The Canada Workers Benefit (CWB) is a refundable tax credit designed to support low-income individuals and families who earn working income. Because it is refundable, if the credit amount is greater than the taxes you owe, the excess amount will be refunded to you.
This is one of the key reasons individuals should file a tax return even if they do not expect to owe taxes, as filing ensures eligibility for valuable benefits like the CWB.
The CWB has been available since the 2019 taxation year and applies to eligible individuals or families with working income over $3,000 in most provinces and territories. The calculation of the benefit differs in Alberta, Quebec, and Nunavut.
Too Complicated? We Can Help!
Keeping up with the ever-changing tax laws and regulations can prove to be a mammoth task without the help of a reliable accountant. Moreover, not staying informed about these changes can lead you to pay more taxes than you need! But don’t worry, we have got you covered. With over 40 years of experience, CPA4IT can help you navigate these changes easily.
Our mission is to help our clients organize finances, create wealth, and transform wealth into a legacy. If you would like to learn more about how we can help you, book a FREE consultation with our experts today to discuss this further.
Where the CWB Appears on Your Tax Return
The Canada Workers Benefit is reported on Line 45300 of the personal income tax return.
The benefit is calculated using Schedule 6 of the tax return. Any advance payments received during the year are reported on tax slip RC210 and entered on Line 41500 of the tax return.
Which Spouse Can Claim the CWB?
When spouses or common-law partners are eligible, only one person can claim the basic CWB.
The following rules apply:
- The spouse who received the CWB advance payment during the year must claim the basic CWB.
- If both spouses are eligible and one qualifies for the Disability Tax Credit (DTC), that person should claim the basic CWB and the disability supplement.
- If both spouses qualify for the DTC, only one spouse can claim the basic CWB, but each spouse must claim the disability supplement separately using Schedule 6.
Eligibility for the Canada Workers Benefit
To qualify for the CWB, an individual must meet certain criteria.
Eligible Individual
An eligible individual is someone who:
- Was resident in Canada throughout the taxation year, and
- At the end of the year was:
- 19 years of age or older, or
- The cohabiting spouse or common-law partner of another individual, or
- The parent of a child with whom the individual resides.
Eligible Spouse
An eligible spouse is an individual who:
- Was resident in Canada throughout the taxation year, and
- Was the cohabiting spouse or common-law partner of the eligible individual at the end of the year.
Ineligible Individuals
An individual is considered ineligible if they:
- Are an employee of a government outside Canada or a family member of such an employee
- Were enrolled as a full-time student for more than 13 weeks during the year at a designated educational institution (unless they have an eligible dependent)
- Were confined to prison or a similar institution for at least 90 days during the taxation year
Eligible Dependant
An eligible dependant is a child who:
- Resided with the individual
- Was under age 19 at the end of the year
- Was not an eligible individual
Secondary Earner Exemption
In 2021, a rule called the secondary earner exemption was introduced for couples.
This rule allows the lower-income spouse to exclude up to $14,000 of working income when calculating the couple’s adjusted net income for the CWB phase-out. The $14,000 amount has been indexed annually starting in 2022.
CWB Family Working Income
If both spouses qualify for the CWB, the income of both spouses is included when calculating family working income.
Family working income includes:
- Income from office or employment, including director’s fees (reported on lines 10100 and 10400)
- Taxable scholarships and research grants (line 13010)
- Income from a business carried on by the individual (lines 13500 to 14300)
- Tax-exempt working income earned on a reserve or allowances received as an emergency volunteer
CWB Adjusted Net Income
Adjusted net income is based on the individual’s net income on line 23600 of the tax return.
Adjustments may be made for:
- UCCB income
- RDSP income
- Income earned or received on a reserve
- Allowances received as an emergency volunteer
CWB Disability Supplement
The Canada Workers Benefit includes an additional disability supplement.
This supplement is available for each individual (other than a dependant) who is eligible for the Disability Tax Credit (DTC). The amounts vary by year and by province or territory.
Automatic Advance Payments (Beginning in 2023)
Starting in 2023, advance payments of the Canada Workers Benefit became automatic.
Previously, taxpayers had to apply for advance payments. Under the new system:
- Half of the estimated CWB entitlement is paid in advance
- Payments are divided into three instalments
- Instalments are issued in July, October, and January
- Payments are based on the prior year’s tax return
For example, payments beginning in July 2024 were based on 2023 tax returns.
Any remaining entitlement is calculated when the taxpayer files their tax return for the year.
If the advance payments exceed the final entitlement, repayment is generally not required, unless the individual was not entitled to the payments based on the prior year’s tax return.
Previous CWB Advance Payment System
Before automatic payments were introduced, individuals and families eligible for the CWB could apply for advance payments from the CRA.
Key details of the previous system included:
- Advance payments could equal half of the estimated benefit
- The estimated benefit had to be at least $200
- Applicants needed to provide evidence of expected earned income and Canadian residency
- Payments were made within the GST credit payment cycle
Advance payments were requested using:
- The tax return, or
- CRA Form RC201 – Canada Workers Benefit Advance Payment
If a prepayment later became repayable, interest would be charged similar to underpaid income tax.
From WITB to the Canada Workers Benefit
Before 2019, the program was called the Working Income Tax Benefit (WITB).
The 2018 federal budget introduced legislation to rename the program to the Canada Workers Benefit and enhance the benefit starting in the 2019 taxation year.
The WITB had been available from 2007 to 2018 for low-income individuals and families with working income above $3,000.
Final Thoughts
The Canada Workers Benefit provides valuable financial support to low-income workers and families in Canada. Because the benefit is refundable, filing a tax return can result in receiving money back even when no tax is owed.
For many individuals, simply filing a tax return ensures access to benefits such as the Canada Workers Benefit, making it an important step each year.
