Yahoo Finance CRA: Can You Claim This $2,355 Tax Credit?
The Canada Revenue Agency (CRA) unveiled a slew of new benefits in 2020 in response to the COVID-19 pandemic. Earlier this month, I’d discussed how some Canadians could determine their eligibility for one of these benefits or even a revamped Employment Insurance (EI) program. Canadians who have not dipped into benefits in 2020 should keep their eyes on potential tax credits. Today, I want to focus on a potential $1,355 to $2,355 tax credit that often flies under the radar.
CRA: What is the Canada Workers Benefit?
According to the government of Canada website, the Canada Workers Benefit (CWB) is a refundable tax credit that can provide tax relief for eligible low-income individuals and families who are in the workforce. Moreover, the CWB includes a disability supplement for individuals who have an approved Disability Tax Credit Certificate form filled out.
The CRA-administered CWB is designed to bolster the previous working income tax benefit (WITB). As of the 2019 tax year, Canadians may choose to include or not include tax-exempt income when calculating the CWB. The CWB has two parts: a basic amount and a disability supplement. If you have an eligible spouse, only one of you can claim the disability supplement.
How do you qualify?
In order to qualify for the CWB, you must be a resident of Canada and at least 19 years of age on December 31. Full-time students, prisoners confined for 90 days or more in a year, and officers of foreign nations are not eligible. Net income levels for the CWB in Canada stand at $24,111 for single applicants without children. If you are single with children, or attached with or without, the cap sits at $36,483. These amounts differ in the provinces and territories of Québec, Alberta, and Nunavut. Cap levels are the same for the disability supplement.
The maximum payment for the CWB is $1,355 for single individuals. That bumps up to $2,335 for families. However, the CWB payments is gradually reduced when family net income exceeds $17,025. It is worth checking on your recent CRA information to see where you or your family may land.
CRA: An alternative that can help you rake in tax-free cash
The Tax-Free Savings Account (TFSA) affords Canadians the opportunity to generate capital growth and income without paying a capital gains tax to the CRA. This has grown into a favoured account because of its flexibility and tax-free benefits. Those who want to take advantage of income should consider top TSX dividend stocks.
Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is a Calgary-based company engaged in hydrocarbon exploration in Western Canada and around the world. Its shares have dropped 23% in 2020 as of close on November 26. The COVID-19 pandemic has been damaging to the oil and gas sector as demand has cratered.
In Q3 2020, this company posted a profit of $408 million — down from $1.03 billion in the previous year. However, profit was up from a loss of $310 million in the prior quarter. Shares of Canadian Natural Resources possess a favourable price-to-book value of 1.1. It offers a quarterly dividend of $0.425 per share, representing a strong 5.4% yield. None of that TFSA income will need to go to the CRA.
The post CRA: Can You Claim This $2,355 Tax Credit? appeared first on The Motley Fool Canada.
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Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.
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