Canada Workers Benefit (Working Income Tax Benefit before 2019)

For 2019 and subsequent taxation years, the budget proposes to introduce the Canada Workers Benefit (CWB), an enhanced version of the Working Income Tax Benefit (WITB). The WITB is a refundable tax credit that supplements the earnings of low income workers and improves work incentives for low-income Canadians.

The budget proposes that the amount of the CWB will be equal to 26% of each dollar of earned income over $3,000, to a maximum credit of $1,355* for single individuals without children and $2,335* for families (couples and single parents). The maximum credit is reduced by 12% of adjusted net income over $12,820* for single individuals without children and $17,025* for families.

* These amounts are indexed to inflation after the 2019 taxation year.

See the chart below to see how the CWB compares to the WITB.

Individuals who are eligible for the Disability Tax Credit and CWB may also receive a CWB disability supplement. For 2019 and subsequent taxation years, the budget proposes to enhance the CWB disability supplement (formerly known as the WITB disability supplement).

The budget proposes that the maximum amount will be $700* in 2019. It will be reduced by 12% (6% if both spouses or common-law partners in a family are eligible for the supplement) of adjusted net income over $24,111* for single individuals without children and $36,483* for families.

*These amounts are indexed to inflation after the 2019 taxation year.

See the chart below to see how the CWB disability supplement compares to the WITB disability supplement.

The WITB and the disability supplement are calculated on Schedule 6 of the T1 Income Tax and Benefit Return.

You can estimate your WITB and disability supplement for the current tax year using the Working income tax benefit calculation sheets.

You can also estimate the WITB and disability supplement along with other family benefits for the last tax year using the Child and family benefits calculator.

The above web pages are updated every year.

See the chart below to see how CWB compares to WITB for most provinces and territories.

In addition to enhancing the benefit, the budget also proposes changes that will allow the Canada Revenue Agency (CRA) to calculate the benefit even if the taxpayer does not complete Schedule 6, “Working Income Tax Benefit” (which will be renamed “Canada Workers Benefit”), of the T1 Income Tax and Benefit Return.

Working income earned on a reserve or an allowance received as an emergency volunteer, which are tax exempt amounts, are currently required to be used in the calculation of the WITB. For 2019 and subsequent taxation years, the budget proposes to allow the taxpayer to choose whether to include the tax-exempt part of working income earned on a reserve or an allowance received as an emergency volunteer in the calculation of the benefit.

A taxpayer who chooses to include any such amount must include all tax exempt income amounts in both their working income and their adjusted family net income for the purpose of calculating the benefit. For a taxpayer who chooses to include these amounts, the relevant portions of Schedule 6 will have to be completed.

For those who do not complete Schedule 6, the CRA will calculate the CWB without including this income.

No, this income is only entered on Schedule 6 for the purpose of calculating the CWB, and is not included in calculating your taxable income.

To be eligible for the CWB, your working income has to be higher than $3,000. Including the tax-exempt part of your working income earned on a reserve or your allowance received as an emergency volunteer, could raise your working income over this threshold, so that you may be eligible for the CWB.

Even if your income is already over this threshold, including tax exempt income may increase your CWB as the benefit is equal to 26% of working income in excess of $3,000 to a maximum benefit of $1,355 for single individuals and $2,335 for families.

For 2019 and subsequent taxation years, the CWB is reduced starting at an adjusted net income over $12,820 for single individuals without children and $17,025 for families and eventually is phased out completely.

Remember, if you choose to include tax exempt income, you must include all such amounts in both working income and in adjusted family net income for the purpose of calculating the benefit. As the adjusted family net income will reduce the CWB when it exceeds the thresholds described above, including tax exempt income may result in a reduced CWB.

Estimated take-up of the WITB is lower among individuals who file using paper tax forms versus those who file electronically. Therefore, the CRA is including a paper insert on the WITB in the 2017 paper tax package to increase awareness of this tax benefit. The CRA will also continue to create awareness through its Taxtips, social media posts and other public advertising materials.

Currently, designated educational institutions in Canada provide a certificate to their students pertaining to the students' enrolment.

To assist in the administration of the CWB, the budget is proposing that designated educational institutions in Canada report to the CRA information pertaining to students' enrolment, such as the months of full time or part time enrolment and tuition fees, effective for months of enrolment after 2018, on a new information return. This information return will be substantially the same but will include the Social Insurance Number (SIN) of a student.

Given the requirement for the student's SIN to be provided on these new information slips starting February 2020 (when the slips for the 2019 tax year must be filed with the CRA), educational institutions may need to make earlier changes to their processes (for example, to obtain the student's SIN when registering for a program).

This additional reporting will assist the CRA in the administration of the CWB and other existing measures, such as the Lifelong Learning Plan and the exemption for scholarship, fellowship and bursary income.

The following forms are affected by this change:

• Form "T2202A, Tuition and Enrolment Certificate", will be converted so that it will satisfy the requirements of the proposed new information return,
• The Form "TL11B, Tuition and Enrolment Certificate – Flying School or Club" has been discontinued, as these institutions will now be required to complete and file the new information return with the CRA for qualifying students. However, the information provided on that form may still be requested by the CRA to support claims made by students of a Flying School or Club.

Educational institutions outside Canada will continue to complete all of the below forms, in paper format only, and provide them to Canadian students:

• TL11A Tuition and Enrolment Certificate – University Outside Canada
• TL11C Tuition and Enrolment Certificate – Commuter to the United States
• TL11D Tuition Fees Certificate – Educational Institutions Outside Canada for a Deemed Resident of Canada

The CRA provides the latest information on the proposed changes on Canada.ca. Taxpayers should check online regularly for updated forms, policies, guidelines, questions and answers and guidance.

In the meantime, please consult the Department of Finance Canada's Budget 2018 documents for details.