A new tax credit has been proposed to assist low-income Canadians who find that the net effect of taking a job is that they end up poorer.

The Working Income Tax Benefit, unveiled in the 2007 federal budget, will provide a refundable tax credit equal to 20% of each dollar of earned income in excess of $3,000 to a maximum credit of $500 for single individuals without dependants, and $1,000 for families — couples and single parents.

A single individual will be eligible for the WITB for a taxation year if the individual is at least 19 years old and has been a resident in Canada throughout the taxation year.

A single parent will be eligible for the family-based WITB for a taxation year if the parent is resident in Canada throughout the taxation year, and at the end of the taxation year is the primary caregiver to a dependent child in Canada.

Similarly, a couple will be eligible for the family-based WITB for a taxation year if both individuals are resident in Canada throughout the taxation year.

When one member of a couple meets the residency requirement and one does not, the individual that meets the residency requirement will be deemed to be a single individual or to be a single parent.

The WITB will include an additional disability supplement for each individual other than a dependant who is eligible for the disability tax credit, who has at least $1,750 in individual earned income.

The WITB and the disability supplement will be effective for the 2007 taxation year.