If you’re under the low-income bracket and have not been claiming the CWB, you’re missing out.
The Canada Workers Benefit (CWB) is a taxable supplement to eligible low-income Canadians.
Just recently, the Canadian government announced the expansion of the CWB beneficiaries to lift more Canadians out of poverty due to the pandemic.
Consequently, 3.2 million low-income Canadians are now entitled to the CWB payments.
Are you one of them? How do you qualify for the CWB payment? Continue reading to find answers to these questions and more.
What is Canada Workers Benefit?
This refers to a taxable credit given to low-income Canadian individuals and families.
In 2019, the CWB was established to replace the Working Income Tax Benefit (WITB) which was also established to assist low-income Canadians.
To claim the CWB, you need to file your tax return.
The CWB has two components namely a basic amount and a disability supplement.
You can receive the CWB during the tax period or in advance.
As you continue reading, you will learn more about CWB payments.
How Does the CWB Work?
Once you have $3,000 working income, you are entitled to 26% on each dollar you make. This continues until it reaches the maximum benefit for your family and province/territory.
However, the CWB reduces by 12% when your family-adjusted net income reaches a particular amount. This continues until it is eliminated by a higher amount.
The CWB is only available to one person per family, but if both spouses are qualified, each may get an extra disability benefit.
You can have your CWB paid in a lump sum by direct transfer once a year.
Also, you can request an advance payment to receive half of your benefit four times a year.
You can then get the remainder paid as a lump sum when your taxes are completed.
Working Income Tax Benefit vs Canada Workers Benefit: Similarities and Differences
Both WITB and CWB were established to supplement the income of low-income earners in Canada.
Unlike the WIT, which has a 15% drawback rate, the CWB has a 12% reduction rate. This also leads to the adjustment of the income threshold from:
- $12,016 to $13,064 for individuals.
- $17,348 to $16,593 for families.
With the WITB, an individual was only entitled to get a maximum of $1,059 and families were entitled to receive a maximum of $1,922.
But the CWB now offers individuals up to $1,381 and families up to $2,379.
Also, individuals can get up to $500 through the CWB in Nunavut, Alberta and Quebec. This is beyond the WITB limit.
Under the WITB, single taxpayers were ineligible if their yearly income exceeded $19,076. However, individuals with the maximum income of $24,572 are eligible for CWB.
Similarly, families were only eligible for the WITB if their income didn’t exceed $28,975. But with CWB, the maximum income is $37,173.
Furthermore, the CWB is easier to access than the WITB. This is because the CWB has both electronic and paper means of application, while the WITB application was more of paperwork.
Who Qualifies for Canada Workers Benefit? Canada Workers Benefit Eligibility
To be eligible for the Canada Workers Benefit (CWB), you must:
- Have employment income
- Be 19 years or older
- Reside in Canada throughout the year for tax reasons
If you have a spouse or common-law partner, they must meet the following requirements to qualify for the CWB:
- Reside together with you on December 31.
- Meet all the requirements for CWB eligibility.
Furthermore, if you have dependents, they must meet the following requirements to qualify for the CWB:
- Be the child of your spouse or common-law partner.
- Not reach 19 years of age
- Disqualified for the CWB.
Who is Not Eligible for the CWB?
You may not be eligible for the Canada Workers Benefit if:
- You’re a full-time student for more than 13 weeks in any designated school. An exception applies when you have a qualified dependent on December 31.
- Canada is not your country/resident, or you’re not required to pay tax in Canada.
- You’re imprisoned within the year for at least 90 days.
Disability Supplement Eligibility
As mentioned earlier, the CWB has two components in which Disability Supplement is one of them.
This credit assists Canadians whose disability affects their ability to work. To be eligible for this credit, you must:
Canada Workers Benefit Advance Payments 2022
As mentioned earlier, you can receive one lump-sum CWB payment after your tax is completed or request for advance payment.
With CWB advance payment, you can receive up to half of your total amount four times a year.
CWB advance payments are made on the following dates:
- January 5, 2022
- April 5, 2022
- July 5, 2022
- October 5, 2022
You should contact the CRA if you didn’t receive your advanced payment 10 working days after the expected date.
How to Apply for CWB Advance Payments
The CWB advance payment is not automatic. You must apply for it each year you want to get the advance payment.
There are two options for applying for the CWB advance payment. These are:
- Visit your CRA My Account.
- Navigate to “Canada workers benefit advance payments application.”
- Provide the required information and submit your application.
- Complete Form RC201, Canada Workers Benefit Payments Application and mail it to Sudbury Tax Centre, PO Box 20000, STN A, Sudbury ON P3A 5C1.
: You must complete the Form RC201 on or before August 31 for it to be processed.
Furthermore, you don’t need to complete two forms if both you and your spouse/common-law partners are qualified for the CWB and want to receive an advance payment.
You only need to submit one application.
How Much CWB Can You Receive?
How much you get on Canada Workers Benefit (CWB) lies on your employment income and province/territory.
The table below shows the CWB ineligibility amounts of different income earners and provinces/territories for the 2020 tax year.
|Canada (excluding Alberta, Quebec, and Nunavut) Quebec||Quebec||Nunavut||Alberta|
|Family with children||$37,173||$28,153.75||$49,926||$36,758|
|Family without children||$37,173||$36,997.95||$49,926||$36,758
|Single with children||$37,173||$18,652.80||$49,926||$36,758|
|Single without children||$24,573||$23,904.11||$48,779||$25,793|
An individual may receive a maximum of $1,381. But as their income exceeds $13,064, the amount reduces.
Additionally, an individual may not receive CWB basic amount if their income exceeds $24,573.
On the other hand, families can receive a maximum of $2,379. But as their adjusted income exceeds $17,348, the amount reduces.
Furthermore, families with more than $37,173 income will not receive the CWB basic amount.
How Much Disability Supplement Can You Receive?
Like the CWB, how much disability supplement you can get depends on your income and province/territory.
The table below shows the disability supplement ineligibility amounts of different income earners and provinces/territories for the 2020 tax year.
|Canada (excluding Alberta, Quebec, and Nunavut) Quebec||Quebec||Nunavut||Alberta|
|Family with children||$43,118||$31,713.95||$55,868||$42,700|
|Family without children||$43,118||$40,558.15||$55,868||$42,700|
|Single with children||$43,118||$22,213||$55,868||$42,700
|Single without children||$30,511||$27,464.31||$54,721||$31,735
Single individuals are entitled to the maximum disability supplement of $713. This reduces as their income exceeds $24,569.
Additionally, single individuals with more than $30,511 income will not be eligible for the disability supplement payment.
Also, families can receive a maximum disability supplement of $713. This reduces as their net income exceeds $37,176.
Furthermore, families with more than $43,118 income are not eligible for the disability supplement.
How is the CWB Calculated?
The CRA considers the following factors when calculating your CWB. That’s, your:
- Employment income.
- Family net income.
- Marital status.
- Province/ territory.
- Qualification for the disability tax credit.
- Qualified dependents.
How to Claim the Canada Workers Benefit
Once you’re qualified for the CWB, the next thing is to claim it. You can claim the Canada Workers Benefit by:
- Filing your taxes electronically using your certified tax software
- Complete the Schedule 6, Canada workers benefit form and submit it.
Schedule 6 Canada Workers Benefit
The Schedule 6 Canada Workers Benefit is a questionnaire that determines your CWB amount.
This form contains two parts in calculating your CWB. These are:
- Part A: This step calculates your working income.
- Part B: Here, your family adjusted net income is calculated.
How to Claim the Disability Supplement
If you and your spouse are both qualified for the CWB, the person that qualifies for the disability tax credit can receive the disability supplement and the CWB basic amount for both of you.
However, if you and your spouse are both qualified for the CWB and disability tax credit, only you or your spouse can claim the CWB basic amount.
But to claim the disability supplement, both you and your spouse must complete the Schedule 6, Canada workers benefit separately.
What Is the Secondary Earner Exemption?
A special rule called the secondary earner exemption was introduced in 2021.
This was designed for people with an eligible spouse in scenarios where the common-law partner (or spouse) with the lesser working income subtracts up to $14,000 of their working income when calculating their net income that has been adjusted. This is done because of the phase-out of the Canada Workers Benefit.
Previously (before this rule came into the picture), the secondary (lower income) earner in a common-law relationship did not get Canada Workers Benefits. But these days, the net income (adjusted) of the secondary earner will be cut down by the lesser working income of theirs.
The secondary earner exemption rule was part of the enhancements provided for the 2021 Federal Budget.
Additional Benefits for Canadians
As a Canadian, the CWB may be only one out of many benefits that you could be eligible for.
The more you know about these benefits, the more you can diversify your income.
Here are two other benefits you need to know about as a Canadian.
This means Canada Refund Income Tax. It refers to a tax refund paid to Canadian taxpayers.
Unlike CWB, Canada RIT doesn’t have a fixed payment date.
You may receive it upon completing your tax or on a later date when the CRA completes reassessing your tax.
If the CRA needs to reassess your tax, you will be notified by mail or on your CRA My Account.
As a tax-free credit, you can spend the Canada RIT the way you like without worrying about taxes.
Click here to learn more about Canada RIT and dates.
Canada Pension Plan
Canada Pension Plan (CPP) is a taxable credit given to Canadians to supplement their retirement income.
Whether you’re a retiree or not, you can receive the CPP once you’re qualified.
If you want to save more on taxes with the CPP benefits, all you need is to share it with your spouse.
This lifetime benefit will help you build financial security in your retirement.
Click here to learn more about the Canada Pension Plan and dates.
The Canada Workers Benefit could be the little boost you need to transform your financial situation.
It may not be much, but those few hundreds or thousands of dollars could add up to building your financial security.
As I always advise, you should be smart on spending any credit you receive from the government.
Whatever option you choose, ensure you spend your CWB on things that matter.
Finally, take the practical step of claiming your CWB and other benefits henceforth.
If you have any questions or concerns about the Canada Workers Benefit, let me know in the comment section.