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budgeting, covid-19, financial-planning, news

Covid-19 Relief Benefits For Canadians

Earlier today, the act that covers financial relief to Canadians reached royal assent and became law. This new program called the Canada Emergency Response Benefit (CERB) offers financial support to help alleviate the cashflow crisis that is striking millions of Canadians from coast to coast. 

One of the biggest benefits included in the package is the Canada Emergency Response Benefit or CERB for short. This program consolidated the previously released emergency care and support program. 

So how do this new program work, how do you apply for it and how does it interact with Employment Insurance (EI)?

The Basics of the Canada Emergency Response Benefit (CERB)

The benefit pays $2,000 per month to qualifying individuals and lasts for four months. Registration opens up in early April and the deposit was stated to occur within ten days. After that, the deposit will be made on a monthly basis.

This benefit is taxable, meaning that the amount that is deposited in a recipient’s bank accounts will be less than $2,000. If an individual has a large enough income when they resume work than this can lead to an amount owing for the 2020 tax year (a common issue that happens to parents on maternity/parental leave when not enough withholding tax is taken off of EI payments).

How to Qualify?

To qualify for the program, an employer or self-employed ceases working for at least 14 consecutive days within a four week period and do not receive any income or benefits (unstated at this time). The individual cannot be eligible for EI (however, the government is exempting this factor for now due to the EI backlog).  

The reason for the loss of work can be due to being sick, quarantine, taking care of an individual that is suffering from a quarantine, and taking care of a child that is sick or home because of school closure. Individuals that also are employed, but do not receive income due to work interruptions are also eligible.

The recipient also needs to be a Canadian resident, be at least 15 years old, and have earned $5,000 in employment, self-employment income, or maternity/parental benefits in 2019 or the twelve months before their CERB application.  

What About EI?

The way that the CERB interacts with EI benefits are a little complicated right now. On the surface level, the CERB is for Canadians that are not eligible for EI but due to a massive EI backlog the government has announced that those that are eligible for EI can apply to the program for quicker relief. 

For those that are currently receiving EI, they have been directed that they will be eligible for CERN once their existing benefits run out. Those that are in the EI process can either complete the EI process or apply to the CERB when it’s available. 

It may still make sense for EI eligible individuals to follow the EI path first. The current monthly maximum for EI is $2,483 ($573/wk) before taxes which is substantially greater than the $2,000 for the CERB. Also, there is a high possibility that EI benefits will be extended and even if not, one can receive the CERB after EI if they are still eligible. 

If one decides to CERB before EI then the government states that they would still be eligible for the EI benefits once the CERB runs out and they are still not working. Going down this path would also help individuals that are planning to use EI benefits for maternity or parental leave in the near future as this can interfere with the claim.

How to Apply

Applying to the CERB is pretty easy and can be completed through CRA Online, Service Canada Online or through a yet to be announced dedicated telephone number.

It’s actually a great idea for people to gain access to Service Canada Online asap to have everything set-up before the CERB goes live.

As always you can contact me at info@ffcoach.ca or at 647-289-0012

For more information on the subject, please contact Matthew Siwiec at www.ffcoach.ca, or at info@ffcoach.ca, and make sure to listen to his Podcast. You can also follow Matthew on Instagram @F_FCOACH

Author’s Bio: As a financial literacy coach, Matthew specializes in empowering Canadians to achieve financial independence. After leaving a lengthy career in the commercial finance industry, he embraced his entrepreneurial side and he now focuses on offering non-biased financial education. With over twelve years of financial advising experience, Matthew believes that financial education should be oriented to each individual’s unique needs and life goals. He is also an avid financial blogger and is involved with many local non-profit organizations

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