CERB Users: Changes Likely Coming as the CRA Payment Expires for Many

The CERB is changing, and Canadians need to be aware of new rules, as they come to be to avoid falling in hot water with the CRA.

| More on:
A person suffering

Image source: Getty Images

The Canada Emergency Response Benefit (CERB) continues to change and evolve. And with that, I imagine that some eligible Canadians who’ve been collecting such Canada Revenue Agency (CRA) payments are a bit confused, especially if they haven’t been keeping up with the latest.

Waves of vulnerable Canadians are going to see their CERB lifelines come to an end over the coming months. For those who’ve yet to get an opportunity to get back at it, the future is uncertain and scary for many families that may not be able to make ends meet.

CRA payment extension or not, the financial hit brought forth by the coronavirus is palpable

There’s a chance that CERB payments could be extended further, but the rules of eligibility are due to change, as new rules look to be written up on the fly. As new legislation passes, there’s a chance that many Canadians may suddenly find themselves ineligible for CERB or subject to potentially stiff consequences by the CRA.

A CERB extension until 2021 may be necessary to protect the most vulnerable Canadians, but the bill is reported set to cost $57 billion, according to the Parliamentary Budget Officer, and is over double that of initial estimates.

If we’re hit with a second wave of COVID-19 outbreaks in the latter part of the year, things could get nasty. As the economy continues reopening in phases over the summer months, CRA payment recipients may soon be obliged to return to work as soon as they’re given a “reasonable” opportunity to do so.

Proposed legislation that CERB users need to know about

Under the new proposed legislation, Canadians eligible for the CRA’s CERB could become non-eligible should they opt to continue receiving relief benefits by choosing not to return to work when it’s “reasonable to do so” and the employer “asks them to return,” if they don’t “resume self-employment when reasonable,” or “decline a reasonable job offer.”

The word reasonable comes with some degree of discretion, but the message from the Feds is loud and clear. If you would rather receive CERB than return to work when it’s safe, the CRA wants their money back, and you’ll have to make your case for why you thought it was “unreasonable.”

As such, CERB recipients unwilling to head back to work could fall into some hot water over the coming months, as the CRA “aggressively” looks to crack down on non-eligible applications and “fraudulent” claims. If in doubt, ask for help, search for answers, but please don’t panic, as the federal government has noted that they won’t imprison those who make “honest mistakes” should the new, stiff CERB rules pass. With all the uncertainty and continuing changes to CRA payment eligibility, there will surely be a fair share of such mistakes.

If you have some cash in your Tax-Free Savings Account, you can supplement your tax-free monthly income with specialty-income ETFs such as the BMO High Dividend Covered Call Canadian Equity ETF (TSX:ZWC), which sports a healthy 8.5% yield at the time of writing. Rotating funds into high dividends or distributions is a great way to give yourself an income boost whether or not you’re eligible for those changing CERB requirements.

Foolish takeaway

Change is coming with CERB. If in doubt about your eligibility, call the CRA or visit their website to ensure you won’t be at risk of skating offside with the CERB and your personal situation, whatever that may be. Whether or not new CERB rules are passed, the Fed’s message is loud and clear: they want people to get off the CERB and return to work.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns shares of BMO Canadian High Dividend Covered Call ETF.

More on Dividend Stocks

Illustration of bull and bear
Dividend Stocks

TFSA Investors: 2 TSX Stocks Set to Thrive in the Next Bull Market

Canadian Tire and another dividend growth play that's getting way too cheap to ignore amid the market's turbulence.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

How I’d Invest $20,000 to Earn Reliable Passive Income Today

If you want to turn up your passive income and total-return strategy, check out these top Canadian stocks for a…

Read more »

Electric car being charged
Dividend Stocks

2 Growth Stocks to Buy Before a Big Rally

Despite market volatility persistently plaguing the market, these two TSX stocks might be worth considering right now to prepare for…

Read more »

financial freedom sign
Dividend Stocks

2 Cheap TSX Stocks That Could Make You Rich

Keep these two cheap TSX stocks on your radar if you seek immense wealth growth potential for your self-directed portfolio.

Read more »

Increasing yield
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Won’t Regret Owning in 2023

Buy these monthly dividend stocks now with insanely high yields and look forward to immense growth by the end of…

Read more »

funds, money, nest egg
Dividend Stocks

The Best Way to Make $1 Million When a Bull Market Returns

Here are five quality TSX stocks investors can buy and hold for the long term, allowing them to increase their…

Read more »

Gold medal
Dividend Stocks

3 Undervalued Winners Just Begging to Be Invested in Today

Three undervalued stocks from three underperforming sectors are winners and screaming buys today.

Read more »

Man data analyze
Dividend Stocks

3 Top Dividend Stocks I Can’t Wait to Buy in 2023

Top Dividend Aristocrats are worth buying in almost every market, especially if you hold them long term. However, weak markets…

Read more »