The CRA recently issued a warning to taxpayers not to “be fooled by the working income tax benefit tax scheme”.
The WITB (which will be renamed the Canada Workers Benefit starting 2019) is a refundable tax credit intended to help low-income individuals and families who are currently in the workforce. It also encourages Canadians to enter the workforce. You can only claim the WITB if you are earning income from working in Canada.
The scheme involves the promoter preparing a T4 employment income slip in your name, listing an income amount in Box 14 that will maximize your tax refund. Because the WITB is a refundable credit, earning such income can keep you below the level of paying tax and yet generate a WITB for you.
The promoter will tell you that you must pay them the tax deductions they noted on the T4 slip as well as a fee for them completing your tax return. A legitimate tax preparer will never ask you to pay back deductions and will not prepare a T4 for you when you did not earn income in Canada.
If you suspect someone of promoting or participating in an abusive tax scheme, you can report it at canada.ca/taxes-leads or by calling the Leads program at 1-866-809-6841. You may give information anonymously. See also canada.ca/tax-schemes.
