Since April 2020, approximately 8 million Canadians have taken advantage of the Canada Emergency Response Benefit otherwise known as CERB. Its aim was to help workers who may be affected by the pandemic by providing a $2000/month benefit up to a maximum of 16 weeks or four months. In order to get money into Canadians hands as quickly as possible, anyone that applied was approved. For some, the benefit was a welcome relief and maybe even more than their normal monthly income. But for far too many others, it didn’t begin to cover living expenses. Their shortfall for the last few months has been bridged by credit cards, lines of credit and what little savings people had.
There are many factors to be mindful of when it comes to the CERB. The $2000 monthly benefit is not free money. It is taxable and depending on how much you earn in 2020, you may owe CRA next tax season as a result of receiving it. Many people still don’t know this. It is a good idea, if you can afford it, to set aside at least 20% to cover this potential tax burden. While it sounds like a solid plan, it’s just not feasible for so many and they will have to deal with the tax issue next spring.
The Canada Revenue Agency (CRA) claims it will eventually review if Canadians who received the CERB met the eligibility requirements. Many didn’t read the fine print and don’t qualify but are getting the money. If you know you don’t qualify, CRA is not someone you want to try and fool. Penalties and interest will far exceed the benefit of working the system. Send the money back to them.
The CERB is paid once a month. Most workers get paid weekly, bi-weekly or semi-monthly so money is always on the horizon. Getting used to stretching one payment throughout an entire month has its own challenges. Just ask any senior who gets their pension money just once a month. Budgeting to make it last the entire 4 weeks is critical and more important than ever.
While the emergency situation isn’t going to last forever, neither is the CERB. The Feds might decide to extend the program but Canadians shouldn’t be making plans for it to continue in the future. Each day we await details on what the future holds.
Finally, while the economy will reopen, recovery is expected to be slow. The future may be uncertain but focusing on what you can control like your everyday spending during the pandemic will help.