Income Research Paper Series
The filing patterns of wage earners and receipt of the Canada workers benefit

Summary

By combining data from administrative files, in this case, the T4 slip that provides information about earnings from paid employment with T1 data on income tax returns, this paper aims to examine the rate of non T1 tax-filing among T4 earners in Canada by various sociodemographic characteristics. It also investigates the potential entitlement of non-filers to the Canada workers benefit and provides an estimate of initially unclaimed benefits.

Start of text box

Highlights

• Women earners are more likely to file taxes and receive the Canada workers benefit (CWB) compared with men. This may be partly related to their increased incentive to file to become eligible for the Canada child benefit, but the same is also true for women without dependents compared with their male counterparts^Note .
• In Quebec, non-filing rates (3.8% in 2021) among earners were lower than half the Canadian average. CWB program parameters in Quebec generate lower rates of estimated CWB receipt (6.2% vs 10.0% for Canada) but higher median amounts (at $1,360 vs $1,070 for Canada).
• Non-permanent residents represent a small percentage of the earner population (4.4% in 2021) but are less likely to file (40.2% non-filing rate). However, those who do file and have eligible earnings are more likely to receive the CWB (21.7% vs 10.0% for Canada).
• Workers who are “lapsed filers” (did not file in the previous year) or who have never filed, file less in the current year, with non-filing rates (59.6% and 50.8% respectively in 2021) 12 to 15 times higher than for earners who filed the previous year (4.0%).
• Short-term or part-time students show similar or lower – especially for men – non-filing rates than the rest of the eligible earner population, though they do not represent a large share of the eligible workers (5.0%).
• Participation in the Community Volunteer Income Tax Program (CVITP in Canada outside of Quebec), or the Income Tax Assistance Volunteer Program (ITAVP in Quebec) is higher among earners who received CWB compared to all earners (2.9% vs 0.8% in 2021). Participation was highest among those who received CWB and were in the lowest income category (4.2%). Overall, paid employees may have initially unclaimed 212 million dollars in benefits in 2021. This is an increase from 2020 (79 million dollars) when CWB entitlement was lower because of higher government transfers or reduced earnings but also 61% more than in 2019 (131 million dollars).

End of text box

Introduction

The Canada workers benefit (CWB) is a federal refundable tax credit implemented in 2019 for eligible low-income individuals and families which aims to reduce rates of poverty and incentivize work. It replaced the Working income tax benefit (WITB), increased the maximum benefit available and simplified the credit claiming process on the tax return.

However, filing an income tax return remains a prerequisite to entitlement under the CWB program and has been identified as one of the barriers that might prevent eligible Canadians from benefiting from the government support they could need.

A 2022 report by the Auditor General of Canada, titled “Report 1—Access to Benefits for Hard-To-Reach Populations”, indicates that more research is required to examine Canada workers benefit take-up in hard-to-reach populations facing barriers such as limited access to financial services and not being able to file taxes, as well as literacy levels or inability to communicate in either of Canada’s official languages and reluctance to disclose personal and financial information to the government, among others. Many Canadians who are part of vulnerable populations and who should be benefiting from economic supports, may not be receiving the amounts to which they are entitled. Further research is necessary to determine how much the lack of benefit uptake, non-filing, and late filing are affecting individuals and the population as a whole.

This study uses administrative data from the Canada Revenue Agency (CRA) available at Statistics Canada to build a dataset of potentially eligible CWB beneficiaries and see who had not filed a tax return within a certain period. The target population includes all workers who received a T4 – Statement of remuneration paid slip between the years of 2019 and 2021, integrated with data from the T1 – Income tax and benefit return, and other datasets to establish eligibility and provide sociodemographic characteristics.

By integrating data from the T4 and the T1, this study will estimate the non-filing rate among workers who may not have filed tax returns, and answer questions such as:

1. What proportions of paid employees potentially eligible for CWB did not file a tax return from 2019 to 2021?
2. What are the sociodemographic characteristics of the workers least likely to file?
3. Among filers, what proportion are entitled to CWB and what is the mean amount received? Can one estimate the benefits non-filers initially missed by applying the rates and amounts of similar filers?

This study aims to fill this information gap by first discussing the program eligibility and the source datasets, followed by non-filing rate results disaggregated by sociodemographic, income and geographic characteristics. The final section will address the estimation of the benefits foregone or delayed by not filing in a timely manner.

Start of text box

Box 1: Overview of the Canada workers benefit

One of the original purposes of the Working Income Tax Benefit (WITB), which the CWB replaced, was to increase the entry into the workforce, for example, by reducing the “welfare wall”. This would lessen the burden of indirect and direct taxes experienced by welfare recipients upon entering or re-entering the labour market when their benefits are supplemented with earned income.

Compared with the WITB, the CWB includes an increase in both the maximum benefits received, as well as the income level at which the benefit is phased out completely (Finance Canada, 2018a). It was estimated in 2019 that $1 billion in addition would be spent on the CWB compared to 2018 (Finance Canada, 2018b).

Individuals are eligible if they are:

• A resident of Canada throughout the year
• Aged 19 years or older by end of current year
• Earning a working income of at least $3,000^Note 

Individuals are not eligible, unless they have an eligible dependent or spouse, if they are:

• Enrolled as a full-time student at designated institution for more than 13 weeks
• Incarcerated for at least 90 days during the year
• Someone who does not have to pay taxes in Canada

A disability supplement is available with an approved T2201, Disability Tax Credit Certificate on file with CRA.

When the CWB was introduced in 2019, for the basic amount, the maximum benefit was $1,355 for single individuals, with the maximum adjusted net income threshold as $24,111, above which no benefit was provided. For families, the maximum benefit was $2,335, and the maximum adjusted net income threshold was $36,483 (Finance Canada, 2018b).

In 2021, an enhancement was made which increased somewhat the maximum basic amounts but shifted the income threshold significantly higher. For single individuals, the maximum adjusted net income was set at $32,244 and for families, $42,197 (Finance Canada, 2021). Additionally, a secondary earner exemption was introduced, increasing eligibility in families by allowing a second, lower-income earner to exclude up to $14,000 of their working income in the calculation of combined adjusted net income when determining the CWB amount.

End of text box

Methods

Data sources

Data spanning 2019 to 2021 were extracted from the T4 – Statement of Remuneration Paid file held at Statistics Canada, which includes all slips received for individuals who worked as paid employees throughout each tax year. The total earnings for the year were calculated as the sum of boxes 14, 71 and 88 across all T4 slips issued, representing employment income including amounts possibly considered tax-exempt under the Indian Act. The province or territory of residence in the tax year was also extracted from T4 data, and, for those with missing values, it was assigned based on the first letter of the recipient’s postal code.

The T2202 – Tuition and Enrolment Certificate and Summary form is now provided directly to CRA by designated educational institutions in Canada and issued for all students who have paid tuition or fees. The form includes the number of months of full-time or part-time attendance and tuition amounts paid. This dataset was linked to the T4 universe to exclude individuals who are known to not be eligible for the CWB based on having full-time student status exceeding 13 weeks.

The T4 was also linked to the T1 return for each tax year. The examination of filing or non-filing status is based on returns received during the first year after the end of each calendar year. Sociodemographic variables were sourced for both the filing and non-filing populations from various Statistics Canada holdings. This includes age and sex, presence of dependents, previous filing behaviours and the construction of a variable to pinpoint non-permanent residents^Note .

Identifying individuals eligible for the CWB

To identify the subset of individuals eligible for CWB from the T4 population, all T4 slips reporting income in each year were aggregated by individual. Slips reporting no amount in boxes 14, 71 and 88 were excluded, as were slips without social insurance numbers (SIN) or with invalid or probably reused SIN (these were identified as those for which more than fifty T4 slips were issued in a single year).

From the remaining population, several factors were assessed to help determine those eligible for the CWB: location of residence, T4 earnings, age, and student status. Individuals who appeared to reside outside of Canada, based on the country of residence variable were excluded. However, those with missing or uncertain address information were kept.

Individuals were also excluded if they received T4 earnings less than $3,000 dollars during the year or if they were younger than 19 years old at year end^Note . T4 recipients who linked to one or more T2202 slips and had full-time school enrolment status for three months or more were also removed.

The restricted T4 subset was linked to the T1 to identify those who were tax filers for each year and, for filers, obtain the CWB amount received if any. The number of slips excluded and the total number of potentially eligible T4 workers in the subset is shown in Table 1.

In this analysis, CWB eligibility is inferred based on the available variables pertaining to the criteria. To determine entitlement accurately and completely, further information would be required. In particular, information related to the family adjusted net income, the presence and earnings of spouses and dependents, as well as comprehensive working income would be needed. Since the T4 slip data does not contain a full set of information to properly assess entitlement for non-filers, it will be necessary to assume similar entitlement rates for groups of persons with similar characteristics.

Determining filer status and CWB benefit rate

Tax filing status was identified based on the linkage of the subset of T4 earners described above to the T1 file. Filers were identified as T4 earners who could be linked to the T1 for the same tax year. Non-filers were identified as individuals who received one or more T4s but could not be linked to a T1 for the same tax year (i.e., eligible workers from the T4 who did not file taxes).

The CWB benefit entitlement rate for a given tax year is calculated as the percentage of filing individuals who received CWB on the T1 among filers with eligible earnings. The amount of CWB received was the entitlement on the T1 as calculated by CRA’s assessment process, including both the basic and disability amounts. Due to the structure of the dataset and T1 filings, the CWB rates and average amounts received were calculated on a per filer basis.

A variable was also created to identify each earner’s previous filing status. Eligible earners were divided in three categories: those for whom CRA has not received a single T1 return between 1982 and the year prior to receipt of T4 earnings (the never filed population), those who filed a T1 the year prior, and those who had filed previously but not in the year just prior (intermittent or lapsed filers).

Results

Non-filing rates among T4 earners eligible for CWB

As seen in Table 1, after accounting for various exclusion reasons, the eligible T4 earners subset contained approximately 16 million individuals from 2019 to 2021. The total number of persons receiving a T4 slip was lower for 2020, due to pandemic-related perturbations in the labour market, although the filing rate of earners remained similar to other years. Among eligible wage earners, the T1 filing rate was around 91% for these three years. The non-filing rates for this population were 8.4% in 2019, 9.0% in 2020 and 9.2% in 2021.

In Chart 1, 2021 non-filing rates are shown by age and sex for eligible T4 earners compared with the implicit non-filing rate for the general population. For comparison, an “implicit non-filing rate” was calculated for Canadians using population estimates at the end of the year and total filers from the T1 data. In 2021, the implicit non-filing rate was 9.0%. The T4 subset follows similar patterns as for the population, such as higher non-filing rates in men and among younger individuals. Both show higher non-filing rates before age 22, decreasing with older age. Young women with earnings, 23 to 34 years old, have slightly higher non-filing rates than their counterparts from the general population of the same age group.

Data table for Chart 1

Data table for Chart 1
Table summary
The information is grouped by Age (years) (appearing as row headers), T4 earners, General population, Women, Men, Women and Men, calculated using non-filing rates (percent) units of measure (appearing as column headers).

Age (years)	T4 earners		General population
	Women	Men	Women	Men
	non-filing rates (percent)
Note: Population estimates for January 1, 2022. Sources: Statistics Canada, Population estimates by age and sex, 2022 and T1 and T4, 2021.
19	14.3	14.2	19.4	22.0
20	13.4	14.0	16.0	19.3
21	13.3	14.9	15.6	19.8
22	14.3	16.6	13.5	18.7
23	12.9	16.8	10.9	16.5
24	11.7	16.1	9.7	15.2
25	11.3	15.6	8.2	13.9
26	11.2	15.7	7.4	13.6
27	10.8	15.3	6.4	12.6
28	9.9	14.6	6.2	13.1
29	9.2	13.8	5.1	12.0
30	8.4	13.0	6.1	12.8
31	7.9	12.3	5.3	11.8
32	7.4	11.8	5.6	12.3
33	7.0	11.4	5.6	11.8
34	6.8	11.0	6.0	11.9
35	6.6	10.7	6.3	12.1
36	6.5	10.5	6.8	12.0
37	6.3	10.2	5.9	11.0
38	6.3	10.1	6.5	11.0
39	6.4	10.0	5.9	10.3
40	6.4	9.8	7.1	10.8
41	6.5	9.8	7.1	10.3
42	6.6	9.9	6.9	10.1
43	6.7	10.0	7.9	10.6
44	6.7	9.9	7.5	9.9
45	7.1	9.9	8.0	10.6
46	7.3	10.0	8.3	10.8
47	7.3	10.1	8.7	10.8
48	7.3	10.1	8.5	11.0
49	7.5	10.1	8.3	10.5
50	7.4	10.0	8.3	11.0
51	7.4	10.0	8.4	11.1
52	7.2	9.9	8.5	11.5
53	6.9	9.4	8.2	10.8
54	6.9	9.3	8.9	11.9
55	6.7	8.9	8.7	11.4
56	6.3	8.8	8.6	11.8
57	6.3	8.5	7.2	10.2
58	5.9	8.0	7.2	10.0
59	5.5	7.6	6.5	9.5
60	5.6	7.4	7.5	10.2
61	5.5	7.1	6.4	9.1
62	5.2	6.8	6.3	8.9
63	4.9	6.4	6.2	8.6
64	4.4	5.4	4.7	6.2
65	4.3	5.3	4.8	6.3
66	4.5	5.2	4.6	6.3
67	4.4	5.0	3.9	5.2
68	4.5	5.1	4.4	5.7
69	4.5	4.7	3.3	4.3
70	4.3	4.2	4.9	6.0
71	4.2	4.3	3.9	5.3
72	3.8	4.3	3.6	4.7
73	4.0	4.0	4.1	5.1
74	3.5	4.0	2.3	3.2
75	3.5	3.7	2.5	3.5
76	3.5	3.4	6.7	7.6
77	3.4	3.1	4.2	5.7
78	3.5	2.8	4.3	5.6
79	3.2	3.4	4.3	5.8
80	3.2	2.7	7.0	7.8

As can be seen in Table 2, male earners were more likely to be non-filers compared with women and this is true in all three years, presenting a difference slightly increasing over time up to 2.5 percentage points in 2021. Disaggregating by age, younger individuals aged 19 to 24 were more likely to not file (11.1% in 2019 to 13.8% in 2020, and 14.6% in 2021) than earners from other age groups.

Those earning between $3,000 and $13,000 were the least likely to file, at 13.7% in 2021. As one considers the earnings distribution, non-filing declines progressively reaching half that rate for workers earning $73,000 or more (6.5%).

Geographically, the territories had the highest proportion of non-filers for any given tax year, with non-filing rates in 2021 of 12.4% for Nunavut, 12.7% for Yukon and 13.3% for the Northwest Territories.

Among the provinces, Nova Scotia had the highest proportion of non-filers among earners for all three years, with 9.6% in 2021. British Columbia also had a higher proportion of non-filers than the Canadian rate in 2021 at 9.4%. The lowest non-filing rates among earners were found in Quebec (3.8% in 2021) -  a few percentage points lower than observed in most provinces. There are multiple potential explanations for this difference, but administrative data does not help distinguish between them. For example, it may be due to better knowledge of the existence of CWB or other potential benefits to filing or higher incentives to file, either to obtain benefits specific to Quebec^Note  or a refund of income taxes or contributions withheld by the employer. The activities or reputation of Revenu Québec – the agency responsible for the collection of provincial taxes – may also influence participation as well as past experiences in the province.

Among eligible T4 earners, around 98% had filed at least one tax return previously. Tax-filing behaviour in the year just preceding the current tax year was a good indicator of whether they would file in the current year. In 2021, among workers who filed in the previous year, 4.0% did not file for the current tax year. In comparison, those who did not file in the previous year are nearly 15 times more likely to be non-filers in the current tax year (59.6%).

For the 1.8% of the eligible population which had never filed a tax return before 2021 – the year in which they earned T4 employment income – approximately half (50.8%) remained non-filers. Thus, workers who did not file in the previous year or who have never filed have non-filing rates 12 to 15 times higher than for earners who filed the previous year.

Despite being a small proportion of the overall eligible T4 population (i.e., less than 5% in 2021), those identified as non-permanent residents were more likely to be non-filers than those who were not (40.2% versus 7.8% in 2021). Those with dependents younger than 18 years of age have significantly lower non-filing rates compared to those without dependents. This may be driven by the additional incentive to file in order to obtain the Canada child benefit (CCB), for which tax-filing is also mandatory to continue receiving monthly benefits.

The proportion of non-filing workers with a T2202 and part-time or short-term student status (with less than 3 months of full-time studies) was typically 2.5 percentage points lower than the overall average. They represented 5% of eligible earners in 2021. Looking more carefully at rates across the earnings distribution and separately by sex, Chart 2 shows for 2021, as earnings levels increase, non-filing rates tend to decrease for both part-time or short-term students and non-students. Overall, at lower income levels, the differences in non-filing rates between students and non-students are greater. Compared with women, men had higher non-filing rates among both students and non-students.

Data table for Chart 2

Data table for Chart 2
Table summary
The information is grouped by Income from T4 (dollars) (appearing as row headers), Short term students, Not students , Women, Men, Women and Men, calculated using non-filing rate (percent) units of measure (appearing as column headers).

Income from T4 (dollars)	Short term students		Not students
	Women	Men	Women	Men
	non-filing rate (percent)
Notes: Short-term or part-time students refer to those linked to a T2202 with less than 3 months of full-time status. Income higher than $70,000 were included in the analysis but were excluded from the graph due to low number of observations for short-term students. Non-students may include some students for whom the T2202 was not found due to the absence of a Social Insurance Number (SIN). Sources: Statistics Canada, T1, T4 and T2202, 2021.
3,000	8.9	16.9	11.6	20.7
4,000	9.9	15.5	10.2	17.8
5,000	9.9	15.8	10.4	19.5
6,000	10.6	14.7	10.3	18.5
7,000	9.4	13.2	10.0	18.7
8,000	9.7	13.1	10.0	18.2
9,000	9.5	12.2	9.7	18.1
10,000	8.7	12.7	9.4	16.6
11,000	8.2	13.0	9.7	17.2
12,000	9.0	11.6	8.8	15.6
13,000	7.8	12.2	9.3	16.8
14,000	8.2	12.5	9.1	16.4
15,000	8.8	13.0	8.9	15.4
16,000	8.5	11.3	8.9	15.9
17,000	7.5	11.6	9.1	16.0
18,000	8.0	11.2	8.7	15.2
19,000	8.0	10.9	9.1	15.7
20,000	7.6	9.8	8.5	14.3
21,000	7.3	11.3	8.7	15.4
22,000	7.6	11.3	8.8	15.2
23,000	7.4	9.7	8.8	15.0
24,000	6.9	10.7	8.3	13.8
25,000	6.8	9.8	8.4	14.5
26,000	7.8	10.3	8.6	15.0
27,000	7.6	11.0	8.6	14.8
28,000	7.3	8.9	8.4	14.5
29,000	7.4	10.1	8.6	14.7
30,000	6.7	9.1	8.1	13.1
31,000	6.8	10.3	8.2	14.2
32,000	6.6	9.6	8.4	14.1
33,000	6.1	9.5	8.2	14.2
34,000	7.1	9.8	8.4	14.1
35,000	7.1	9.7	8.0	13.2
36,000	6.4	8.6	7.7	12.7
37,000	6.1	9.5	7.9	13.3
38,000	6.1	9.1	8.1	13.2
39,000	6.3	8.6	7.6	13.0
40,000	5.8	8.4	7.4	12.2
41,000	5.7	9.3	7.5	12.4
42,000	6.0	8.5	7.3	11.8
43,000	5.5	8.7	7.2	12.2
44,000	5.2	7.4	7.0	12.1
45,000	5.6	7.8	6.8	11.7
46,000	5.5	8.8	7.1	11.7
47,000	5.2	8.4	7.1	11.6
48,000	5.6	7.7	6.7	10.9
49,000	5.7	7.9	6.7	11.1
50,000	5.3	8.3	6.7	10.6
51,000	5.4	7.0	6.8	11.2
52,000	5.2	8.3	6.8	10.4
53,000	4.5	6.9	6.5	10.5
54,000	4.9	7.1	6.7	10.3
55,000	5.1	6.3	6.7	10.3
56,000	4.6	6.5	6.8	10.2
57,000	4.7	6.8	6.6	10.2
58,000	5.0	6.6	6.5	10.0
59,000	5.3	6.7	6.5	9.9
60,000	4.6	5.8	6.2	9.0
61,000	4.1	6.5	6.4	9.7
62,000	4.7	6.1	6.2	9.1
63,000	4.3	6.9	6.4	9.4
64,000	4.6	5.2	6.4	9.2
65,000	4.8	5.7	6.4	9.1
66,000	4.1	5.9	6.4	8.9
67,000	4.8	6.7	6.2	9.0
68,000	4.9	5.4	6.2	8.9
69,000	5.2	6.0	6.2	8.9
70,000	5.0	5.3	6.1	8.2

Entitlement rates and averages among filers

Having discussed factors among the eligible population that are associated with individuals being more or less likely to file a tax return and potentially access the CWB, we aim to assess their eventual entitlement. As we cannot observe other sources of income, the presence of a partner and their earnings or dependents, or be certain of school attendance status, it is therefore difficult to have enough information to accurately assess benefit entitlement for specific non-filers. However, by making certain assumptions about these earners it is possible to estimate the proportion receiving CWB and by extrapolation, the amounts paid by looking at similar filers. In order to estimate individuals entitled to the CWB, it is assumed that the proportion of non-filers entitled to receive CWB would be about the same as for the filers with similar characteristics^Note .

Table 3 presents the estimated benefit entitlement rate among filers and the average amount received by recipients. The entitlement rate presents CWB recipients as a share of the tax filing population of eligible earners (i.e., all eligible workers who filed a T1 tax return). Overall, the benefit entitlement rate in 2019 was 8.7%. This decreased to 5.2% in 2020 and rose to 10.0% in 2021. The average amount received was $920 in 2019, 740$ in 2020, and $1,070 in 2021.On average, higher CWB payments were observed in 2021 compared to both 2020 and 2019.

In 2021, the higher benefit rate and average CWB received may be a result of enhancements to the program. The enhancements introduced increased the thresholds for the phasing-out of the benefit, which expanded the entitled population and benefit amounts received.

Although greater proportions of non-filers were found in eligible earners with lower earnings levels (e.g., below $13,000), among those who did file we saw the highest benefit entitlement rates. This is expected as lower income individuals were the target CWB population. A small percentage of individuals with working income greater than $33,000 also received the benefit, likely due to the presence of an eligible spouse or dependent.

The estimated CWB benefit rate was highest for those in the two lowest broad T4 earnings categories ($3,000 to $13,000 and $13,000 to $23,000). Close to one third of earners received an amount in 2019 and 2021, averaging $1,070 in 2019 and $1,340 in 2021, respectively, for the lowest and second lowest earnings groups. Among filers, women, those under 25 years old, and non-permanent residents had higher benefit receipt rates and higher benefit amounts.

The territories, while having a larger proportion of non-filers, also had estimated benefit rates that were generally higher compared to that of the provinces.

The highest benefit rate was observed among filers in Nunavut at 25.4% in 2021 and the mean benefit received there was $900, slightly below averages seen in other jurisdictions. Among provinces, the take-up rate was highest in Nova Scotia at 14.1% in 2021. The benefit received was $1,020 in 2021. However, mean benefit received was highest in Quebec for all these years, hitting $1,360 in 2021. Provincial and territorial differences may be partly due to reconfiguration of the CWB parameters in these jurisdictions with differences in the upper ‘ceiling’ of the benefit for single individuals and families, the impact of which is explored in Charts 3 and 4.

Charts 3 and 4 describe the percentage receiving the CWB and median amounts received in the regions with differing CWB eligibility parameters compared to the rest of Canada, namely Alberta, Nunavut and Quebec. Chart 3 shows that as income levels increase, the benefit receipt rates in the regions with differing CWB eligibility parameters vary compared to the rest of Canada. As income from the T4 increases, the estimated CWB benefit rate decreases as expected, with the remaining individuals who received benefits likely due to eligible spouses or dependents. Chart 4 shows that the median amount received generally decreases with higher income in Canada, reaching a maximum in Quebec of approximately $2,000 for those with income around $12,000, and showing increased volatility in amounts received for incomes $53,000 or greater due to smaller numbers of recipients.

Data table for Chart 3

Data table for Chart 3
Table summary
The information is grouped by Income from T4 (dollars) (appearing as row headers), Provinces, Alberta, Nunavut, Quebec and Rest of Canada, calculated using received benefit (percent) units of measure (appearing as column headers).

Income from T4 (dollars)	Provinces
	Alberta	Nunavut	Quebec	Rest of Canada
	received benefit (percent)
Note: Percentage computed among filers with eligible T4 earnings. Source: Statistics Canada, T1 and T4,2021.
3,000	25.7	8.1	13.6	27.5
4,000	20.2	4.4	14.7	28.3
5,000	32.2	8.1	16.2	33.2
6,000	31.9	32.0	17.3	35.4
7,000	34.4	52.6	18.7	37.5
8,000	36.4	61.5	19.9	38.6
9,000	37.0	60.4	21.4	39.6
10,000	36.1	59.0	22.1	38.1
11,000	39.1	60.0	24.2	39.2
12,000	36.5	63.8	24.9	37.6
13,000	36.6	61.7	24.4	38.1
14,000	36.1	66.7	24.8	37.7
15,000	35.6	66.3	24.6	36.2
16,000	35.8	64.6	24.7	36.7
17,000	35.2	68.5	24.5	36.4
18,000	34.2	59.7	24.5	35.8
19,000	35.0	69.5	24.5	36.0
20,000	30.7	73.3	24.5	34.7
21,000	32.9	56.5	24.3	35.2
22,000	32.5	65.1	23.6	34.8
23,000	32.1	60.5	23.3	35.0
24,000	29.8	66.7	23.0	33.3
25,000	29.7	63.6	22.6	33.1
26,000	31.4	63.0	22.4	33.2
27,000	29.8	60.3	21.2	33.0
28,000	28.5	59.2	21.0	32.3
29,000	28.8	63.6	10.8	32.0
30,000	25.9	62.8	7.7	29.4
31,000	27.0	68.9	6.4	30.2
32,000	24.6	62.9	5.3	26.8
33,000	12.7	57.6	4.6	14.4
34,000	10.3	61.6	4.0	11.6
35,000	9.6	62.7	3.6	10.2
36,000	8.3	50.5	3.0	9.1
37,000	8.3	64.0	2.4	8.6
38,000	7.6	48.9	2.3	8.0
39,000	7.0	42.4	2.1	7.4
40,000	6.5	60.0	2.1	6.9
41,000	6.5	66.2	1.6	6.5
42,000	6.1	36.8	1.6	5.9
43,000	4.7	53.8	1.4	3.8
44,000	3.1	35.6	1.2	3.0
45,000	2.3	47.6	1.0	2.5
46,000	2.4	45.3	0.8	2.2
47,000	1.7	37.5	0.6	1.7
48,000	1.5	40.6	0.6	1.3
49,000	1.3	44.1	0.5	1.2
50,000	1.1	38.0	0.4	1.1
51,000	1.1	39.4	0.4	0.9
52,000	1.0	40.3	0.4	0.8
53,000	0.7	40.0	0.3	0.8
54,000	0.7	35.3	0.3	0.6
55,000	0.7	41.8	0.3	0.6
56,000	0.7	25.0	0.2	0.6
57,000	0.5	25.0	0.2	0.5
58,000	0.5	21.7	0.3	0.5
59,000	0.4	13.8	0.2	0.5
60,000	0.5	14.1	0.2	0.5
61,000	0.4	4.9	0.2	0.4
62,000	0.4	4.3	0.2	0.4
63,000	0.5	2.8	0.2	0.4
64,000	0.5	5.1	0.2	0.4
65,000	0.4	2.9	0.2	0.3
66,000	0.3	1.7	0.1	0.3
67,000	0.4	1.3	0.1	0.3
68,000	0.2	0.0	0.1	0.3
69,000	0.2	5.7	0.1	0.3
70,000	0.3	0.0	0.2	0.3

The entitlement criteria in Alberta have also been adjusted but are comparable to the parameters in the rest of Canada and thus, Alberta shows similar benefit rates and median amounts received as the rest of Canada, with benefit rates declining slowly after the phase-in and more sharply when earning levels reach $33,000. The amount of median CWB received is similar between those with earning $9,000 to $25,000 and decreases as the benefit is clawed back up to the $32,000 range.

Data table for Chart 4

Data table for Chart 4
Table summary
The information is grouped by Income from T4 (dollars) (appearing as row headers), Provinces , Alberta, Nunavut, Quebec and Rest of Canada, calculated using Median benefit (dollars) units of measure (appearing as column headers).

Income from T4 (dollars)	Provinces
	Alberta	Nunavut	Quebec	Rest of Canada
	Median benefit (dollars)
Note: Median computed among recipients only. Source: Statistics Canada, T1 and T4, 2021.
3,000	380	380	810	770
4,000	550	520	820	870
5,000	720	670	540	1,050
6,000	800	830	260	1,230
7,000	900	980	300	1,400
8,000	1,010	1,130	400	1,580
9,000	1,100	1,180	570	1,730
10,000	1,220	1,220	570	1,830
11,000	1,260	1,240	730	1,960
12,000	1,250	1,290	850	2,000
13,000	1,310	1,270	960	1,950
14,000	1,330	1,270	1,090	1,910
15,000	1,350	1,290	1,210	1,860
16,000	1,320	1,270	1,270	1,780
17,000	1,310	1,260	1,330	1,730
18,000	1,310	1,280	1,320	1,670
19,000	1,300	1,260	1,330	1,570
20,000	1,330	1,270	1,360	1,470
21,000	1,310	1,250	1,350	1,360
22,000	1,280	1,250	1,290	1,270
23,000	1,250	1,230	1,330	1,180
24,000	1,210	1,210	1,300	1,050
25,000	1,130	1,120	1,280	950
26,000	1,050	1,050	1,170	820
27,000	970	950	1,320	670
28,000	870	870	1,180	530
29,000	810	770	1,060	760
30,000	740	710	950	980
31,000	620	580	1,190	990
32,000	550	510	990	990
33,000	900	790	1,100	1,030
34,000	980	860	900	1,030
35,000	940	850	840	1,070
36,000	930	850	920	1,090
37,000	850	800	820	1,110
38,000	820	750	810	1,080
39,000	730	680	680	1,030
40,000	660	610	640	1,010
41,000	590	520	800	980
42,000	470	460	640	930
43,000	480	570	760	850
44,000	640	610	720	820
45,000	710	630	500	920
46,000	640	640	540	930
47,000	710	690	480	1,050
48,000	850	790	500	1,110
49,000	850	790	570	1,230
50,000	950	840	460	1,180
51,000	850	860	370	1,240
52,000	890	890	310	1,220
53,000	890	970	310	1,470
54,000	960	970	230	1,320
55,000	900	910	220	1,150
56,000	910	950	160	1,450
57,000	950	990	200	1,220
58,000	1,180	960	180	1,550
59,000	980	1,010	210	1,580
60,000	970	970	90	1,430
61,000	900	920	220	1,280
62,000	970	1,060	80	1,480
63,000	1,020	970	20	1,420
64,000	1,100	1,020	50	1,830
65,000	1,040	1,070	1,120	1,390
66,000	1,050	1,080	410	1,310
67,000	1,150	1,050	80	1,700
68,000	1,070	1,120	0	1,480
69,000	1,120	1,020	440	1,680
70,000	1,200	1,130	0	1,580

In Quebec, the benefit receipt rates decrease when income reaches $29,000, and the median amount received starts decreasing around $11,000 in income. This follows the provincial entitlement claw-back threshold, which is lower than that of the rest of Canada. Of note, coordination with the work premium tax credit may impact aspects of the CWB parameters chosen for Quebec. This program, for Quebec residents only, has similar eligibility criteria as the CWB, such as age limit of 18 years or older, reporting income, and lack of full-time student status. The annual work income must be over $2,400 to qualify. The maximum income thresholds ranged from $21,490 in 2022 for single individuals up to $69,048 for couples with at least one child, at or above those levels, no amounts are payable.

In Nunavut, although the non-filing rate is higher than other regions as seen in Table 2, the estimated entitlement rate is generally higher for all income levels, and declines around earnings levels of $56,000. The median CWB received declines as earnings increase. The higher entitlement rates stem from Nunavut’s lower claw-back rate. This also entails a maximum threshold for adjusted net income which is significantly higher than that for the rest of Canada. As a result, proportionally more individuals in Nunavut and some persons with much higher earnings are entitled to the benefit compared with those in other regions. The smaller number of filers may add to volatility in the estimated entitlement rate and median amount received across income levels, especially at higher incomes.

The following section focuses on comparing the percentage who filed their return with assistance from a community volunteer among two groups of taxpayers, tax-filers with eligible T4 earnings and tax-filers with eligible T4 earnings who were also CWB recipients. Table 4 shows that T4 filers who received CWB were more likely to use the volunteer programs. In 2021, 2.9% of CWB recipients with eligible T4 earnings had their tax return filing done with help from a community volunteer compared to 0.8% of all T4 filers with eligible earnings. The volunteer programs were found to be most used among those earning $3,000 to less than $13,000, reaching a high of 4.2% among CWB recipients and 2.4% among T4 filers with eligible earnings in 2021.

Estimating entitlement among non-filers

Preliminary estimations using the proportion of eligible filers who received CWB multiplied by the average amount of CWB received was applied to the non-filer population to provide a rough indication of potential benefits initially missed (Table 5). Between 5.2% and 10.0% of filers from 2019 to 2021 were eligible for the CWB and received average amounts of $740 to $1,070 depending on the year. Among non-filers, it is estimated that 7.6% to 14.2% were likely to be entitled based on age, province or territory of residence, T4 earnings, and student status. In total, the estimation of initially unclaimed CWB is $131 million in 2019, $79 million in 2020 and $212 million in 2021. The tax year 2020 has the lowest estimate due to the observed decrease in the total number of workers who received a T4 slip and lower entitlement rates among filers, which leads to fewer individuals expected to be entitled among non-filers and lower estimates of the benefits potentially missed.

Table A2 in the Appendix presents a detailed breakdown of potential unclaimed benefits by province and territory of residence on the T4 slip.

Conclusion

Based on administrative data, this study found that non-filers represent between 8% to 10% of the paid worker population considered eligible for CWB from 2019 to 2021.

Younger people, particularly those under 25 years of age, non-permanent residents, those with T4 earnings under $13,000 and those who have not filed in the previous year are consistently less likely to file a return. By not filing, individuals with these characteristics face higher risk of missing out on benefits which they might be entitled to. In 2021, there were greater proportions of non-filers among individuals living in the territories, Nova Scotia, and British Columbia. Additionally, women were observed to have higher filing rates than men, as were persons with dependents compared to those without.

Workers in Quebec show considerably lower non-filing rates overall. More research would be required to assess whether this is due to different incentives because of additional provincial benefits or the adjusted CWB parameters in the province, or composition effects. Differences across provinces and territories in compliance measures on income tax filing or different awareness levels of the programs may also contribute to the variations.

Among those who were eligible for CWB and filed a return, the estimated entitlement rate was 8.7% in 2019, 5.2% in 2020 and 10.0% in 2021. Adjustments to program parameters may have contributed to the 2021 increase. Meanwhile, possible reasons for lower benefit rates and benefit amounts in 2020 include the receipt of pandemic-related benefits such as the Canada Emergency Response Benefit, or increased Employment Insurance that individuals and their spouses or partners may have received which increased their family net income and reduced the benefit entitlement. The average amount received under the program was $1,070 in 2021. The estimated amounts were higher among women, younger individuals, and those living in the territories compared to their counterparts.

The estimate of the total benefits initially missed from non-filing ranges from $79 million in 2020 to $212 million in 2021 based on the eligible non-filer numbers and benefit entitlement rates and average amounts received among filers with similar characteristics.

As raised in different points in the paper, there are a few caveats to this analysis that must be kept in mind for the interpretation: any filing which may have occurred after the first year following the year of employment, the univariate approach which may obscure certain effects and the possibility of unobserved differences which distinguish filers and non-filers.

In addition, this analysis covers solely the population of paid employees who have received a T4 of at least $3,000 for the year in question and excludes the self-employed. Thus, a sizeable proportion of the population receiving CWB, presumably with self-employment income, is not examined because they cannot be identified among non-filers.

The examination of the non-filing status is based on returns received during the first year after the end of each calendar year. Therefore, a proportion of earners deserving the CWB could have become entitled by filing later, either with the help of volunteer programs or on their own so these estimates represent the amounts initially missed. A portion of them could become delayed only instead of being missed.

Considering independently each of the characteristics may lead to assessments that are incomplete as composition effects in each group may be driving some of the contrasts (or minimising them). Therefore, multi-variate modelling methods could be considered to better describe non-filers in the future.

Given the available data it was not possible to reproduce the entirety of eligibility and entitlement criteria used to define CWB recipients. Unobserved characteristics that distinguish filers from non-filers are not fully captured in the present datasets and could influence the precision of the estimates.

Barriers to filing identified in Part 1 of the 2022 Report by the Auditor General of Canada for increasing the benefit uptake among hard-to-reach populations include literacy levels, the reluctance to disclose personal and financial information to the government, requirements to provide additional identification or documentation and geographic location/remoteness. Administrative data could eventually be supplemented with other methods such as focus groups and outreach programs to provide a more comprehensive picture of the barriers experienced by vulnerable individuals who may be eligible but did not access the CWB.

Potential action items to support future research could include ensuring all T2202 slips contain a SIN or for those without SINs, at least a date of birth, to aid automated identification of full-time students and to increase exclusion rates for ineligible students. Also, multi-variate modelling methods may be considered to better describe non-filers. Additional factors and incentives that may explain the higher filing rates in the province of Quebec compared to the rest of Canada should be explored.

Generally, the size (in dollar terms) of CWB is not comparable to the Canada child benefit and this may partly explain why there are still significant differences in filing rates for CWB eligible individuals compared to CCB eligible individuals. However, it is important to also note that the CWB may not be the only benefit low-income workers may be forfeiting – perhaps unwittingly – when they do not file.

References

Finance Canada (2018a). Backgrounder: Introducing the Canada Workers Benefit.

Finance Canada (2018b). Budget 2018. Archived - Budget 2018.

Finance Canada (2021). Budget 2021 (Archived): A Recovery Plan for Jobs, Growth, and Resilience.

Government of Canada (2022). Canada workers benefit – Overview.

Office of the Auditor General of Canada (2022). Report 1—Access to Benefits for Hard-to-Reach Populations. 2022 Reports of the Auditor General of Canada—Report 1—Access to Benefits for Hard-to-Reach Populations - 2022 Reports of the Auditor General of Canada—Report 1—Access to Benefits for Hard-to-Reach Populations - Open Government Portal.

Appendix