The 2021 federal budget introduced an enhancement to the Canada Workers Benefit (CWB). These changes will ultimately put more money into the pockets of recipients.

First, the regular CWB will be improved by increasing:

• the phase-in rate from 26% to 27% for single individuals with no dependents and for families;

• the phase-out threshold from $13,194 to $22,944 for single individuals with no dependents and from $17,522 to $26,177 for families; and

• the phase-out rate from 12% to 15%.

The CWB Disability supplement is also improved by making changes to the phase-in and reduction rates, and reduction threshold. More specifically, the supplement is phased out at a rate of 7.5% for each individual in a couple where both of them receive the disability supplement, and a rate of 15% in other cases. The reduction threshold is increased to align with the point where the base benefit is fully phased out (i.e., from $24,815 under the existing rules to $32,244 for singles individuals with no children and from $37,548 to $42,197 for families).

There is a special rule called “secondary earner exemption” for individuals with an eligible spouse. The rule allows the spouse or common-law partner with the lower working income to exclude up to $14,000 of such income to compute their adjusted net income for the purpose of phasing out the CWB.

These measures will apply to the 2021 and subsequent taxation years. The indexation of CWB amounts will continue after 2021.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.