WORKING INCOME TAX BENEFIT: Explained

 

First of all, just what is the Working Income Tax Benefit (WITB) and who does it affect? Canada Revenue Agency (CRA) defines the WITB as “a refundable tax credit intended to provide tax relief for eligible working low-income individuals and families who are already in the workforce and to encourage other Canadians to enter the workforce.”

AM I ELIGIBLE FOR THE WORKING INCOME TAX BENEFIT (WITB)?

From CRA’s Frequently Asked Questions–

“You are eligible for the WITB if:

  • You are 19 years of age or older on December 31st; and
  • You are a resident of Canada for income tax purposes throughout the year.

You are not eligible for the WITB if:

  • You do not have an eligible dependant and are enrolled as a full-time student at a designated educational institution for more than 13 weeks in the year;
  • You are confined to a prison or similar institution for a period of 90 days or more in the year; or
  • You do not have to pay tax in Canada because you are an officer or servant of another country, such as a diplomat, or a family member or employee of such person.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

WHAT IS AN ELIGIBLE DEPENDANT IN REGARDS TO THE WITB?

From CRA’s Frequently Asked Questions–

“For WITB purposes, you have an eligible dependant if you have a child who, at the end of the year:

  • Lives with you;
  • Is under 19 years of age; and
  • Is not eligible for the WITB.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

HOW IS THE WITB CALCULATED?

From CRA’s Frequently Asked Questions–

“The WITB is calculated using the following information:

  • Marital status;
  • Province or territory of residence;
  • Working income;
  • Net income;
  • Eligible dependant; and
  • Eligibility for the WITB disability supplement.”

*There are exceptions to these conditions– for more information, refer to the CRA’s regulations of contact your Liu & Associates professional.

As the WITB is based on family structure and net income, it is vital you provide the CRA with yearly tax returns and report your eligibility to ensure you receive any benefit. Incomplete or unfiled returns can delay your approval, so follow CRA regulations to the letter to receive your credited amount in a timely fashion– or take the pressure off and have an accounting professional at Liu & Associates handle your finances and complicated family accounting.