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Earned Income

Earned income is money you receive in exchange for work. This includes wages, salaries, tips, and self-employment income. Earned income is different from money received without working, such as investment returns or government payments. Lenders look at your earned income to assess your ability to repay a loan on a regular schedule.

Types of Earned Income

Earned income covers several categories:

To set up direct deposit, you will need:

  • Wages and salaries: what you earn from an employer for regular hours of work
  • Tips and gratuities: amounts received from customers in service-based work
  • Self-employment income: earnings from your own business or work as a contractor or freelancer
  • Commissions: amounts earned based on sales or performance results•      Bonuses: extra pay tied to job performance or company results

All of these count as earned income because they result directly from work you perform.

Earned Income vs. Other Types of Income

Not all money you receive counts as earned income. Here is how the types compare:

  • Earned income: wages, tips, self-employment earnings
  • Investment income: dividends, interest, capital gains earned from money invested, not from working
  • Passive income: rental income or certain business income where you are not actively involved
  • Government benefits: Employment Insurance (EI), Canada Child Benefit (CCB), and other transfer payments

Some lenders accept certain types of unearned income, like government benefits or pension payments, when reviewing an application.

How the CRA Classifies Earned Income

The Canada Revenue Agency (CRA) uses earned income when calculating certain credits and contribution room. Your RRSP contribution room, for example, is based on a percentage of your previous year’s earned income. The CRA also uses earned income to check eligibility for some refundable tax credits.

For full details on how the CRA defines earned income for tax purposes, visit canada.ca.

Direct deposit has several advantages over paper cheques:

  • Faster access to funds — no waiting for a cheque to clear
  • More secure — no risk of a cheque being lost or stolen
  • Reliable — funds arrive on the same schedule each time
  • Convenient — no trip to the bank required

Earned Income and Loan Applications

When you apply for a loan, most lenders look at your income to understand your ability to repay. Your earned income, what you bring in regularly from work,  is often the main figure reviewed.

For a Speedy Cash payday loan, your income is one of the most important factors in the review process.

You will be asked to provide:

  • One piece of Government Picture ID
  • Pre-Authorized Debit Form (PAD)
  • 30-60 Day Bank Statement
  • Proof of Address
  • Your most recent Pay Stub (if your income is not Direct Deposit)

If your income comes from self-employment or another non-traditional source, requirements will vary. Eligibility and loan amounts vary by province.

Earned Income and Government Benefits in Canada

Many Canadians receive income from both employment and government programmes. Common Canadian government income sources include:

  • Employment Insurance (EI)
  • Canada Child Benefit (CCB) which is formerly known as the Child Tax Benefit (CTB)
  • Canada Pension Plan (CPP)
  • Old Age Security (OAS)

Under CRA definitions, these are not typically considered earned income. That said, lenders review all income sources when assessing an application. Requirements vary by lender and province.

Summary

Earned income is money you receive in exchange for work,  including wages, tips, salaries, commissions, and self-employment earnings. Lenders look at your earned income to assess your ability to repay. At Speedy Cash, income is one of the key factors reviewed during the application process. Eligibility and loan amounts vary by province.

If you’re looking for a short-term borrowing option, apply online at Speedy Cash or visit a store near you.