hiring incentives. Verify current-year rates on ontario.ca/page/tax-credits-employers each January; program terms change.
Source: ontario.ca â Tax credits for employers
— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA
Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.