The CRA Isn’t Messing Around With These 2 Crisis Payouts

The CRA deserves praise from workers and students for the crisis payouts. CERB and CESB will lessen the economic pain and enable recipients to use savings to invest in the Summit Industrial stock to generate more income.

Christopher Liew, CFA

Christopher is a CFA Charterholder and a former financial advisor at RBC.

Published May 26, 2020 8:00 am EDT

Canadian workers and students are getting crisis payouts from the Canada Revenue Agency (CRA) due to the pandemic. The tax agency is working double-time and not messing around.

The Canada Emergency Response Benefit (CERB) and Canada Emergency Student Benefit (CESB) are integral parts of the federal government’s COVID-19 Economic Response Plan.

Early measure

CERB is one of the first measures at the onset of the pandemic. As businesses slow down or grind to a halt, workers are facing the loss of income. This taxable benefit is available to employees and workers (part-time, contract, and seasonal) as well as self-employed individuals.

There are many COVID-related instances where you can qualify to receive $500 weekly for up to 16 weeks. You can get CERB if you lost your job or your work hours are down to zero.

A person in quarantine or sick due to COVID-19 qualifies. Likewise, you can apply for CERB if you’re unable to go to work, because you’re caring for someone in quarantine or sick due to COVID-19. However, if you voluntarily quit your job, you’re not eligible to receive the benefit.

Needed relief

CESB is available to post-secondary students and recent post-secondary and high school graduates who are unable to find work due to COVID-19. Also, this exclusive benefit is necessary, because most students do not qualify for CERB or Employment Insurance (EI).

If you’re eligible, you can receive $1,250 monthly from May to August 2020. The amount can be $2,000 for the same period if you have dependents or a disability. In case a student finds work that pays $1,000 (before taxes) during an eligibility period, he or she must return the CERB to the CRA.

Investment opportunity

The CERB and CESB are emergency cash, so recipients need not withdraw from their savings for emergency use. Those with free or spare cash can pursue long-term financial goals. Investment opportunities are available while you’re on lockdown.

Summit Industrial (TSX: SMU.UN) is one of the better options. The business of this $1.36 billion real estate investment trust (REIT) remains stable amid the pandemic. The REIT can duplicate its record growth and operating performance last year.

In 2019, the revenue and net rental income growth of Summit were 54.3% and 59%, respectively. The occupancy rate was a high of 98.4%. There is no liquidity concern entering 2020, as cash on hand was $200 million as of year-end. This REIT added 42 more light industrial properties to its growing real estate portfolio.

COVID-19 is not stopping Summit’s momentum. For the first quarter of 2020, revenue and net rental income increased by 37.7% and 39.6%, respectively, compared with the same period in 2019. High stable occupancies and rent escalations are the growth drivers. The only significant move is the suspension of acquisition activities.

For less than $10 per share, you can be a pseudo-landlord through Summit. With its 5.47% dividend, an $8,000 investment (equivalent to total CERB for four months) can generate $437.60 in passive income.