News for Refundable Tax Credit Recipients

Has your income changed since filing last year's return? If so, your eligibility for certain refundable tax credits may increase or decrease this year. Always monitor new benefit levels and "clawback zones"; that is, the income thresholds used to phase out your eligibility for the Working Income Tax Benefit (WITB), the Canada Child Tax Benefit (CTB), and GST Credit. Income distributed through these credits begins again in July 2009, if you file family tax returns on time and report net income (line 236 on the tax return of both spouses) within various clawback zones. Again, an RRSP contribution might help you maximize these credits, which can really help with cash flow throughout the year.

The Working Income Tax Benefit (WITB) is a refundable tax credit that can provide some tax relief for individuals and families that are employed in low income jobs. It also helps to encourage those not currently in the workforce to enter it by accessing the tax credit incentive.

Taxpayers could be eligible for the WITB if:

• They are 19 years of age or older at the end of 2008 and;
• They were a resident of Canada for income tax purposes throughout the year

Note that if the taxpayer was under 19 years old during the year and had a spouse, common-law partner or eligible dependant in 2008, they could also be eligible for the benefits.

Taxpayers are not eligible for the benefits if they don't have an eligible dependant and were enrolled as a full time student for more than 13 weeks in 2008 at a designated educational institution. Entitlement is also lost if they were confined to a prison or are not required to pay tax as an officer or servant of another country or are a family member of such a person.

All benefit levels and thresholds are indexed each year. Qualifying taxpayers must apply for the credit by filing a tax return and completing Schedule 6.

Individuals can apply to have 50% their current year's estimated WITB prepaid. Prepayments will be made on the same payment cycle as GST credits are paid but the entire prepayment will be paid over the number of remaining GST payment dates left in the year. So, for example, an application made in April 2009 will earn 1/3rd of 50% of the estimated WITB in July, October and January. Prepayments will be reconciled to the actual entitlement when a return is filed by adding the prepayment amount to taxes owing.