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Working Tax Credits for the Self-Employed

Rebecca Rustin
An empty wallet

Many Canadians qualify for the Working Income Tax Benefit (WITB) - which is a refundable tax credit to financially help working, low-income individuals and families. Unfortunately, more than $175 million in benefits were not claimed by some of the 240,000 low-income Canadians eligible for millions of dollars in federal support payments.  Continue reading to learn about the WITB eligibility rules and benefit amounts.

Can I get working tax credits if I'm self-employed?

The good news is that you could qualify for working tax credits if your working income is low. Also, if you live as a couple or have a disability, you can claim additional amounts.  According to the CRA, "The Working Income Tax Benefit (WITB) is a refundable tax credit intended to provide tax relief for eligible working low-income individuals and families. The 2018 federal budget proposes to replace the WITB with the Canada Workers Benefit (CWB), effective in the 2019 tax year. The Government's CWB page shows that CWB working tax credits would be higher than under the WITB. Net income limits are also higher, so it should be easier to qualify.  You won't see the new tax credit until early 2020 when you file your 2019 tax return. Until then, you can claim the WITB.

When should I apply for the WITB?

Starting or running your own small business and being self-employed can be challenging. If any of these typical self-employment situations applies to you, the WITB could help with an income shortfall:

  • You're newly self-employed. Working for yourself can be very satisfying, but also challenging. You may not earn much in your first year, but it might be enough working income to qualify for the WITB. Also, expenses like meals on the road, gas for car trips to client locations, etc., could eat into your cash flow. Receiving the WITB tax credit might make a difference if you're cash-strapped.
  • You work part-time or earn limited income. Maybe you split your time between your dog-walking business and caring for elderly parents. Or you provide maintenance services in a small community with few customers. If this sounds like the situation you're in, the WITB tax credit could help.
  • You have a disability. Disabilities impact your ability to work and earn self-employment income. The WITB provides a supplement if you have a disability.

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Can I claim working tax credits?

Anyone who is self-employed and earns at least $3,000 of working income ($1,150 if you have a disability) can claim the WITB tax credit. However, to claim the full amount, your working income must range from $7,172 to $11,838 (2017 tax year). If it's below or above that range, the tax benefit falls off.

How much WITB could I get?

The amount of tax credits depending on where you live and your situation. You can use the CRA's WITB calculator to figure out exactly how much you could get. Family benefits are entitled if you live as a couple and both of you qualify.  If you or your partner have a disability, the WITB also offers a disability supplement. To qualify, you'll need to submit Form T2201, Disability Tax Credit Certificate, to the CRA.  The maximum WITB tax credit you can claim for 2017 falls into three categories:

  • Single benefit maximum: $1,043 / $1,355 in 2019*
  • Family benefit maximum: $1,894 / $2,335 in 2019*
  • Maximum disability supplement for each eligible adult in a family: $521 / $700 in 2019*

*Under the new Canada Workers Benefit replaces the WITB in the 2019 tax year

Are there other conditions to qualify for the WITB?

The CRA also looks at your net income for the year. Your net income includes all the income you earned, including rental or investment income. To see the detailed calculation, have a look at Schedule 6. You won't qualify for the WITB tax credit if your net income exceeds the CRA's limits.  [table id=20 /]  Again, these amounts will vary depending on where you live in Canada. The CRA's WITB page and calculator provide information specific to your situation.  Finally, during the year, unless you supported a spouse or a child, minimum age is 19 years old to qualify for the WITB, and you cannot have been a full-time student for more than 13 weeks.  If all these numbers sound a bit confusing, don't worry. Most tax software automatically calculates whether you and your partner qualify for the WITB and fills in the required forms when you prepare your tax return.

How often do I get paid?

After you claim the WITB on your tax return (line 453), you'll receive payments in April, July, October and January. To accelerate your disbursements, you can apply to draw up to 50 percent of your tax credit in advance by submitting form RC201 to the CRA between January and August.

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