Section 5 – Employees
Incentives for Workers
The Canada Employment Credit is a non-refundable tax credit equal to 15% of the lesser of $1,195 or the employee’s employment income.
Low-income Canadian workers who are at least 19 years of age are entitled to a refundable tax credit up to 25%24 of earned income (employment or business income) in excess of a threshold amount, up to an annual limit. Disabled persons are entitled to a supplement. The benefit, which can only be claimed by one spouse, is based on the applicant’s net income in the previous year, family situation and province of residence. An individual may apply for an advance payment of one-half of the benefit to which he/she is entitled for the year.25 As of 2019, the benefit will be increased and renamed the Canada Workers Benefit.
24 26% as of 2019.
25 For additional information and to estimate the amount to which you are entitled, go to the CRA Internet site at: http://www.cra-arc.gc.ca/bnfts/wtb/menu-eng.html.
The work premium is a refundable credit comparable to the federal working income tax benefit that is granted to Quebec residents who receive work income, i.e. employment or business income, of at least $2,400 for a single person or a head of a single-parent family, or at least $3,600 for a couple, whether or not they have children. The credit is granted to the extent the individual files a tax return for the year and the amount is determined based on the family situation and the individuals’s income.26 An application for advance payment may be made for part of the premium provided certain conditions are met.
Individuals with a severely limited capacity for employment can benefit from the Adapted Work Premium, which is calculated using more flexible parameters than the Work Premium. Moreover, a supplement is added for long-term recipients giving up last-resort financial assistance during labour market integration. A full-time student can only benefit from the work premium if he/she is the parent of a child with whom her/she resides.
Households subject to a decrease of their work premium due to an increase in their income from work can benefit from some tax relief under to the tax shield (see Section II).
26 The work premium for couple with no children will be progressively increased from 2018 to 2022. The following site provides more information: http://www4.gouv.qc.ca/EN/Portail/Citoyens/Evenements/DevenirParent/Pages/credt_impot_prime_travail.aspx.
An employee may deduct an amount equal to 6% of his/her work income, including self-employment income, up to a maximum of $1,150.27
27 For 2018. Indexed annually.
In 2018, individuals aged 61 and over28 are eligible for a non-refundable tax credit of 15% of their work income over $5,000. The credit is calculated on a maximum work income of $34,000 if the individual is aged 61 and $5,000, $7,000, $9,000 or $11,000 if the individual is aged 62, 63, 64 or 65 and over, respectively. This tax credit can neither be carried over nor transferred to a spouse and is reduced when the work income exceeds $34,030.29
28 For 2018. Indexed annually.
29 If the worker reaches
This document has been updated on August 31st, 2018 and reflects the state of the Law, including draft amendments, at that date.