Working income tax benefit

The working income tax benefit (WITB) is a refundable tax credit in Canada, similar to the Earned Income Tax Credit (EITC) in the United States. Introduced in 2007, it offers tax relief to working low-income individuals and encourages others to enter the workforce.[1] The WITB has been expanded considerably since its introduction.[2][3][4]

Eligibility

To be eligible for the WITB, the applicant or their spouse must be a Canadian resident for income tax purposes of at least 19 years of age as of December 31, and cannot be a full-time student.[5][6] The WITB can be claimed on line 453 of the income tax return if their income exceeds $3,000 for the calendar year. However, the additional paperwork required to claim the credit is complex, involving a the 42-step process on Schedule 6 of Canada's main income-tax form.[7]

Benefits

As of 2016, the WITB is worth up to $1,028 for a single individual and $1,868 for couples and single-parent families. Benefits increase and then decrease with income. At an income of $18,529 for single individuals or $28,576 for families the benefits decrease to $0.[8] WITB is estimated to benefit 1.4 million working Canadians annually, at a cost to the federal government of CDN$1.2 billion.[7] In October 2017, the Liberal government of Justin Trudeau promised to expand the benefit by $500 million annually, beginning in 2019.[7]

Consistently since 2009, only about 85% of all working Canadians eligible for the WITB have claimed their benefit, with particularly low uptake in Atlantic Canada and the Prairie provinces.[7] In 2017, this left an estimated CDN$175 million in benefits unclaimed by 240,000 eligible low-income Canadians.[7] This is thought by the Canada Revenue Agency (CRA) to be due to a mixture of lack of awareness and the complexity of the forms required to claim the benefit.[7] CRA is working to increase uptake by CRA is expanding its support for free volunteer tax-preparation services and by scaling up a 2016 pilot project in New Brunswick, which highlighted the program to persons likely eligible for the program and was judged to have had a "positive impact."[7]

References

  1. ↑ "Working income tax benefit (WITB)". Canada Revenue Agency.
  2. ↑ CORAK, MILES (Nov 8, 2013). "This refundable tax credit could reduce income inequality". The Globe and Mail (Wealth Paradox). Retrieved 25 September 2015.
  3. ↑ Wells, Paul. "Harper changes Canada, a cut at a time". Maclean's.
  4. ↑ OECD (2010). Tax expenditures in OECD countries. Paris: OECD. p. 81. ISBN 9789264076907. Retrieved 25 September 2015.
  5. ↑ "Refundable tax credit for WITB: Application and Eligibility". Canada Revenue Agency. Retrieved 25 September 2015.
  6. ↑ JACKS, EVELYN (Apr 7, 2011). "Take advantage of changes to this year's tax return". The Globe and Mail.
  7. 1 2 3 4 5 6 7 Beeby, Dean (29 November 2017). "$175M in federal money for working poor goes unclaimed". CBC News. Retrieved 3 December 2017.
  8. ↑ "Refundable tax credit for WITB: Calculation". Canada Revenue Agency.

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