CERB Penalty: You Might Get Hit With a Fine or Jail Time!

Avoid penalties for improper CERB applications and focus on creating additional income through the Fortis stock instead.

| More on:
Road sign warning of a risk ahead

Image source: Getty Images.

The Canadian government and the Canada Revenue Agency (CRA) began paying citizens $2,000 per month from the Canada Emergency Response Benefit (CERB) as a measure to help them cope with the loss of income due to the pandemic.

To rapidly roll out the payments, the CRA relaxed its stringency in checking for eligibility. The government and CRA’s priority was to ensure that the most vulnerable citizens received these benefits as soon as possible. The government took to trusting everybody and assumed that nobody would break the rules.

It is not surprising that we are learning about many cases where Canadians who do not qualify for the benefits are busy collecting money from the program.

Ineligible collectors

One of the most significant concerns for Canadian taxpayers is an alarming number of ineligible people collecting CERB money. Many people who collected CERB without qualifying for it have started to admit to wrongdoing.

The CRA reported that more than 190,000 Canadians who collected CERB money through fraudulent claims have paid back at least some of the amount.

Most Canadians know someone who is committing CERB fraud. With measures being taken to rectify the issue, CERB fraud might result in punishment befitting the crime.

CERB fraud fine and imprisonment

The government made it clear that people abusing the CERB program will face the consequences of their actions. Paying back the falsely claimed CERB money was always going to be a part of it. However, the consequences will not end there for unjustly collecting the benefit.

According to reports, the ruling party in Canada prepared a bill that will result in harsh punishment for people collecting the CERB money without qualifying for it.

Canadians who make fraudulent claims can face fines of up to $5,000 — a penalty that equals double their ill-received funds, and jail time of up to six months.

As you can see, the government is taking this quite seriously. Some Canadians refuse to go back to work so they can continue to qualify for CERB money. The government will also take action against people who refuse to return to work when their employers ask them to come back.

The CERB was meant to be nothing more than a temporary measure to aid citizens who lost their jobs until they could begin making money again. The benefit is not a payment for people to comply with social distancing measures and staying home.

As apt as the proposed bill may seem to many, it is currently still in the works. Other parties within the House of Commons are not in support of this bill because of their opinion about jail time being too harsh. There is a possibility the bill may pass, or it may sink. However, there is no need to consider risking the possibility of punishment.

Create another means of income

Instead of trying to deceive the government when it is trying to help its most at-risk citizens, it would be better to create an alternative source of income to help them through this time. Creating your revenue stream of passive income is possible if you make the right investments.

One of the best ways is to create a Tax-Free Saving Account (TFSA) portfolio that consists of dividend-paying stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS). This is a defensive dividend stock that can pay you income without letting financial crises disrupt its cash flow.

Fortis is a regulated utility provider that continues to generate revenue due to the essential nature of its operations. The company enjoys substantial insulation compared to the broader market because it can make an income in even the most uncertain periods for the economy. No matter how bad things become, people will still need their electricity.

Fortis provides electrical transmission to customers across the country, and most of its income is regulated.

Foolish takeaway

Holding dividend-paying assets in your TFSA can help you earn tax-free passive income. Creating a robust and diversified portfolio can substantially increase the overall income you can make.

Fortis can be the perfect stock to begin building a dividend-income portfolio in your TFSA.

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 Adam Othman has no position in any of the stocks mentioned.

More on Dividend Stocks

Dividend Stocks

TFSA: How to Invest $88,000 to Get $5,450/Year in Passive Income

Top TSX dividend stocks such as Enbridge can be held in your TFSA to benefit from steady payouts and capital…

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Cheap Dividend Stocks (Down Over 30%) to Buy in January 2023

Given their discounted stock prices and high yields, these three cheap dividend stocks could be attractive for income-seeking investors.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

TFSA Investors: Earn Passive Income With 3 Blue-Chip Stocks

TFSA investors can worry less about a recession and earn passive income with three blue-chip stocks as core holdings.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

Is Now the Right Time to Buy Consumer Discretionary Stocks?

Investors cannot paint consumer discretionary stocks with a wide brush. Each stock must be investigated individually. Here's why.

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Ultra-Stable Canadian Stocks Just Crowned as Dividend Aristocrats for 2023

Waste Connections (TSX:WCN) stock and another Dividend Aristocrat could help investors crush the markets in 2023.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Create $200 in Passive Income Every Quarter From 1 Defensive Stock

Risk-averse investors can seek safety in a defensive stock and earn more in passive income in 2023 and beyond.

Read more »

Dividend Stocks

Slow and Steady: Buy this Railroad Stock Now to Win the Race

Investors looking for a solid and growing income should pick up shares in this railroad.

Read more »

retirees and finances
Dividend Stocks

RRSP Investors: Should You be Worried During a Recession?

RRSP savers might feel like gagging as they watch their investments fall, but stay strong! Especially with these TSX stocks.

Read more »