Can you get a tax refund if you’re on welfare?

Can you get a tax refund if you’re on welfare?

April 13, 2020

Many people on welfare often think that there is no reason even to file their taxes. Up to a quarter don’t believe it is possible to get a refund if you’re on welfare. And although it is technically accurate that you can’t get tax dollars back if you never paid anything in, you could get tax credits that give you a tax refund.

Benefits like GST/HST and child tax credits can get you federal and provincial payments, as long as you file your tax return, even if you are on welfare. A single person on welfare could get $585. A single parent with a child could get $4,700. And two-parent families with two children could get $8,600.

In Alberta, Saskatchewan, Manitoba and Ontario, the CAI (Climate Action Incentive) refundable tax credit could mean a refund, too.

Canada Workers Benefit (formerly the Federal Working Income Tax Benefit)

The Canada Workers Benefit (CWB) encourages low-income workers to keep earning. If you make $3,000 or more, you claim this refundable credit even if you received some welfare payments during the year. The Canada Workers Benefit is a new, enhanced version of the federal Working Income Tax Benefit, starting in 2019.

If you get a tax refund through credits or other benefits while you are on welfare, that amount isn’t deducted from your income assistance cheque.  Also, if you paid taxes and were employed in the year, you will most likely get back any taxes that you paid. That is, if your total net income is under about $12,000.

Welfare payments are not taxable income. The amount from your T5007 slip is first added and then subtracted from your income on your tax forms, so you don’t pay tax on those payments. You’ll get a T5007 slip early in the year after you received the payments. So then you can do your taxes before the April 30th due date. Your welfare payment total is in box 11.

See also ‘Reporting Reporting Social Assistance Payments on Your Tax Return’

That payment total from box 11 is transferred to lines 14500 (formerly line 145) and 25000 (formerly line 250) of your income tax return. Any payments you receive for a foster person who lives with you should not be included.

Which payments to report so you can you get a tax refund if you’re on welfare

Any payments on behalf of foster children subtract from that total in box 11. The rest is how much you report on your tax return. Many people only receive payments for a foster person and nothing for yourself or anyone else in your household. If so,  the difference is zero, and you report nothing. Make sure you keep your T5007 slip and any receipts for payments from the foster agency.

So, can you get a tax refund if you’re on welfare? Yes! So do your taxes and see how much!

Nimalan Balachandran is the Founder & CEO of CloudTax, an income tax filing platform, certified by the Canada Revenue Agency, that allows simple tax filers to file their taxes from home. He was a former employee at the Canada Revenue Agency, and has been in the tax preparation industry for over 10 years. His goal was to bring his passion for technology and assisting Canadians in minimizing their taxes together, by building new software that allows Canadian residents to file simple taxes on their own. Along with his background in accounting, finance, artificial intelligence & business strategy from Seneca College and Massachusetts Institute of Technology, Nimalan has also worked as a Financial Advisor at Sun Life Financials. Nimalan also co-founded a not-for-profit organization, ATI Foundation, serving individuals with intellectual and physical disabilities in the Greater Toronto Area.


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