Since opening the official snitch line, the Canada Revenue Agency (CRA) is now reviewing more than 1,300 suspected fraudulent Canada Emergency Response Benefit (CERB) applications.
People report or provide leads to the CRA if they suspect cheating activities on CERB and other COVID-19 relief programs. The government was lenient and did not scrutinize CERB applications before, but not anymore. The CRA is now investigating abuse and fraud.
If you’re eligible and truthful about your CERB application, you can avoid suspicion. Likewise, you won’t have to pay a $5,000 penalty. Here are the do’s and don’ts of CERB.
One application only
Do not apply for CERB if you’re already receiving the Employment Insurance (EI) regular payments. You will receive the EI benefits until the end of your benefit period. Even if your EI claim is still in process, you must not submit a CERB application.
Also, you can only file your CERB application with the CRA or Service Canada, not both. If you did by mistake or confusion and received double, return the overpayment to the CRA.
CERB is for people who are out of work or unable to report for work due to COVID-19. It will raise a red flag if you’re double-dipping. You shouldn’t be receiving CERB if you’re receiving a salary. If you inadvertently commit this error and received payments, the CRA will take back your CERB.
Beware for people who refuse to go back or do reasonable work yet to continue to claim CERB are facing penalties. The amount could be three times the benefits.
Don’t attempt to cheat
The CRA and Service Canada have records of all CERB recipients. Scammers are getting Social Security numbers or stealing identities to apply for CERB. Do not attempt to file a fictitious or fraudulent application. Once caught, you can even serve jail time of no less than six months, aside from paying the $5,000 fine.
Create a CERB-like income
Those with free money or spare cash can go dividend investing in creating a CERB-like income. Your investment income from a blue-chip company like Manulife Financial (TSX:MFC)(NYSE:MFC) can be the emergency fund. The high 6.01% dividend this $35.74 billion renowned global insurer is paying is safe, given the low 44.4% payout ratio.
Despite reporting a 40.5% drop in net income (from $2.17 billion to $1.29 billion) in Q1 2020 versus 2019, Manulife is ideal for income investors. The company has financial flexibility and operational efficiency in navigating the current crisis.
Roy Gori, Manulife’s president and CEO, cites the decrease in core earnings, charges from investment-related experience, and the direct effect of equity markets and variable annuity guarantee liabilities as to the reasons for the income drop. Notably, its global wealth and asset management business generated net inflows of $3.2 billion.
Gori said the headwind for insurers is the new era of lower rates. Manulife is preparing to change pricing and products as well as increase efficiency, partly through technology adoption.
The CRA means business this time, so you have to make sure you’re eligible for CERB. More importantly, you should abide by the rules. One mistake could be costly and embarrassing.