Canada Workers Benefit (CWB): Boosting Your Income and Reducing Your Taxes

Rylan Kaliel
6 days ago
9 min read

Two people in black shirts smiling in front of colorful wall panels. The setting appears bright and welcoming.

The Canada Workers Benefit (CWB) is a refundable tax credit designed to provide financial assistance to low and modest-income Canadian workers and families. It encourages workforce participation by offering an incentive for employment. This blog will explore the eligibility criteria, how the benefit is calculated, how to claim it, and strategies to maximize the CWB to enhance your financial well-being.

What is the Canada Workers Benefit?

The CWB provides additional income to employed Canadians who earn below certain income thresholds. It is structured to incentivize individuals to work, recognizing the challenges low-income earners may face when employment-related costs outweigh their benefits. The CWB is a refundable tax credit, which means this amount is not limited to the amount of taxes you actually have to pay. See our Basic Personal Amount blog for more details.

Eligibility for the Canada Workers Benefit

To qualify for the CWB, you must:

Earn income from employment or self-employment that is below the net income level for your province or territory (see Income Thresholds and Benefit Amounts below for more details).
Be a resident of Canada throughout the year.
Be at least 19 years old by the end of the tax year or living with a spouse/common-law partner or dependent child.

You are not eligible for CWB if any of the following applies:

Are enrolled as a full-time student for more than 13 weeks in the year, unless, on December 31, you have a dependent.
You are confined to a prison or similar institution for a period of at least 90 days during the year.
Do not have to pay tax in Canada because you are an officer or servant of another country, or you are a family member or employee of that person.

For CWB purposes, a spouse/common-law partner is someone who:

Lives with you as a spouse or common-law partner on December 31.
Is a resident of Canada throughout the year.

Similar to the above, a spouse/common-law partner does not include a person who meets any of the conditions noted as not being eligible for CWB.

For CWB purposes, a dependent is someone who:

Is your or your spouse/common-law partner’s child
Is under 19 years of age and lives with you on December 31
Is not eligible for the CWB

Income Used for the Canada Workers Benefit

Benefits under the CWB are based on two definitions:

Family working income, which includes:
- Employment income (line 10100 and line 10400)
- Self-employment income (lines 13500, 13700, 13900, 14100, and 14300)
- Tax-exempt income earned on a reserve (line 10000 from Form T90)
- Tax-exempt portion of allowance received as an emergency volunteer (line 10105)
Adjusted family net income, which includes:
- Net income from line 23600
- Total net exempt income earned on a reserve (line 10026 from Form T90)
- Allowances received as an emergency volunteer (line 10105)
- UCCB repayments (line 21300)
- RDSP income repayment (line 23200),
- Less total UCCB received (line 11700)
- Less RDSP income (line 12500),
- Less the secondary earner exemption, which is based on the lower of your or your spouse/common-law partners, up to a max of $15,955 (2024, adjusted for inflation)

For single individuals, you would only include your own amounts for both of the calculations. For individuals with a spouse/common-law partner, you would combine both you and your spouse/common-law partners amounts to determine your family income.

Income Thresholds and Benefit Amounts

The CWB amount varies based on your income, family situation, and province of residence, with higher benefits generally provided to lower-income earners. The amount of the maximum benefit depends on your marital status and whether you have an eligible dependent, the table below determines the maximum benefit available, by province.

A table noting columns for Quebec, Nunavut, Alberta, and other provinces in Canada. It details amounts for Family with children, Family without children, Single with children, Single without children. Amounts included represent the maximum benefit available to persons in each of these situations by province. — Summary of the max benefit, by province and status, for the CWB.

The benefit gradually phases out as your income surpasses specified thresholds of income. As your income increases beyond the minimum threshold the benefit is reduced until it hits the maximum threshold. These thresholds vary by province and are based on your adjusted family net income (see Income Used for the Canada Workers Benefit above). A full table of the minimum and maximums incomes by province can be seen below.

In addition to this, there is a base amount that if your family working income is under this amount, you will not receive the benefit. This varies by province and is noted in the table below.

As can be seen above, the calculation of the CWB can be extremely complex and depends on several factors. As will be discussed in How is the Canada Workers Benefit Calculated? there are other factors, such as the benefit rate and the grind rate that can further complicate these calculations. As such, it is advised you discuss the expected amount to receive with a tax professional.

How is the Canada Workers Benefit Calculated?

As noted above, the CWB is based on the minimum, maximum, base rate, and a variety of other factors. In addition to these thresholds, there are also benefit rates that will dictate how much you will receive under the CWB.

The first rate to know is the benefit rate, which is the rate that is applied against your family working income (see Income Used for the Canada Workers Benefit above) in excess of the base amount to determine your benefit. These vary by province and are detailed in the table below.

Additionally, there is a grind rate to consider, which reduces the benefit once it passes the minimum threshold amount, this is based on your adjusted family net income (see Income Used for the Canada Workers Benefit above). This rate differs from the benefit rate and is often lower. These also vary by province and are detailed in the table below.

Let’s work through a simple example to see how this calculation is performed. While this example does not illustrate every situation and the differences between provinces, it should give you a brief understanding of how this calculation works.

Let’s assume we have a single individual who has a child. All conditions to meet the CWB are met, and the child qualifies as a dependent. They have an income of $35,000 with no deductions, such that family working income and adjusted family net income is the same, and live in Alberta.

Calculation of CWB, which starts with family working income of $35,000, base amount of $2,760, for income applied to benefit rate of $32,240. A benefit rate of 21% is applied to calculate the calculated benefit of $6,770.40. The calculated benefit is compared to the max benefit of $2,551 to determine the max benefit to receive of $2,551. The calculation continues in a separate section with adjusted family net income of $35,000 less the minimum threshold of $31,911 to determine the income in excess of minimum threshold of $3,089. This is applied against the grind rate of 15% to determine the reduction to benefit of $463.35. The max benefit less the reduction to benefit results in a CWB of $2,087.65. — Illustration of how the CWB is calculated.

As we can see, we calculate our family working income, less our base amount, to determine our income that can be applied to the benefit rate. We then take our calculated benefit and compare it to our max benefit, the lower of the two is taken, which is the max benefit of $2,551 in Alberta.

After this, we take our adjusted family net income and reduce it by the minimum threshold to determine our income more than the minimum threshold. This amount is multiplied by the grind rate to determine our reduction to our benefit. Finally, we take our max benefit to receive ($2,551), less our reduction to benefit ($463.35), and determine our CWB of $2,087.65.

Canada Workers Benefit Disability Supplement

If you are entitled to the disability tax credit you may be entitled to an additional supplement called the CWB disability supplement. Similar to the above, there are minimum and maximum thresholds, maximum benefits, base amounts, benefit rates, and grind rates which vary by province.

The maximum benefit, by province, for 2024 (adjusted annually), are as follows:

It is important to note that this benefit is received for each person who qualifies, meaning that if a person qualifies and their spouse/common-law partner qualifies, this max benefit would be doubled.

The minimum and maximum thresholds, for 2024 (adjusted annually), are as follows:

The base amount, for 2024 (adjusted annually), are as follows:

The benefit rate, which is applied to each individuals working family income (not the total for the family, just the specific individual), for 2024 (adjusted annually), are as follows:

The grind rate, which is applied to the adjusted family net income, for 2024 (adjusted annually), are as follows:

Let’s look at an example of this in action. Let’s assume a person who is entitled to the CWB Disability Supplement. They are married couple and earns $30,000 of employment income and their other spouse, who is not entitled to the CWB Disability Supplement earns $35,000 in employment income. They have one child together. Both persons are not entitled to any deductions against this income and live in British Columbia.

Calculation of CWB Disability Supplement, which starts with the person’s working income of $30,000, base amount of $1,150, for income applied to benefit rate of $28,850. A benefit rate of 27% is applied to calculate the calculated benefit of $7,789.50. The calculated benefit is compared to the max benefit of $821 to determine the max benefit to receive of $821. The calculation continues in a separate section with adjusted family net income of $49,045 less the minimum threshold of $48,091 to determine the income in excess of minimum threshold of $954. This is applied against the grind rate of 15% to determine the reduction to benefit of $143.10. The max benefit less the reduction to benefit results in a CWB Disability Supplement of $677.90. — Illustration of how the CWB Disability Supplement is calculated.

* Person's income of $30,000, plus spouses income of $35,000, less the secondary earner exemption, which is the lower of the two incomes and $15,955.

As we can see, we calculate our person’s working income, less our base amount, to determine our income that can be applied to the benefit rate. We then take our calculated benefit and compare it to our max benefit, the lower of the two is taken, which is the max benefit of $821 in British Columbia.

After this, we take our adjusted family net income and reduce it by the minimum threshold to determine our income more than the minimum threshold. This amount is multiplied by the grind rate to determine our reduction to our benefit. Finally, we take our max benefit to receive ($821), less our reduction to benefit ($143.10), and determine our CWB Disability Supplement of $677.90.

Similar to as was discussed in How is the Canada Workers Benefit Calculated?, these rules can be very complex given the various different rates, marital, and disability status, so it is advised you discuss this with a tax professional to confirm the correct amount.

Advanced Payments of the Canada Workers Benefit

Eligible taxpayers may receive advance payments of up to 50% of their anticipated annual CWB amount. In order to receive these payments you are required to be a resident of Canada on the first day of the quarter to be eligible for the advanced payments. These payments are typically issued quarterly, providing more immediate financial support throughout the year. Typical payment dates are:

July 12
October 12
January 12

Please note these dates are subject to weekends and holidays and may be paid on the first business day following the weekend and/or holiday.

Let’s look at an example of this, assuming that the CWB is $1,965 and the CWB Disability Supplement is $821, for a total of $2,786. 50% of this amount would be $1,393. This would be separated out into three equal instalments of $464.33. We would expect payments to be as follows:

Illustration of the payment dates, separating out the payments into four dates: July 12 of $464.33; October 12 of $464.33; January 12 of $464.34; and Received with filing of return of $1,393.00, for a total of $2,786.00. — Illustration of when the ACWB payments are made.

As we can see, 50% of the payments are paid out in advance of filing the return in three equal instalments, with the final 50% paid upon filing of your tax return.

It is important to note that this payment is received for the family, meaning that it isn’t received by both you and your spouse/common-law partner (i.e., doesn’t double in value). One question that comes up is who receives this payment, you or your spouse/common-law partner? In situations where you have a spouse/common-law partner, these payments are typically made to the following persons:

Amounts are sent to the spouse/common-law partner with the higher income, however, if both you and your spouse/common-law partner have the same working income, the spouse/common-law partner who files their return first will receive this benefit.
If either you or your spouse/common-law partner is entitled to the CWB Disability Supplement, the person receiving this benefit will receive both the CWB and Disability Supplement
If both you and your spouse/common-law partner are entitled to the CWB Disability Supplement, the rules determined in 1 above will determine who gets the CWB and each person will receive their own CWB Disability Supplement separately.

Claiming the Canada Workers Benefit and Disability Supplement

To receive the CWB:

Complete Schedule 6 of your personal tax return (T1). If you have a spouse/common-law partner, ensure you indicate whether you or your spouse/common-law partner will claim the CWB.
Ensure you accurately report employment or self-employment income.
You must also report amounts received annually on any ACWB using Form RC210 Advanced Canada workers benefit (ACWB) statement on your T1 Income Tax and Benefit Return.

The CRA automatically calculates your benefit if you don't claim it explicitly, but explicitly claiming via Schedule 6 ensures accuracy and faster processing.

Strategic Considerations to Maximize the CWB

Maximizing your CWB involves strategic financial planning:

Ensure all eligible employment income is accurately reported.
Apply annually for advanced payments if you qualify to improve cash flow.
Monitor income closely to understand how changes affect your CWB entitlement.

Common Mistakes and How to Avoid Them

Common errors when claiming the CWB include:

Underreporting employment income.
Missing out on advanced payment opportunities.
Misunderstanding eligibility or reporting requirements.

To avoid these pitfalls:

Keep detailed income records and verify accuracy annually.
Regularly confirm eligibility criteria, especially if family circumstances change.
Consider professional assistance if uncertain about claiming the benefit.

Impact on Other Benefits

Properly claiming the CWB can also influence eligibility for other government benefits and credits, such as the GST/HST credit and Canada Child Benefit, since these are income-tested programs.

Summary

The Canada Workers Benefit provides critical financial support for low and modest-income workers, promoting employment and financial stability. Understanding eligibility, benefit calculations, accurate reporting, and strategic planning allows you to maximize this important tax credit effectively.

Stay tuned for our next blog, where we'll explore the Home Buyer’s Tax Credit and its benefits for Canadian homebuyers.

KLV Accounting, a Calgary-based accounting firm, is here to help. Contact us today to enhance your financial strategy, minimize your taxes, and drive business success! For a free consultation, call us at 403-679-3772 or email us at info@klvaccounting.ca.