The CWB is a refundable tax credit intended to supplement the earnings of low and modest income workers and improve their work incentives.

The CWB has two components – a basic amount, and a disability supplement for those who are eligible for the Disability Tax Credit.

The CWB is calculated on Schedule 6 of the T1 Income Tax and Benefit Return.

Currently, for 2021, the basic CWB amount is equal to 26% of working income over $3,000 to a maximum of $1,395* for single individuals without dependants and $2,403* for families (couples and single parents). The benefit is phased out by 12% of adjusted family net income over $13,194* for single individuals without dependants and $17,522* for families.

Individuals who are eligible for the CWB and the disability tax credit may receive a CWB disability supplement up to $720*. The phase-out threshold of the disability supplement is $24,815* for single individuals without dependants and $37,548* for families. The phase-out rate of the supplement is 12%, but is 6% where both individuals in a couple are eligible for the supplement.

*These amounts are indexed to inflation

For 2021 and later tax years, the budget proposes that the basic CWB amount be equal to 27% of working income over $3,000 to a maximum of $1,395* for single individuals without dependants and $2,403* for families (couples and single parents). The maximum credit will be phased-out by 15% of adjusted family net income over $22,944* for single individuals without dependants and $26,177* for families.

For 2021 and later tax years, the budget also proposes to enhance the CWB disability supplement. The budget proposes that the maximum amount will be $720* in 2021. It will be phased-out by 15% (7.5% where both individuals in a couple are eligible for the supplement) of adjusted family net income over $32,244* for single individuals without dependants and $42,197* for families.

*These amounts are indexed to inflation after the 2021 tax year.

See the chart below to see how the proposed enhancements to the CWB compare to the current CWB, for most provinces and territories.

In addition to the enhancements noted above, the budget also proposes to introduce a secondary earner exemption. This is a special rule for individuals with an eligible spouse where the spouse or common-law partner with the lower working income excludes up to $14,000 of their working income in the calculation of their adjusted net income, for the purpose of the CWB phase-out.

The proposed changes will make the CWB available to more Canadian families.

Consider a taxpayer and their spouse (or common-law partner) who have an adjusted family net income of $50,000. The secondary earner in this couple earned $20,000 of working income. Under the current rules, they would not receive any CWB in 2021. However, with the introduction of the secondary earner exemption, the secondary earner’s adjusted net income will be reduced by the lesser of their working income ($20,000) and $14,000. The adjusted family net income of $36,000 calculated using the proposed changes would give the couple a benefit of $930.

No, your CWB advance payment for 2021 will not change. Any CWB amount you are eligible for but do not receive in advance is paid to you when your 2021 T1 Income Tax and Benefit Return is assessed.

The CRA provides the latest information on the proposed changes on Canada.ca. Check online regularly for updated forms, policies, guidelines, questions and answers, and guidance.

In the meantime, please consult the Finance Canada's Budget 2021 documents for details.