Canada Workers Benefit

What is the Canada Workers Benefit?

The CWB is a refundable tax benefit extended to families living in Canada and earning a low income. To an extent, it is similar to the Earned Income Tax Credit (EITC) in the United States. CWB was introduced in Canada in 2007 under the name Workers Income Tax Benefit (WITB). The idea was primarily to encourage residents to enter the workforce and, at the same time, support low-income individuals. In the 2018 Canadian federal budget WITB was replaced with CWB. The benefit is provided in two parts, namely:

•   Basic Amount
•   Disability Supplement

CWB is part of the new Affordability Plan introduced by the Canadian government. The objectives of the plan are to make living in Canada more affordable for marginal-income individuals and families. Affordability has become a major constraint after the pandemic, primarily because of skyrocketing inflation. At the time of writing this article, the latest inflation numbers for June 2022 were 8.1% and for May 2022 were 7.7%. While the original forecast from Statistics Canada expected these numbers to be around 8.4%.

Prior to 2022, inflation in Canada was managed pretty well by the central bank as it kept interest rates low. For historical reference, the inflation in 2008 was 3.2 % and in 2018 was 4%. Thanks to the pandemic and the war between Russia and Ukraine, prices for almost every commodity, including oil, have gone through the roof. 

Canada Workers Benefit boost

The CWB support amount for individuals and families varies depending on their province of residence within Canada. CWB amounts are being boosted by the government based on the announcement made on June 16, 2022. Individuals can now get a maximum of $1,395, and families can receive up to $2,403 annually.

The boost will cost the Canadian government about $1.7 billion in 2022. The benefit is expected to positively impact 3 million Canadian citizens and residents. 

What does CWB Disability Supplement mean?

It is a tax credit designed to benefit low-income taxpayers who face certain disabilities. The beneficiary needs to complete form T2201 “Disability Tax Credit Certificate”. This tax credit is an added benefit meant for low-income workers with a disability. If your disability is recognized in form T2201, you may apply for the disability supplement under CWB. 

Eligibility for Canada Workers Benefit

The eligibility requirements for CWB are pretty straightforward. You should be a resident of Canada all through the tax year. You should be a minimum of 19 years old on December 31st of the tax year. If you live with your spouse or common-law partner, you could be eligible for twice the benefit amount. Eligible couples could get an additional $2,400.

If you believe you are eligible, you should apply for CWB support by completing your latest tax return. Since the CWB amount is applicable on your 2021 tax return, perhaps you already received the CWB support amount. Check your Notice of Assessment or check with your accountant.

Income requirements for CWB eligibility

The Canadian government has set maximum income criteria basis the following categories of earners:

•   Individuals – Singles with no children, income over $32,244
•   Single earner families with dependent children, income should be less than $42,197
•   Couple earners – combined income for spouses or common-law partners should be less than $56,197

These figures are applicable to most Canadian residents, they differ for Alberta, Quebec, and Nunavut.

What factors make you ineligible for CWB?

You will not be eligible to receive Canada Workers Benefit if you:

•   Are enrolled in a full-time study course as a student in a designated educational institution and your course duration is more than 13 weeks in a year. An exception being that you have a dependent.
•   Have spent time in prison for 90 days or more in a year
•   Are a diplomat, servant, or officer of another country. The family of such an individual is also not eligible.

How CRA will determine Canada Workers Benefit amount

The Canadian Revenue Agency (CRA) will take the following into consideration when assessing your eligibility:

•   Marital status – eligible spouse
•   Province or territory where you live
•   Total income earned and adjusted family income
•   Eligible dependents, if any
•   Disability tax credit eligibility

You could use CRA’s online eligibility calculator if you know your income numbers. You’ll need to select your province first as calculations vary depending on your geography within Canada.