By Jeff Sanford
Toronto, Ontario -- November 20, 2017 -- The Ontario provincial government included several business-friendly measures in the 2017 Ontario Fall Economic Statement handed down last week, which look set to benefit small firms in the collision repair sector.
The government traditionally updates its budget in the fall by tabling a ‘mini-budget.’ This past Tuesday, Ontario Finance Minister Charles Sousa delivered an update that provides both a cut in taxes for small businesses as well as a big change in the way the provincial apprenticeship program will be run.
The measures announced last week are widely considered a benefit to small businesses which were previously angry about the government’s initiative (announced in the last budget) to increase the minimum wage to $15 an hour on January 1, 2018.
Business owners have balked at that bit of legislation. Owners of businesses across the province have spoken out on how they’ll be forced to lay off some employees as a result of the coming surge in labour costs.
The changes to law included in the latest budget update are considered an attempt to quell the anger. Those managing collision repair shops that train apprentices will benefit from a new and more efficient program to manage them. Business owners will also benefit from a cut to the small business corporate tax rate.
“The Ontario Minister of Finance, Charles Sousa, this week identified some changes that impact collision repair and autobody shops. Most fairly positively,” said John Norris, Executive Director of Collision Industry Information Assistance (CIIA), a provincial trade organization.
“Reducing the rate of corporate income tax for small business is always helpful and the Minister decreased the tax rate from 4.5 percent to 3.5 percent, one of the lowest rates in developed countries,” according to Norris.
The Tories have promised to slow the implementation of the higher minimum wage if elected. So no wonder the new measures designed to alleviate some of the pain of the new higher minimum wage requirements. According to Norris, the new structure of the apprenticeship program will provide real benefits in that these programs should be easier to run and will enjoy new funding.
“The government has announced an investment of $124 million over three years for businesses with less than 100 employees to help hire young workers between the ages of 15 to 29 years,” said Norris.
For collision repair centre owners that have been dealing with an extremely tight labour market, the new money will be welcomed. The change is one that the industry has sought for years. “This is major change, and one that the association had been actively requesting at the Apprenticeship Modernization meetings,” comments Norris.
The basic changes involve a modification to the old Apprenticeship Training Tax Credit. The government will make it easier to administer apprenticeship programs by shifting the nature of this program from a tax credit to an outright government grant. The 2017 Ontario Fall Economic Statement proposes to transform the Apprenticeship Training Tax Credit (ATTC) into a new Graduated Apprenticeship Grant for Employers (GAGE).
“For those employers, who have current apprentices and are receiving ATTC, that will continue and the Employer Completion Bonus will be paid,” said Norris. “However any new apprentices for the categories, Autobody and Collision Damage Repair, Automotive Painter or Autobody Repair registered with the Ontario College of Trades after November 14, 2017, a new payment grant program will start and any employer registering an apprentice will be automatically assessed for grant eligibility.”
That is, after November 14 of this year, shop owners will bring apprentices onto the shop floor through the new program, the Graduated Apprenticeship Grant for Employers (GAGE), which started on that date.
According to Norris the program provides up to $15,200 in payments to the shop, but the apprentice must complete apprenticeship classes as required. “In the past shops received grants, but often did not send their apprentices to school as required so many apprentices were never schooled or properly trained,” he said.
It assumed the new form of the program will make it easier to access, leading to more apprentices fulfilling all of the requirements. That said, Norris notes that the government, “... did not raise the funding limit back to the higher amounts that were in effect up to 2014.”
Nevertheless, having studied the new legislation, Norris comments that business owners can look forward to a new plan design that offers cash incentives. “A thousand dollars would be paid to the employer on hiring and a further $1,000 at the six month employment marker to encourage retention,” said Norris of the new legislation.
As well, in the first and second year of training the grant is $2,500 per year, and then $3,500 for the third year with a further $4,700 paid once the employee has receive their Certificate of Apprenticeship or their Certificate of Qualification.
“A further $500 will be paid over and above these funding levels for each step if the apprentice is a female, or a member of an under-represented group,” said Norris. Further incentives will be reviewed at a later date based on demand from employers.
"The largest challenge for the collision repair industry has always been that although we have a significant increase in numbers of apprentices, almost 70 percent in early years did not attend class. This is a step to provide incentives to better obligate employers to send apprentices to class to become better trained and ready to competently and professionally work on newer vehicles in your repair shop." added Norris.
Shop owners will certainly appreciate the new format of the apprenticeship plan. Whether or not shop owners can forgive the higher minimum wage is still an outstanding question.
Interestingly, The Canadian Federation of Independent Business wasn’t overly impressed with the government’s announcement. “Thousands of business owners across the province will be assessing today’s measures against a very tough backdrop,” said Plamen Pletkov, CFIB’s Ontario Vice-President. “As important as the initiatives announced today are, they won’t offset the real impact of this legislation on Ontario’s jobs and the economy.”
According to the Ontario Ministry of Finance the Graduated Apprenticeship Grant for Employers (GAGE) will provide payments to employers who hire (sponsor) and train apprentices in 130 eligible trades. The following trades are among those eligible for GAGE: Recreation Vehicle Technician; Parts Technician; Automotive Glass Technician; Tire Wheel and Rim Mechanic; Auto Body and Collision Damage Repairer; Automotive Painter; Truck and Coach Technician; Transmission Technician; Alignment and Brakes Technician; Motorcycle Technician; Truck-Trailer Service Technician; Automotive Electronic Accessory Technician; Auto Body Repairer; Automotive Service Technician.