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, more accessible version of the Working Income Tax Benefit*. The Canada Workers Benefit is a refundable tax credit that is intended to supplement the earnings of low income workers and improves work incentives for low-income Canadians.

*The federal calculation of the Working Income Tax Benefit applies to residents of all provinces and territories other than Nunavut, British Columbia, Alberta and Quebec, for which there are unique calculations. These provinces and territories have entered into reconfiguration agreements with the federal government to make specific changes to the design of the benefit that are cost neutral to the federal government and build on actions taken by the province or territory to improve work incentives for low income individuals and families.  

1. What is the Canada Workers Benefit?

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.

Note

The parameters for the CWB may differ for residents of provinces or territories that enter into reconfiguration agreements with the federal government to make specific changes to the design of the benefit. Currently, the federal calculation of the WITB applies to residents of all provinces and territories other than Nunavut, British Columbia, Alberta and Quebec, for which there are unique calculations.

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

2. What is the CWB disability supplement?

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.

Note

The parameters for the disability supplement may differ for residents of provinces or territories that enter into reconfiguration agreements with the federal government to make specific changes to the design of the benefit. Currently, the federal calculation of the WITB and the disability supplement applies to residents of all provinces and territories other than Nunavut, British Columbia, Alberta and Quebec, for which there are unique calculations.

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

3. How are the WITB and the disability supplement currently being calculated?

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.

For further details and the calculations that currently apply to provinces and territories with reconfiguration agreements with the federal government, see Refundable tax credit for Working Income Tax Benefit: Calculation.

The above web pages are updated every year.

4. How does the CWB compare with the WITB?

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

Comparison between the CWB and the WITB for the basic benefit
Basic benefit CWB–2019** WITB–2018* WITB-2017*
Rate 26% of earned income over $3,000 25% of earned income over $3,000 25% of earned income over $3,000
Maximum benefit for single individuals without children $1,355 $1,059 $1043
Maximum benefit for families $2,335 $1,922 $1,894
Reduction threshold for single individuals without children $12,820 $12,016 $11,838
Reduction threshold for families $17,025 $16,593 $16,348
Reduction rate 12% 15% 15%
Comparison between the CWB and the WITB for the disability supplement
Disability supplement CWB–2019** WITB–2018* WITB-2017*
Maximum disability supplement $700 $529 $521
Phase-out threshold for single individuals without children $24,111 $19,073 $18,791
Phase-out threshold  for families $36,483 $29,410 $28,975
Reduction rate (one spouse disabled) 12% 15% 15%
Reduction rate (both spouses disabled) 6% 7.5% 7.5%

* Currently agreements exist with Alberta, Quebec, British Columbia and Nunavut that reconfigure the WITB amounts for their residents.

** Agreements may apply to certain provinces to reconfigure the CWB amounts for their residents.

5. How does Budget 2018 propose to make the CWB more accessible for 2019?

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.

6. If I include the tax-exempt part of my working income earned on a reserve or my allowance received as an emergency volunteer in the calculation of the CWB, will I pay tax on 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.

7. How do I choose whether to include the tax-exempt part of my working income earned on a reserve or my allowance received as an emergency volunteer in the calculation of the CWB?

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.

Note

The parameters for the CWB may differ for residents of provinces or territories that enter into reconfiguration agreements with the federal government to make specific changes to the design of the benefit. Currently, the federal calculation of the WITB applies to residents of all provinces and territories other than Nunavut, British Columbia, Alberta and Quebec, for which there are unique calculations.

8. Since these changes are proposed for 2019 and subsequent taxation years, what is the CRA doing in the meantime to increase the take-up of the WITB?

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.

9. For 2019 and subsequent years, what information will designated educational institutions in Canada have to report to the CRA?

Currently, designated educational institutions in Canada provide a certificate (e.g., Form T2202A, Tuition and Enrolment 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 as T2202A 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).

10. What is the purpose of this additional reporting requirement?

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.

11. What other tuition and enrolment certificates will be affected?

The following forms are affected by this change:

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

12. Where can I obtain more information on this proposed change?

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.

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