The Canada Workers Benefit (CWB) supports low-income Canadian workers and their families through a quarterly advance or yearly tax credit. By providing access to these funds, the CWB is instrumental in creating economic stability for individuals and circulating money in disadvantaged communities.
In this guide, we’ll explain how the CWB works, who qualifies, and how it benefits employees and employers.
What is the Canada Workers Benefit?
The CWB is a refundable tax credit awarded to low-income workers and their dependents. It reduces or eliminates an individual’s overall tax burden and ensures that they receive a tax refund even if their tax liability is zero.
The CWB comprises two components: the basic amount, available to qualifying individuals and families, and the disability supplement, which provides additional support for disabled people. To claim the disability supplement, applicants must meet specific eligibility criteria and have their medical practitioner complete the T2201 Disability Tax Credit Certificate.
The maximum benefit amounts vary depending on marital status, location, and number of dependents. These criteria ensure that the CWB can address diverse financial needs across Canada.
What is the Advanced Canada Workers Benefit?
The Advanced Canada Workers Benefit (ACWB) program provides eligible individuals with a portion of their CWB in advance, distributed throughout the year. Instead of waiting until tax season to access the full benefit, recipients can receive quarterly payments, which offers more consistent financial assistance.
This approach benefits people facing unexpected challenges because it helps bridge the gap between pay periods. This proactive distribution method empowers low-income workers in Canada to manage their finances more efficiently year-round, alleviating the strain of waiting for a lump-sum refund.
Canada Workers Benefit eligibility
The Canada Workers Benefit (CWB) and the Advanced Canada Workers Benefit (ACWB) support low-income workers who meet specific criteria:
- Income thresholds: To be eligible for the CWB, your net income, which is the amount of money remaining after taxes, benefits, and other deductions, must not exceed the set limits of $35,095 for singles and $45,935 for families. These limits vary between provinces, such as Nunavut and Quebec, to account for differences in the cost of living.
- Residency requirement: You must be a Canadian resident for the entire tax year. That means if you’re an independent contractor working outside the country for half the year, you cannot apply for the CWB. If you work remotely but don’t leave Canada, you’re entitled to apply. This ensures that the benefits support workers contributing to Canada’s workforce and economy.
- Age requirement: Applicants must be at least 19 years old by December 31 of the tax year. This does not apply if you live with a spouse, common-law partner, or eligible dependent.
- Student eligibility: Full-time students enrolled in a designated educational institution for more than 13 weeks out of the year cannot apply for the CWB. However, you can apply if you have an eligible dependent at the end of the year.
- Incarceration restrictions: If you were in prison or a similar institution for 90 or more days during the tax year, you cannot claim the CWB or ACWB.
- Exemptions for diplomats and servants: If you’re a diplomat, officer, or public servant of another country and thus exempt from paying Canadian taxes, you are not eligible, and neither are your employees or family members.
How to apply for the Canada Workers Benefit
Applying for the CWB and the ACWB is straightforward but requires attention to the detail. Follow these six steps:
1. File your tax return by April 30: Filing your income tax return on time is essential for eligibility, as the Canada Revenue Agency (CRA) uses it to calculate your benefit amount and determine if you qualify for advance payments via the ACWB. (To be eligible for the ACWB, you must file with the CRA before November 1 of the benefit period.)
2. Complete a Schedule 6 form: A Schedule 6 is used to calculate your CWB and, if applicable, your disability supplement. If you’re using tax software, the software will complete the form automatically as part of the process. For paper filers, print and fill out a Schedule 6 form to submit with your documents.
3. Calculate working and adjusted family income: Accurately calculate your working income and, if applicable, your adjusted family income on the Schedule 6 form. Adjusted family income is the pre-tax income of a family’s primary caregiver and their spouse or common-law partner. These figures determine eligibility for the CWB and how much money you can claim.
4. Review the Disability Supplement: If you or your spouse qualify for the disability tax credit, calculate the additional supplement amount on the Schedule 6 form. You’ll need a valid Disability Tax Credit Certificate (T2201) on file with the CRA.
5. Keep your tax information up-to-date: Ensure that your personal and financial information, including your address, income, and dependents, is always correct. Inaccurate details may delay processing or disqualify you from receiving the credit.
6. File annually: File your income tax return every year to continue receiving the CWB and the ACWB. Regular filing means you’ll have uninterrupted access to financial support.
Understanding Canada Workers Benefit payment dates and amounts
The amount you receive from the CWB depends on your net income, marital status, and eligibility for the disability supplement. The benefit is highest for those with lower incomes and gradually decreases as income exceeds the set thresholds, ensuring support goes to workers who need it most.
For individuals and families with a qualifying disability, the CWB includes an additional supplement to help cover extra costs. If one of you qualifies for the disability supplement, either partner can claim the basic CWB amount, but only the eligible partner can claim the disability benefit. If you both qualify for the disability supplement, only one of you can claim the basic CWB amount, but you can both claim the disability supplement on a Schedule 6 form.
The ACWB gives eligible recipients up to 50% of their calculated yearly benefit. Payments are typically issued in January, July, and October. The CRA determines these advance payments based on your most recent tax return and issues the payments automatically.
Streamline compliance and empower your team with Oyster
Navigating benefits like the CWB is essential to build a supportive, financially stable team in Canada. From understanding eligibility to managing applications, ensuring your team members receive the support they’re entitled to requires time and expertise, and that’s where Oyster comes in.
Oyster simplifies hiring and managing employees in Canada by streamlining compliance, automating processes, and providing access to local expertise. Our platform helps you stay on top of employment regulations, deliver competitive benefits, and mitigate cross-border tax risks. If you’re ready to hire talent in Canada, learn more about our Employer of Record (EOR) services.
FAQs
How much do employees pay for benefits in Canada?
In Canada, employees contribute to mandatory benefits like the Canada Pension Plan (CPP) and Employment Insurance (EI). Employees pay approximately 5.95% of their salary to CPP, capped at approximately $3,754 annually, while EI contributions are set at 1.63%, capped at $1,002. Contributions ensure national access to essential programs like unemployment support and parental leave for every eligible Canadian.
What are the employee benefits in Canada?
Canadian employers often offer a mix of mandatory and optional benefits. These include the CPP, EI, extended health care plans covering dental and vision, retirement savings plans, disability insurance, and more. Benefits are often tailored to attract and retain top talent.
How much does a person get on welfare in Canada?
In Canada, financial assistance varies according to the province, household type, and income. For example, in 2023, an unattached single person considered employable might have received up to $26,368 annually in Quebec. Similar households in Ontario may have received approximately $10,473. Families with children typically receive higher amounts.
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