Income Tax Information

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The Working Income Tax Benefit

The working income tax benefit (WITB) is a refundable tax credit which is available starting in 2007, for low-income individuals or families with working income over $3,000 (base amount).  The calculations for BC, Québec, and Nunavut differ.  See the table below for a summary of the factors used in each province/territory.

The following people qualify for the WITB, depending on income, unless they fit the description of an ineligible individual:

• single individual 19 years of age or older at the end of the year:
  • Resident in Canada throughout the year, and
  • Not enrolled as a full-time student for more than 13 weeks in the year
• Individual under 19 years of age at the end of the year:
  • Resident in Canada throughout the year, and
  • Living with a spouse or common-law partner at the end of the year, and
  • Not enrolled as a full-time student for more than 13 weeks in the year
• Single parent family, including parent under 19 years of age:
  • Resident in Canada throughout the year, and
  • Primary caregiver of a dependant child (under 19 at end of year) in Canada at the end of the year
couple:
• with no dependent children who are under 19 at end of year and residing with them:
  • both residents of Canada throughout the year, and
  • not enrolled as full-time students for more than 13 weeks in the year
  • if one spouse is enrolled as a full-time student for more than 13 weeks in the year, then the non-student spouse is eligible for the WITB as a single individual.
• with dependent children who are under 19 at the end of the year, and residing with them:
  • both residents of Canada throughout the year
  • if one spouse is not resident of Canada throughout the year, the resident spouse may be eligible for the WITB as a single individual or parent if the applicable eligibility criteria are met.

An ineligible individual is an individual:

• who is an employee of the government of a country other than Canada, or a member of the employee's family;
• who, unless they have an eligible dependent, was enrolled as a full-time student for more than 13 weeks in the year at a designated educational institution (this would be a program for which theeducation amount tax credit is available); or
• who was confined to a prison or similar institution for a period of at least 90 days during the taxation year

Working income includes:

• income from office or employment (includes director's fees)
• taxable income from scholarships and research grants
• income from a business carried on by the individual

Adjusted net income

Adjusted net income is the individual's net income from line 236 of the tax return, less any Universal Child Care Benefits (UCCB).

Amount of WITB

Maximum refundable tax amount from WITB:

• $500 per year for a single individual
• $1,000 per year for an individual with an eligible spouse or eligible dependant

The WITB can only be claimed by one spouse.

The WITB is 20% of working income over $3,000 (base amount - see above), to the above limits, but is then reduced by:

• for a single person with no dependants, 15% of the amount, if any, by which the individual's adjusted net income for the year exceeds $9,500 (adjusted net income base amount)
• for an individual with an eligible spouse or eligible dependant, 15% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if applicable, the eligible spouse, exceeds $14,500.

The maximum WITB tax refund would be reached in most provinces/territories

• for a single person, at $5,500 or more of working income, and $9,500 or less of adjusted net income
• for an individual with an eligible spouse or eligible dependant, at $8,000 of combined working income, and $14,500 or less of combined (individual and spouse) adjusted net income.

The WITB will be reduced to zero in most provinces/territories

• for a single person with $12,833 or more of adjusted net income
• for an individual with an eligible spouse or eligible dependant, with $21,167 or more of combined (individual and spouse) adjusted net income

Disability supplement

The WITB will include an additional disability supplement for each individual (other than a dependant) who is eligible for the disability tax credit (DTC). The calculation differs for BC, Québec, and Nunavut. See the table below for a summary of the factors used in each province/territory.

The maximum WITB disability supplement is $250 per year.

The WITB disability supplement can only be claimed by one spouse.

The WITB disability supplement is 20% of working income over $1,750 (base amount), to a maximum of $250, but is reduced by:

• for a single person with no dependants, 15% of the amount, if any, by which the individual's adjusted net income for the year exceeds $12,833; or
• for an individual with an eligible spouse or eligible dependant, 15% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if applicable, the eligible spouse, exceeds $21,167; or
• for an individual with an eligible spouse who is also entitled to the disability tax credit, 7.5% of the amount, if any, by which the total of the adjusted net incomes of the individual and spouse exceeds $21,167.

For the CRA information on the working income tax benefit, and to get Schedule 6 on which it is calculated, see the CRA web page Line 453 - Working income tax benefits.

Prepayment

Individuals and families who are eligible for the WITB can apply to CRA for a prepayment of one-half of their estimated WITB, as long as the estimated WITB is at least $200 for the year. Evidence must be provided of expected earned income and proof of residency in Canada. Prepayments will be made as part of the Goods and Services Tax Credit (GSTC) payment cycle.

Eligible individuals and families can apply for the prepayment on their tax return, or by using the CRA form RC201 WITB Advance Payment for 2008.

A recipient of a prepayment must file a tax return for the year in which the prepayment is received. If a prepayment becomes repayable to the government, interest will be charged in the same manner as interest on underpayments of income tax.  If a prepayment has been made for a taxation year, no prepayment will be made for a subsequent tax year until the tax return for the earlier year is filed.