In the middle of June, Prime Minister Justin Trudeau announced that his government would extend the Canada Emergency Response Benefit (CERB) by another eight weeks. Canada’s unemployment rate soared into the mid-teens in the late spring, as the COVID-19 pandemic ravaged the economy. This dire situation combined with political pressure from the NDP, pushed the ruling Liberals to extend this olive branch to those in need.
However, new penalties have also been announced for those who violate eligibility criteria. Because of this, applicants need to be more cautious than ever. Today, I want to discuss the qualifications required for those who seek to stretch out CERB payments for the full 24 weeks.
How to qualify for the CERB extension
CERB recipients for the next phase will be required to sign an attestation that acknowledges the government is encouraging them to look for work. It also requests that applicants consult with the government’s job bank. This attestation was put in place on July 5.
Beyond this new attestation, the same rules apply for those who are seeking CERB payments. Workers must have stopped working because of reasons related to the COVID-19 pandemic. Moreover, recipients must have had employment or self-employment income of at least $5,000 in 2019. Applicants must not have quit their job voluntarily.
Canadians who are seeking more details on applications should consult the Canada Revenue Agency (CRA) website. The penalties for a faulty application could be severe in 2021 and beyond. Because of this, CERB applicants need to take great care.
What is the future of the program?
The CERB program has been one of the most radical social-spending projects in the modern era. Millions of Canadians have relied on the CERB to sustain themselves in this crisis. Because of this, there is considerable anxiety surrounding its expiration. Earlier this month, I’d discussed whether some form of this program could become permanent. A guaranteed income supplement has received support in opinion polling and surveys. In the near term, Canadians should explore how to build their own passive-income stream.
How to generate a passive-income stream of your own making
CERB payments are taxable, which means that many recipients will be forced to fork over a portion of the program next tax season. Why not explore a better way? Canadians can stash income-yielding equities in a Tax-Free Savings Account (TFSA) and pay zero tax on their dividends. Energy stocks are broadly discounted on the TSX right now. Below are two value picks that offer tasty monthly income.
Keyera is engaged in the energy infrastructure business in Canada. Its shares have dropped 36% in 2020 as of close on July 6. However, the stock is up 43% over the past three months. Shares still possess a favourable price-to-earnings (P/E) ratio of 8.9 and a price-to-book (P/B) value of 1.4. Better yet, Keyera offers a monthly dividend of $0.16 per share. This represents a monster 9.3% yield.
AltaGas is also in the energy infrastructure business. Its stock is up 24% over the last three months. Shares last had a P/E ratio of 10 and a P/B value of 0.6. This puts AltaGas in good value territory. In June, AltaGas announced a monthly distribution of $0.08 per share, representing a strong 5.9% yield. Both dividend stocks offer a great alternative for CERB recipients.
