Collecting CERB? The CRA Says 190,000 Canadians Are Making This Mistake!

One thing that’s not a mistake is investing in a top bank stock like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

| More on:
Modern skyscrapers in business district

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The Canada Emergency Response Benefit (CERB) has helped many Canadians who have suffered job losses during the COVID-19 pandemic. However, one of the limitations of the program is that because the goal was to get payments out as quickly as possible, there wasn’t a verification process to ensure all recipients who received the payments were eligible for them. That’s led to many people receiving CERB payments even if they aren’t eligible.

Many Canadians have already paid back CERB payments they’ve received. As of June 3, the Canada Revenue Agency (CRA) states that as many as 190,000 Canadians have already had to repay CERB payments due to ineligibility. And the number of tips the CRA’s received relating to fraudulent claims has risen from 600 on June 1 to 1,300 by June 10.

Mistake in claiming CERB could be costly

Paying the CERB payment back now rather than waiting for the CRA to call is a safer move to make as it’ll lessen the chance that the money’s been spent by the time the CRA comes calling for it. And there’s a danger that paying back CERB may not be the only consequence Canadians may have to worry about.

There was a bill in the House of Commons that would’ve penalized fraudulent CERB recipients with fines that could exceed $5,000 and possibly lead to jail time. Although the bill didn’t get enough support, it’s a sign the government may be looking at stiffer penalties for people who are making fraudulent CERB applications.

The government has hinted that it would go after those who applied for CERB knowing they weren’t eligible for it. However, it wasn’t clear whether that would happen.

Some of the reasons Canadians may not be eligible for CERB include going back to work and making in excess of $1,000 during an eligibility period, quitting a job voluntarily or refusing to go back to work, or receiving benefits through another federal program while also receiving CERB payments.

If you’re not eligible for CERB or want a way to further boost your income, you may want to consider investing in stocks.

Using your Tax-Free Savings Account can help you generate tax-free income

One of the downsides of CERB is that the payments are taxable. But if you hold TSX stocks in a tax-free savings account (TFSA), the good news is the income you earn in the TFSA isn’t taxable.

A stock you may want to consider putting in your TFSA is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). It’s a Big Five bank, so you know it’s going to be a reliable, long-term investment that you can hang on to for years and years.

What’s attractive about bank stocks right now is that because they’re down this year, their yields are up.  Scotiabank currently pays its shareholders a quarterly dividend of $0.90, which at a price of around $60 would mean you’re earning a yield of 6% per year.

If you can buy the stock at a lower price, your yield will be even higher. Bank stocks may struggle during the COVID-19 pandemic but like the economy, they’re likely to emerge even stronger once it’s all over.

Meanwhile, by buying right now, you’ll secure a low price and great yield, setting yourself up for some great returns later on.

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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Dividend Stocks

Woman has an idea
Dividend Stocks

2 Low-Risk Growth Stocks Paying Great Dividends

These top TSX dividend stocks give investors exposure to interesting growth opportunities.

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

These two simple TSX stocks have everything a long-term investor looking to dollar cost average into a position wants right…

Read more »

A golden egg in a nest
Dividend Stocks

Millennials: No Excuses! Start Saving for Retirement Right Now.

Millennials, we need to stop complaining and start bragging. We're great savers, so it's time to start investing in TSX…

Read more »

Value for money
Dividend Stocks

3 UNDERVALUED TSX Stocks to Buy in August

Here are some attractively valued TSX stocks for the long term.

Read more »

A young man throwing and catching his daughter above his head
Dividend Stocks

Parents: Double Your CCB Payments This Month!

Parents can use those CCB payments to their benefit and double them this year month after month -- no waiting,…

Read more »

stock market
Dividend Stocks

I’m Buying These 3 Resilient Stocks During a Bear Market

TD Bank stock is among the three stocks I'm buying to protect my portfolio from a bear market and to…

Read more »

edit Safety First illustration
Dividend Stocks

4 of the Safest Dividend Stocks on Earth Right Now

These dividend stocks offer up strong dividends, a cheap share price, and safety from growing, safe sectors of the market.

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

Change Your Future: What to Hold in a TFSA in 2022

Holding dividend growth stocks in a TFSA long-term can change the financial futures of worried Canadians.

Read more »