With tax season coming up, it’s time to think about the credits or deductions that you may be able to claim. For instance, the Canada Workers Benefit (CWB) was implemented to replace the Working Income Tax Benefit (WITB). This new benefit has become important for many Canadians.
Did you receive the Canada Workers Benefit last year? Are you interested in learning what the CWB is and how you can claim it on your income taxes? Keep reading, to learn how to file your taxes with the CWB.
What Is The Canada Workers Benefit (CWB)?
As mentioned, the Canada Workers Benefit was introduced by the federal government in 2019 as a replacement for the Working Income Tax Benefit, which used to provide over $1 billion in tax benefits to millions of Canadians every year.
Today, the CWB is a refundable tax credit for individuals earning a low taxable income of up to $32,244 and families earning a household income of up to $42,197 or under. If eligible, the maximum you can receive is
- $1,355 as an individual
- $2,335 as a family
This benefit can then be used to cover your debts, rent, and other day-to-day expenses. If the CWB benefit is not enough cash to cover all your debts, consider getting a personal loan to consolidate your debts. This will allow you to spread your payments over a longer period of time, making your monthly expenses more affordable.
Just be sure to check your credit score prior to applying for a loan. It can help you understand what kind of interest rates you can qualify for.
Check out how the wage earner protection program can help you.
How Does The Canada Workers Benefit (CWB) Work?
The Canada Workers Benefit can be collected in two parts:
A Basic Amount
The size of your CWB depends on your household income, marital status and the age of your children. If your income crosses the individual or family threshold, the amount decreases until you earn a higher income and no longer qualify. Only 1 person per family can receive the benefit.
A Disability Supplement
If you have a spouse or common-law partner that’s eligible for the CWB too, both of you may receive an additional disability supplement. To qualify, each individual must also be eligible for the Disability Tax Credit. When these two credits are combined, you can receive an extra $720.
You can arrange for your CWB to be paid in a lump sum every year via direct deposit. Or, half your benefit can be separated into 4 annual payments and the remaining amount will be delivered as a lump sum after your income taxes are processed.
Who’s Eligible For The Canada Workers Benefit (CWB)?
Unfortunately, only certain Canadians are eligible for the Canada Workers Benefit. Here are some of the criteria you need to qualify:
- Be a permanent resident of Canada (for tax purposes during the year)
- Be 19 or older by the end of the current tax year
- If under 19, a spouse, common-law partner or child must live with you
- Earning a minimum income of $3,000 from employment or self-employment
- If you are single, be earning a maximum income of $32,244
- If you are a family, be earning a maximum income of $42,197
If you have a spouse or common-law partner, they are eligible for the CWB when they:
- Live with you throughout the current tax year
- Meet all the other CWB eligibility requirements
If you have dependents, they are eligible for the CWB when they are:
- Under the age of 19
- The child of your spouse or common-law partner
- Not otherwise eligible for the CWB
However, you are not eligible for the Canada Workers Benefit if you:
- Have been incarcerated for 90 or more days during the current tax year
- Are a foreign officer or servant and don’t have to pay Canadian taxes
- Are an employee or family member of a foreign officer/servant
- Are a full-time student for more than 13 weeks of the year and do not have a child that lives with you
Do you have a child? Check out if you qualify for the Canada Child Benefit.
Calculating Your CWB Tax Credit Amount
Even if you’re technically eligible for Canada Workers Benefit, there are factors that can prevent you from qualifying for the full amount. The Canada Revenue Agency typically calculates your CWB Tax Credit based on your:
- Province or territory of residence
- Yearly earned working income
- Family’s adjusted net income
- Marital status
- Own eligibility for the Disability Tax Credit
- Spouse or common-law partner’s eligibility
- Dependants’ eligibility
Other Things to Know About The CWB
- If your spouse or partner is not eligible and you don’t have children living at home, the CRA will calculate your CWB amount as if you were single.
- While both spouses/partners may be eligible, one of you will receive the CWB. You can choose the receiver for yourselves or the CRA will do it on your behalf.
- If your working income is over the $3,000 minimum, you have to add up your total taxable income (also known as adjustable net income) to apply for the CWB.
Maximum CWB Amounts For Individuals & Families
Another important thing to understand about the Canada Workers Benefit is that there are certain factors that can cause your eligible amount to increase and decrease, such as your marital status, net income, and home province/territory.
The maximum basic amount you can receive from the Canada Workers Benefit is:
- $1,395 yearly for single individuals (aged 19+)
- $2,403 yearly for families
Keep in mind that these maximum CWB mounts may be slightly different if your home province/territory is Quebec, Alberta or Nunavut.
Canada Workers Benefit (CWB) For Canadians With Disabilities
Before you apply for the Canada Workers Benefit, don’t forget that you may be eligible for an additional disability supplement of up to $720 per year, if you:
- Already receive the Disability Tax Credit
- Have a minimum employment income of $1,150 (for most provinces)
- Are eligible to receive the Canada Workers Benefit
- Have filled out a Disability Tax Credit Certificate (Form T2201)
Need help filling out your form? Try using a disability tax credit consultant.
How Do You Apply For The Canada Workers Benefit (CWB) Tax Credit?
Applying for and claiming your CWB is relatively simple. All you have to do is visit the Canada Revenue Agency website and complete the following steps:
- If you are filing a paper income tax return, fill out and submit “Schedule 6, Canada Workers Benefit”.
- If you are filing your tax return electronically, follow the instructions as indicated on your certified tax software.
To claim the additional CWB Disability Supplement:
- If your spouse or common-law partner qualifies for the disability tax credit, they must claim their regular CWB and their disability supplement.
- If both spouses/partners are eligible, only one person can claim the regular CWB but each of you will have to claim the disability supplement by filling out a separate Schedule 6 form.
If you prefer, you can also make a request for the Canada Revenue Agency to assess your eligibility for the CWB automatically.
Do you have a disability and live in Ontario? Then you should consider applying for the Ontario Disability Support Program (ODSP).
2023 Payment Dates For Canada Workers Benefit (CWB)
Remember, the Canada Workers Benefit is sometimes paid on a quarterly basis (4 times per year). Typically, you’ll receive your payments on the fifth day of the month, the payment dates are:
- January 5, 2023
- April 5, 2023
- July 5, 2023
- October 5, 2023
CWB Advance Payments
However, you can also receive up to half of your CWB amount through advance payments, which you can apply for using either of these methods:
- Complete “Form RC201, Canada Workers Benefit Payments Application”
- To apply for the disability supplement, fill out Part 3 of Form RC201
- Mail the completed form to: Sudbury Tax Centre, PO Box 20000, Station A, Sudbury ON P3A5C1
- Log into “My Account” through the CRA website
- Click on “Canada Workers Benefit Advance Payments Application”
- Fill out the designated areas and submit your application
It’s important to know that if you want to qualify for these CWB advance payments, the CRA must receive your completed Form RC201 by August 31 of that year. If not, the form won’t be processed. Additionally, if you want to keep receiving advance payments, you’ll have to re-apply every year.
If you don’t get your regular or advance CWB payment by the specified date, wait 10 business days, then contact the Canada Revenue Agency to resolve the situation.
Check out the payment dates for the AISH program.
Canada Workers Benefit (CWB) vs. Working Income Tax Benefit (WITB)?
In 2019, the Canadian government replaced the WITB with the CWB and introduced the following key changes to the tax credit program:
- Larger Benefit – Through the WITB, a single taxpayer could only receive up to $1,059, while families could get up to $1,922. Now, singles can get up to $1,381, from the CWB and families up to $2,379. In Alberta, Nunavut and Quebec, singles can earn up to $500 more with the CWB than they could with the WITB.
- Higher Allowable Income – In the past, single taxpayers weren’t eligible for the WITB if their income surpassed $19,076 annually, the CWB allows for a much higher income. The same goes for families, who could only qualify for the WITB with a maximum income of $28,975, versus $42,197 with the CWB.
- Better Clawback Rate – The WITB used to be reduced by 15% for every dollar that you made above the specified income threshold, whereas the CWB has a clawback rate of 12%. The point at which clawbacks began has also changed.
- Simpler Access to the Benefit – Before 2019, single taxpayers and families had to deal with more paperwork when filing for the WITB. Thankfully, the CRA now automatically assesses eligibility and calculates the CWB for anyone who files their income taxes, even if they don’t actually claim it.
Don’t have a large income? Check out these tax tips for low-income earners.
Income Requirement to Receive The Canada Workers Benefit (CWB)
Before you apply for the CWB, don’t forget to check the specified income limits:
- For Individuals in Most Provinces – Your CWB starts decreasing when your adjusted net income surpasses $22,944. You will not be eligible for any basic amount with an income over $32,244.
- For Families in Most Provinces – Your CWB starts decreasing when your adjusted family net income surpasses $26,177. You will not be eligible for any basic amount with an income over $42,197.
Once again, these maximum income thresholds vary depending on your home province/territory (Alberta, Nunavut and Quebec are slightly different).
Are You Eligible For The Canada Workers Benefit (CWB)?
You could be missing out on some much-needed extra income by not claiming your benefit by the time tax season arrives. Contact the Canada Revenue Agency or visit their website to find out exactly what you need to apply for the Canada Workers Benefit and make the most out of your income tax return.