CERB payments have helped many Canadians put food on the table and ensure a roof over their heads, even if their livelihood was lost due to the pandemic. It was the only option for many people because, amid the pandemic, it was tough to replace a lost source of income.
The unemployment rate is still crazy high, and people are finding it hard to replace lost jobs. What’s worse is that several small and large businesses are closing shop (fully or partly), to reduce expenses. This is one of the reasons why the government has extended the CERB and why it may need to look into ways to create more jobs in the country.
Still, CERB isn’t for everyone. While the CRA was very lenient about CERB when all this started, it’s now scrutinizing applicants more carefully. What’s more, CRA can ask back the CERB if you are found ineligible for the payment after receiving it.
Finding work after receiving CERB
Say you received the CERB payment at the start of the month and just a week later you also found paid work. You thought since it would still be some time before you receive your salary, what’s the harm in using the CERB money. After all, you were eligible when you applied for the payment.
That’s a bit of a grey area. CRA may decide that you are ineligible to receive the payment. In case you receive another month’s payment due to some glitch, that’s something you definitely have to send back to CRA. The department has started running its CERB applicants against payrolls to ensure that working individuals aren’t receiving the benefit.
You choose not to work
If you were offered work but decided that the sweet $2,000 government handout is better than sweating off at work, the CRA might ask for your CERB back. The payment is for people who can’t find work or can’t work due to health or certain family concern. But people who can work and choose not to, and pursue free money, they will most likely need to pay it back.
Doubling the CERB through investment
If someone receives CERB, it’s highly unlikely that they can spare it for investment purposes, since they most likely need it to pay for bare necessities. But if by a stroke of luck, someone who qualified for CERB and had some savings lying around, decided to invest the $2,000 CERB payment, Kinaxis (TSX:KXS) would have doubled it up.
Say you received your CERB cheque at the end of March or on first April, and you invested it in Kinaxis while it was still recovering and trading at $99.25 per share. You would have gotten about 20 shares of the company (disregarding the fractional shares). Currently, Kinaxis is trading at $203 per share at writing.
So even if CRA comes knocking down the door, you can sell your stocks for double the price you bought it for, give CRA there $2,000 back, and still have $2,000 left. The company doubled its market value in exactly two months (from April 2 to July 2). Tech has been one of the swiftest recovering sectors in the TSX during this market crash.
Foolish takeaway
CERB payment (ideally) can’t be used for investment by design since they are only supposed to go to people who don’t have other resources to sustain their life financially. But this is just one example of how market crashes can be used to make fortunes.
If you have savings, buying good companies when they are down in the rut can be a great way to build yourself a nest egg. You therefore won’t need CERB, nor will you need to worry about CRA coming back to collect.
