What is the Working Income Tax Benefit?

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Danielle Kubes is a trained journalist and investor who has written about personal finance for the past six years. Her writing has been published in The Globe and Mail, National Post, MoneySense, Vice and RateHub.ca. Danielle writes about investing and personal finance for Wealthsimple. She has a Bachelor of Humanities from Carleton University and a Master of Journalism from Ryerson University.

In 2019, the Working Income Tax Benefit (WITB) was replaced by the Canada Workers Benefit (CWB) program, an enhanced version of WITB, to support the middle class that was suffering due to wage stagnation. Formerly, the WITB provided over $1 billion to more than 1.4 million Canadians yearly. In 2017, an estimated $175 million of the Workers Income Tax Benefit (WITB) was left unclaimed because, according to Canada Revenue Agency (CRA), low-income families were not aware of it, and the paperwork for claiming the WITB was complex.

The Canada Worker’s Benefit (CWB) eliminates the requirement to apply for benefits as the Canada Revenue Agency (CRA) automatically finds eligible low-income families that meet the criteria when they file taxes.

The CWB, defined

The Canada Workers Benefit (CWB) replaced the Working Income Tax Benefit (WITB) in 2019. It’s a refundable tax credit for low-income individuals and families earning between $3,000 and 32,244, or $42,197 for families. The maximum benefit is $1,395 for individuals and $2,403 for families. An additional supplement is available to eligible individuals with disabilities.

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How the CWB works

The benefit kicks in when you begin to earn an employment income of $3,000. You get 27% of every dollar you earn above that amount until the maximum benefit is reached for your family situation and province. When your household taxable income reaches a specific threshold, the benefits are reduced by 15% until it is completely eliminated, at a higher threshold. Only one person per household can receive the CWB, but each spouse may receive an additional disability supplement if they are both eligible.

The benefit comes in the form of a refundable tax credit. Normally, your tax refund cannot exceed what you actually paid in tax—the CRA is merely refunding an overpayment. In the case of a refundable tax credit, the CRA dips into its own coffers to pay you.

You can choose to get the exact amount in a lump sum once a year, or spread it out throughout the year (half the estimated amount in four advance payments throughout the year, and the rest in a lump sum after your taxes are assessed).

Changes from the WITB to the CWB

The government upgraded four aspects of the CWB compared to the WITB:

  1. Easier access: The CRA now calculates CWB for all tax filers, even if you don’t specifically claim it. Anyone who files their taxes will be assessed for eligibility.

  2. Bigger benefit: The CWB gives a single person a maximum of $1,395 instead of $1,059 for the WITB, and a household a maximum of $2,403 versus $1,922. The maximum CWB payment varies for residents of Alberta, Nunavut, and Quebec (see table below).

  3. Lower clawback rate: The income threshold at which clawbacks begin have also been raised, to $22,944 for single individuals (without dependants) and $26,177 for families, compared to $12,016 and $16,593, respectively.

  4. Higher income threshold: A single person in most provinces can earn up to $32,244 before losing eligibility for CWB, whereas they could only earn up to $19,076 for the WITB. Families can earn up to $42,197 instead of $28,975. Again, only one person in the household can receive the CWB.

CWB eligibility

To receive the CWB, you must:

  • Be at least 19 years old by the end of the tax year, or be under 19 years old, but have a spouse, a common-law partner, or a child that lives with you

  • Be a resident of Canada for income tax purposes throughout the year

  • Earn $3,000 from employment or self-employment, but have total taxable income of less than $32,244 for singles or $42,197 for families

You are not eligible for CWB if you are:

  • A full-time student for more than 13 weeks in the year, unless you have a child who lives with you

  • In prison for 90 days or more during the year

  • Not required to pay tax in Canada because you are a diplomat or in a similar situation

You are eligible for the disability supplement if you are:

How your CWB benefit is calculated

The amount you receive is based on the following factors:

  • Marital status

  • Province or territory of residence

  • Working income

  • Net income

  • Eligible dependant(s)

  • Eligibility for the disability supplement

You must first add up for yourself and an eligible spouse any:

  • Employment income

  • Taxable scholarships, fellowships, bursaries, and artist project grants

  • Self-employment income

It is optional to declare any tax-exempt working income earned on a reserve, or an allowance received as an emergency volunteer.

If your spouse is ineligible to receive the CWB, and you also do not have a child living with you, you must calculate your CWB as if you were single. Leave out any of your partner’s income. Your benefit will be calculated and distributed as if you were unattached.

For example, if you are childfree and your husband has been in prison for six months, then you do not need to include any of his income and you will receive a maximum benefit of $1,395.

Otherwise, you must include your total household taxable income and one of you will receive the CWB. If you can’t decide which partner will get the money then the CRA will decide for you.

Next, if your working income is above $3,000 then you must determine your taxable income for the purposes of the benefit (also called net adjustable income). The following applies:

  • Net income on line 23600 (previously known as line 236) on your return. This is all sources of income, such as pensions, capital gains, social assistance payments, employment, minus all deductions, such as RRSP contributions\

  • Plus tax-exempt income received on a reserve or an allowance received as an emergency volunteer

  • Plus any repayment owed for the child benefit or the RDSP

  • Minus income from the child benefit or withdrawals from your RDSP

Based on this figure you have your total net adjusted income, and you can calculate your CWB: 27% of every dollar between $3,000 and the first income threshold, then a clawback of 15% of every dollar after the final income threshold.

Individuals eligible for the Disability Tax Credit and CWB may also receive a CWB disability supplement. The maximum amount is $720 in 2021 for each person with a disability.

The government provides a calculator for all the benefits it offers and can estimate the amount you may get.

Applying for the CWB

You can fill out Schedule 6 of your income tax return to be assessed by CRA automatically to receive Canada Workers Benefit (CWB).

WITB FAQ

The Canada Worker’s Benefit (CWB) is a refundable federal tax credit available automatically to eligible low-income married or common-law couples and individuals who file taxes. The CWB has two parts: the basic CWB amount and the disability supplement. Additional benefits are provided to taxpayers who are eligible for the Disability Tax Credit.

The CWB is an enhanced version of the Working Income Tax Benefit (WITB) that provides tax relief to low-income individuals and families with easy access, more benefits and a higher income threshold.

To be eligible for the Canada Workers Benefit, you must meet the following requirements:

  • Be at least 19 years old by the end of the tax year, or be under 19 years old, but have a spouse, a common-law partner, or a child that lives with you

  • Be a resident of Canada for income tax purposes throughout the year

  • Earn $3,000 from employment or self-employment, but have total taxable income of less than $32,244 for singles or $42,197 for families

You are not eligible if:

  • You are a full-time student (study more than 13 weeks during the year)

  • You are a full-time student but your child lives with you

  • You were in prison for 90 days or longer during the tax year

  • You don’t pay taxes because you are a foreign officer or are in a similar situation

You are eligible for the disability supplement if:

  • You are eligible for the Canada Workers Benefits (CWB)

  • You receive Disability Tax Credit (DTC)

To apply for the Canada Workers Benefit (CWB), you must be a taxpayer. You can apply for the Canada Workers Benefit advance payments between January 1 to September 1 in two ways:

  • Online: Sign into “My Account” on the CRA website and fill out the “Canada workers benefit advance payments application.”

  • By mail: Fill out the Form RC201, Canada Workers Benefit Payments Application, and mail it to the Canada Revenue Agency.

To be assessed by the CRA automatically for CWB payments, you can fill out Schedule 6 of your income tax return.

If you are eligible for the Canada Worker’s Benefit (CWB) or both CWB and the disability supplement, you can apply for advance CWB payments between January 1 and September 1. You can receive up to 50% of the total CWB payment for the tax year in advance. If you did not receive the advance CWB payments during the tax year, you’ll receive the entire amount after the assessment of your tax return for the year.

To regularly receive the CWB payments in advance, you should complete and submit the Form RC201, Canada Workers Benefit Advance Payments Application before September 1 each year. Advance payments are sent on the fifth of January, April, July, and October.

The Canada Workers Benefit (CWB) payment for individuals and families is 27% of the working income (over $3,000) up to a maximum of $1,395 if their income is less than or equal to $22,944. For families, the maximum CWB payment is $2,403 if their income is less than or equal to $26,177. The yearly CWB amount gradually reduces if the income is over $22,944 for individuals and $26,177 for families. One cannot receive the CWB payment if their adjusted net income is over $32,244 for individuals or $42,197 for families.

The maximum CWB disability supplement amount is $720. The amount is reduced if the net income is over $32,244 for individuals and $42,197 for families. No CWB amount is paid out if one spouse is eligible disabled (qualify for Disability Tax Credit DTC) and the net family income is over $46,997. If both spouses are eligible disabled individuals and their net family income is over $51,797.

(The maximum amounts can differ slightly for Nunavut, Quebec, and Alberta)

To claim the Canada Workers Benefit (CWB), an individual or family must have a working income (employment or self-employment income) of $3,000 or more.

The advance CWB payments are paid out quarterly on the 5th of January, April, July, and October. If you did not receive your CWB payment you should wait 10 full days before contacting the CRA. In certain cases, the CWB amount is paid after the CRA’s assessment of the tax return.

Only one family member (spouse) can claim the basic amount of Canada Workers Benefit. If one spouse qualifies for the disability supplement, one of them can claim the CWB amount on their tax return. If you cannot decide who should claim the CWB amount, the CRA can decide for you.

However, if both spouses are eligible for the Disability Tax Credit (DTC), one of them can claim basic CWB amount and both can claim disability supplement separately on Schedule 6. You can also get professional advice from a tax expert on how to maximize this benefit.

The Canada Workers Benefit (CWB) will likely be paid out on the upcoming payout date, either January 5, April 5, July 5, or October 5. To find out when you’ll receive the CWB amount you can visit “My Account.”

The Canada Revenue Agency (CRA) calculates the CWB amount of an individual or family using:

  • Your marital status (if your spouse or common-law partner who is a Canadian resident during the tax year lives with you on December 31st)

  • Province or territory you live in

  • Working income for the tax year

  • Your total adjusted net family income

  • Eligible dependant(s) (your spouse or common-law partner’s child who lives with you on December 31stt)

  • Eligibility for the Disability Tax Credit (DTC)

Last Updated March 23, 2022

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