Canada Workers Benefit (CWB) Enhancement
Broadening access to the CWB by increasing the phase-in rates and thresholds, as well as providing greater financial incentive for working couples. This includes:
- Raising the phase-in rate of the CWB basic amount from 26% to 27% and the phase-out rate from 12% to 15%.
- Increasing the phase-out thresholds from $13,194 to $22,944 for single individuals without dependents and from $17,522 to $26,177 for families.
- For the disability supplement, augmenting the phase-out rates from 6.0 per cent to 7.5 per cent for individuals and from 12.0 per cent to 15.0 per cent otherwise.
- Creating the new “secondary earner exemption” for working couples. This allows the spouse or common-law partner with the lower working income to exclude up to $14,000 of their working income in the computation of their adjusted net income, for the purpose of the CWB phase out.
Broadening access to the CWB by increasing the phase-in rates and thresholds, as well as providing greater financial incentive for working couples. This includes:
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Raising the phase-in rate of the CWB basic amount from 26% to 27% and the phase-out rate from 12% to 15%.
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Increasing the phase-out thresholds from $13,194 to $22,944 for single individuals without dependents and from $17,522 to $26,177 for families.
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For the disability supplement, augmenting the phase-out rates from 6.0 per cent to 7.5 per cent for individuals and from 12.0 per cent to 15.0 per cent otherwise.
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Creating the new “secondary earner exemption” for working couples. This allows the spouse or common-law partner with the lower working income to exclude up to $14,000 of their working income in the computation of their adjusted net income, for the purpose of the CWB phase out.
The parameters of the CWB in SPSD/M were adjusted to reflect the new policy enhancement regarding the phase-in and the phase-out rates and the thresholds.[^1].
New programming in SPSD/M was introduced to reflect the new “secondary earner exemption”.
For the behavioral response to the CWB enhancement, we calculated the effect of the measure on the METRs, PTRs and the household disposable incomes. Then, we used the labor supply elasticities to estimate the impact of the measure on the labor supply. This behavior response was used to calculate the change in the federal income tax and the CWB.
PBO did not expect any significant incremental administrative costs or savings.
The SPSD/M employment earnings distribution is used for the calculations. This implicitly assumes a quick return to the pre-COVID level of employment earnings.
Projected behavioral costs are sensitive to the elasticity choice.
Future phase-in and phase-out thresholds are indexed to CPI inflation and are sensitive to uncertainty in the economic outlook.
- Estimates are presented on an accruals basis as would appear in the budget and public accounts.
- Positive numbers subtract from the budgetary balance, negative numbers contribute to the budget balance.