Updated June 2026 · Verified against Government of Ontario (administered via Canada Revenue Agency — Schedule 550 / Form ON479) guidelines
✓ First-Timer Friendly Tax Credit Offset
Tax Credit Provincial Active

Ontario Co-operative Education Tax Credit (OCELC)

Government of Ontario (administered via Canada Revenue Agency — Schedule 550 / Form ON479)
Maximum Credit
25–30% of co-op wages, max $3,000
Ongoing — claimed annually on corporate tax return for the year the placement...
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Difficulty
Easy
Payment
Tax Credit Offset
Trend
Stable
First-Timers
Friendly ✓
Credit rate
30%
Ontario Co-operative Education Tax Credit (OCELC) provides up to 25–30% refundable tax credit on co-op student wages; maximum $3,000 per qualifying work placement. A refundable Ontario tax credit that reimburses businesses for hiring post-secondary co-op students. Applications are accepted on an ongoing basis.

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Eligibility & Details

What this program funds and who can apply

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Program Description

A refundable Ontario tax credit that reimburses businesses for hiring post-secondary co-op students. Eligible employers claim 25–30% of wages paid to qualifying work placement students, up to $3,000 per placement per tax year. The credit is refundable, meaning companies receive a cash refund even if they owe no Ontario tax. Smaller businesses (prior-year payroll of $400,000 or less) receive the higher 30% rate.

Eligibility Requirements

  • Corporations or unincorporated businesses with a permanent establishment in Ontario
  • Subject to Ontario corporate income tax or Ontario personal income tax
  • Must hire students enrolled in a formally approved post-secondary co-operative education program
  • Work placement must be developed and/or approved by an eligible Ontario educational institution
  • Student must perform productive work (not observation only) and receive compensation
  • Placement must be a minimum of 10 consecutive weeks (regular co-op) or 8–16 consecutive months (co-op internship)
  • Employer must supervise and formally evaluate the student's performance
  • Educational institution must monitor student progress during the placement
  • Eligible institutions: Ontario universities and colleges of applied arts and technology whose enrolment counts toward Ontario operating grant entitlements, plus the Michener Institute, Ontario College of Art and Design and Redeemer University College. There is no public list of qualifying programs, so confirm with the institution's co-op office
  • Members of a partnership other than limited partners may share the credit for each qualifying work placement; a limited partner's share is nil
  • Consecutive placements with two or more associated corporations count as one employer, and the corporations must designate which one claims
  • The student's program itself must be a qualifying co-operative education program: placements of at least 10 consecutive weeks, at least half of them mandatory, totalling 30% to 75% of the time spent in required academic study, credited toward a degree, diploma or certificate, and filed with the Minister of Finance by the institution's governing body. Only the institution can confirm this, and it is the usual reason a placement is refused certification
Provinces
Ontario
Industries
All
Business Stage
Startup Growth Expansion Established

Quick Assessment

Difficulty
Easy
Competition
Low
First-Timer
Friendly

Funding Details

Amount
25–30% refundable tax credit on co-op student wages; maximum $3,000 per qualifying work placement
Type
Tax Credit
Level
Provincial
Credit rate
Up to 30% of eligible costs
Deadline
Ongoing — claimed annually on corporate tax return for the year the placement ends

Program Scorecard

Competition, effort, and approval at a glance

Competition
Low
Deadline
Ongoing
Approval
Entitlement
Accessibility
5/5

Very accessible — simple application

Competition
1/5

Low competition — good odds of approval

Difficulty
2/5

Easy — minimal documentation

Approval Rate
Processing Time
Budget Trend
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How to claim

Insider tips, common pitfalls, and what successful applicants look like

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Insider Tip

The credit is often missed by SMBs because it requires a certification letter from the school — many employers forget to request this.

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Success Profile

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Evaluation Criteria

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How the Government of Ontario judges your application

What the reviewer scores, what gets applications rejected, and what to write.

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ApplicationNo written form
Judged on6 criteria
Can reject you10 rules
To attach4 documents

Distilled from 6+ source documents, condensed into one brief. Sources as of 2026-09-03.

6 of the sources

What the Government of Ontario favours

Placement approved, productive work, paid, supervised, monitored◦

“The work placement is developed or approved by the eligible educational institution, the student is engaged in productive work during the work placement and is not just an observer, the work placement is either: at least 10 consecutive weeks for qualifying co-operative education programs other than an internship program, or not less than eight consecutive months but no more than sixteen consecutive months for a qualifying internship program, the student is paid for the work performed during the work placement, the employer supervises and evaluates the student's job performance during the work placement, and the educational institution monitors the student's progress in the work placement.”

2 more, in their words

The form

There is no application: the credit is claimed on Schedule 550 with the T2 return or on Form ON479 with the T1 return, and the institution's certification letter is kept, not filed.◦

Judged against4 questions · 6 criteria

  1. 1

    Can this business legally claim the credit?

    Show them Confirm an Ontario permanent establishment and that the corporation is not exempt under Part III of the Taxation Act, 2007.◦

    In the funder’s words · 1
    • If you answered no to question 1 or yes to question 2, then the corporation is not eligible for the CETC.
  2. 2

    Is this a qualifying work placement?

    What to show, and the funder’s 2 criteria behind it in Premium

  3. 3

    Are the wages and the rate defensible?

    What to show, and the funder’s 1 criterion behind it in Premium

  4. 4

    Will the claim survive a later review?

    What to show, and the funder’s 2 criteria behind it in Premium

Where applicants failin the Government of Ontario’s words

“Expenditures for a work placement (WP) are not eligible expenditures if they are greater than the amounts that would be paid to an arm's length employee.”

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Do you pass?10 checks

Each one can rule you out. Tick the ones you meet.

Your business

  • Ontario permanent establishment

    Eligible employers include all corporations or unincorporated businesses with permanent establishments in Ontario subject to Ontario corporate income tax or Ontario personal income tax.

  • Not exempt under Part III

    Was the corporation exempt from tax under Part III of the Taxation Act, 2007 (Ontario)?

8 more checks

2 things this funder says you do NOT need, in Premium.

Documents to attach4

Ticks are kept on this device.

The money

Rate by prior-year payroll30% down to 25% by payroll

The tax credit rate is: 30% for employers with total payroll in the previous taxation year of $400,000 or less, 25% for employers with total payroll in the previous taxation year of $600,000 or more, and A rate between 30% and 25% (calculated by a formula) for employers with total payroll in the previous taxation year between $400,000 and $600,000.

Maximum credit$3,000 per student per placement

The maximum credit is $3,000 per student per qualifying work placement that ended in 2025.

RefundableExcess refunded after tax payable

The credit will reduce tax payable for that year and any excess will be refunded.

StackingGovernment assistance reduces eligible expenditure

Government assistance received by the business for the work placement will reduce the amount of the expenditure eligible for the credit.

Costs before approvalAmend prior returns: three years, four years

'Employers may claim a previous year's credit or change the amount previously claimed by requesting an amendment to the relevant tax return.' 'A Canadian-controlled private corporation must make its request within three years of the initial assessment. Other corporations must make their request within four years of the initial assessment.'

What it pays for · 3
  • Salaries and wages including taxable benefits (the amounts reported on the T-4 slip) paid or payable to the student for the work placement. The student's salary must be attributable to an Ontario permanent establishment (place of business).
  • Fees paid or payable to an employment agency for the work placement for services of a student carried out primarily at an Ontario place of business.
  • A repayment of government assistance received for a work placement will also qualify as an eligible expenditure for the credit, but only to the extent that the government assistance affected a claim in a previous taxation year.
What it does not pay for · 1
  • Despite subsection (10), an expenditure made by a particular taxpayer in respect of a work placement is not an eligible expenditure for the purposes of this section, (a) to the extent that the amount of the expenditure would not be considered to be reasonable in the circumstances by taxpayers dealing with each other at arm's length; or (b) if the work placement is with a taxpayer other than the particular taxpayer.

From application to money

  1. Institution approves placementInstitution approves placement as learning
  2. Student works the placement10 weeks, or eight to sixteen months
  3. Request the certification letterAsk institution for certification letter
  4. File the claimFile Schedule 550 or line 63300
  5. Credit assessed and refundedCredit reduces tax, excess refunded
  6. Keep records for reviewat least 7 yearsKeep records at least 7 years
In the funder’s words · 6
Institution approves placement
The institution must develop or approve the placement as a suitable learning situation, confirm the program is a qualifying co-operative education program, and monitor the student during it.
Student works the placement
The student must be paid for productive work and supervised and evaluated by you for at least 10 consecutive weeks, or eight to sixteen consecutive months for an internship.
Request the certification letter
Ask the institution's co-op office for the letter and check it names the student, the employer, the institution, the placement term and the program.
File the claim
Schedule 550 with the T2 return for corporations, or line 63300 of Form ON479 carried to line 47900 for unincorporated businesses and partners. (the taxation year in which the work placement ends)
Credit assessed and refunded
The credit reduces tax payable for that year and any excess is refunded with the assessment.
Keep records for review
Keep the certification letter, payroll records and government-assistance evidence in case the claim is reviewed.

Quoted lines are word for word from the source documents; lines marked ◦ are our reading of them.

What's in this Playbook

Everything you need to claim OCELC

Not a marketing summary. The actual checklist, intel, and stack strategy reviewers look for.

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Application Playbook

Step-by-step process, required documents, and expenses

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Application Steps

1 Obtain a certification letter from the educational institution At the start of the placement, contact the co-op coordinator at the student's university or college and request a letter confirming the work placement meets the program's co-op requirements. This is required for CRA.

Required Documents 5

✓ Letter of certification from the educational institution naming the student, the employer, the institution, the term of the placement and the program. Keep it, do not file it: CRA tells you not to submit it with the return, and to produce it if asked
✓ Records of wages and taxable benefits paid to the student during the placement period

Eligible Expenses 3

Ineligible Expenses 7

Claim timing

Deadline Notes

Ineligible Organizations

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Funding Stack Strategy

Compatible programs, clawback risk, and combined funding potential

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Compatible Programs

Student Work Placement Program (SWPP) — federal Manitoba Co-op Tax Credit (ids 461, 462 in catalog)
Combined Funding Potential See your total funding potential

Clawback Risk

Low Risk

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How OCELC Compares

Side-by-side with similar programs

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Program Amount Difficulty Payment Deadline
Ontario Co-operative Education Tax Cr... 25–30% Easy Tax Credit Offset Ongoing — claimed...
Student Work Placement Program (SWPP) up to $5,000 Easy Reimbursement Ongoing
Ontario Job Grant (formerly Canada-On... Up to $10,000 per employee Easy Varies Ongoing — year-round...
Ontario Innovation Tax Credit Up to 8% tax credit Moderate Tax Credit Offset Ongoing
Commercial Façade Improvement Grant P... Up to $12,500 (50% of costs) Easy Reimbursement Annual Intake

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Frequently Asked Questions

Quick answers to the questions founders most often ask about OCELC

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Is this credit refundable even if I owe no Ontario tax?
Yes — the OCELC is refundable. If your Ontario tax credit exceeds your tax payable, the excess is paid to you as a cash refund.
What's the difference between the 25% and 30% rates?
Employers with a prior-year Ontario payroll of $400,000 or less receive 30%. Those with payrolls of $600,000 or more receive 25%. Companies between $400K and $600K receive a sliding rate between the two.
Do I need to apply anywhere before hiring a co-op student?
No — this is an entitlement tax credit. No pre-approval is needed. Simply hire the student, get the certification letter from the school, and claim the credit when filing your tax return.
Can I combine this with the federal Student Work Placement Program (SWPP)?
Yes — but the SWPP amount you receive reduces the eligible wages for the Ontario credit. Whether the combination still leaves you ahead depends on your own wage and expenditure numbers, so model it with your accountant to avoid over-claiming.
What happens if I forget to get the certification letter?
The credit requires a valid certification letter from an eligible institution. CRA may disallow the claim on audit without it. Request the letter at the start of each placement.
Is the credit itself taxable?
Yes. The full amount has to be reported as income in the tax year you receive it, so a $3,000 credit is worth less than $3,000 after tax. If you run an unincorporated business, the amount you claim for one year goes on the next year's return as self-employment income.

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