Tax Tips For Low-Income Earners In 2023

Tax Tips For Low-Income Earners In 2023

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated November 29, 2022

Having a lower income doesn’t mean that tax season needs to be more complicated or stressful for you. In reality, you can receive a decent return, as long as you make sure to file any and all the deductions you qualify for. Here are a few tips that you can use in order to make the most of your low income when tax season rolls around

1. Look Into The Canada Workers Benefit (CWB)

Formerly known as the Working Income Tax Benefit (WITB), the Canada Workers Benefit (CWB) is a refundable tax credit for Canadians with a low income. Individuals making between $3,000 to $24,112 and families with incomes below $36,482 are eligible for the tax credit. 

Those who qualify will receive 26% of every dollar they make over $3,000, up to $1,355 as an individual and up to $2,335 for families. This is a type of tax credit, is set up by the Canadian Government to financially support people with low incomes and motivate them to remain in the workforce.

2. Consider Claiming A Tax Credit In The Future, Instead Of Now

There are other types of tax credits that are better saved for the future if you are currently earning a low income, or you are at a zero-payable position when it comes to your taxes. Referred to as “carry-forward,” these credits can be used for expenses such as tuition and books, charitable donations, and moving costs. It’s better to record these expenses when they’ve occurred, but only claim them on your taxes in future when you’re earning a higher income. Some of these expenses, such as those for tuition and books can be kept on record for years, and then used when you need them.

Register an Account with the CRA to better keep track of both your carry-forward credits and tax receipts.   

3. Look Into The GST/HST Tax Credit

GST and HST are types of taxes that residents in certain provinces will have to pay each year. 

  • GST (Goods and Services Tax) – Must be paid in 8 of the 10 Canadian provinces. This tax is related to the goods and services consumed within most of Canada, of both “real property” (land, buildings, etc.) and “intangible personal property” (trademarks, rights to use a patent, products downloaded from the internet, etc.). 
  • HST (Harmonized Sales Tax) – Thia only applies to the 5 provinces which have combined the GST and PST (Provincial Sales Tax) into a single consumption tax.

The GST/HST tax credit is another service offered by the CRA, which applies to individuals and families with low incomes. As of 2014, those individuals and families do not need to apply for this credit. Instead, when you file your income tax return, the CRA will determine whether or not you are eligible, and pay the credit in installments every three months, four times per year. 

Those eligible can get up to $456 as a single individual and up to $598 if they have a partner (married or common-law). If you have children, you can get up to $157 per child under the age of 19. 

$456For eligible adults over the age of 19
$157For each child that’s under the age of 19 
$598For those who are married or are in a common-law relationship

4. Letting Your Spouse Claim Your Tax Credits

When your spouse or common-law partner is earning a larger income than you, it’s a good idea to look into assigning them some of your tax credits. These credits include, but are not limited to caregiver credits, medical expenses, charitable donations, public transit, etc. While both spouses/partners are able to file for these types of credits, it’s more beneficial for the spouse with the highest income to claim them.

5. Always File A Return, And Claim Everything Possible

The best thing you can do during tax season, even if you’re earning little to no income, is to always file a tax return. It’s important for your financial future that the CRA gets all your current information, which will, in turn, give them your net worth. Having a favourable net worth will then help the CRA determine whether or not you’ll be eligible for certain tax credits in the future, such as the GST/HST tax credit, the Canada Child Benefit (tax-free monthly installment for families with children under the age of 18), or any other kind of federal or provincial tax benefit for that matter.

Tax Considerations For ParentsLearn More
Tax Considerations For SeniorsLearn More
Other Government Benefits Learn More

Learn how to maximize your tax refund.

Tax Tips For Low Income Earner FAQs

Do I have to file a tax return if I have no income?

Yes, you should still file your tax return even if you have no income. Filing your tax return will allow you to be assessed for different government benefits such as Canada Child Benefit, the GST/HST tax credit, the Ontario Trillium Benefit and other provincial and federal benefits. 

What happens if I can’t pay my taxes?

If you owe the CRA taxes but are unable to pay them, you can be charged a penalty. The CRA charges a late fee of 5% of the balance you owe plus 1% for each extra month you’re late (up to 12 months). If you need help with your payments, you can make a payment arrangement with the CRA. You can also request for Taxpayer Relief by completing form RC4288.

Where can I file my taxes for free?

There are a number of tax filing platforms and services that offer Canadians a way to file their taxes for free. Turbotax, Wealthsimple Tax, UFile and certain tax clinics file your taxes for free.

Bottom Line

So, if you’re earning a low income, don’t worry. There are ways that you can make the most of your return, just as long as you file your income taxes properly and on time. Early is also a great idea as you’ll have ample time to figure out what you can and can’t claim, pay what you owe, and relieve as much tax stress as you can.

Rating of 5/5 based on 6 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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