In the COVID-19 pandemic, the Canada Revenue Agency (CRA) disbursed $80 billion in Canada Emergency Response Benefit (CERB) payments. These payments helped Canadians that had a working income, but they stopped working because of the pandemic to meet their living expenses. Be it a retired person, a student, a disabled person, or someone on maternity or paternity leave, you can be eligible for CERB. All you have to do is meet all the below criteria during the benefit period from March 15 to October 3.
Are you eligible for the CERB?
The CRA has listed certain age, income, and employment criteria, to ensure only the needy get the CERB.
- You are 15 years and above.
- If you earned, or expect to earn, less than $1,000 for the month you are claiming CERB.
- If you have earned $5,000 in working income in the last 12 months of the application date.
- You lost your job because you were quarantined, caring for sick, got fired, or took a pay cut because of the pandemic.
- You are actively looking for a job and are ready to accept the offer if your employer calls you back to work.
If you voluntarily resigned or got fired before March 15 for reasons other than the pandemic, such as poor performance or contract violation, then you are not eligible for the CERB.
Even though the benefit period extends to 29 weeks, you can claim the CERB payments for a maximum of 24 weeks and up to $12,000. These 24 weeks need not be consecutive.
For instance, Jane lost her job in April. But in June, her employer called her back to work. So, she can claim the CERB for April and May. But later in August, her employer made permanent job cuts, as the business suffered significant losses. Now she can claim the CERB for August and September. However, she has to prove to the CRA that she is actively searching for another job.
Once you receive a total of $12,000 in CERB payments, you are no longer eligible to receive any more payments, even if you meet all other criteria.
The CRA will pay you retroactive CERB payments if you are eligible
If you were eligible for the CERB anytime during the benefit period but did not claim your benefit, you can apply to the CRA before December 2 and get retroactive payments.
For instance, Jake is the only income earner in the family. In May, he was quarantined, because of which he couldn’t work and was left with no income. Amid all the chaos, he didn’t get a chance to apply for the CERB and instead used some of his savings to meet the expenses.
In July, things stabilized and Jake returned to work. He can still apply for the $2,000 CERB payment for the May and June period when he was out of work. The CRA will make a retroactive payment.
A smart way to use your retroactive CERB payment
If your situation is similar to Jake’s, you can apply to the CRA and get the CERB payment for the past months. As you have a working income, you can use the retroactive CERB payments to build your savings.
If you put the entire $2,000 in a good-quality stock through your Tax-Free Savings Account (TFSA), you can double this money in five to seven years. One such stock is Kinaxis (TSX:KXS), a provider of supply chain planning systems.
Kinaxis has a diversified customer base of large enterprises with complex supply chain operations. The company earns revenue through a subscription fee, which varies as per the customer size, the number of users, applications, and sites for manufacturing, distribution, and inventory. Its revenue increased at a CAGR of 22% between 2015 and 2019.
Kinaxis is still in the growth stage. If you had invested $2,000 in the stock five years back, your money would have grown 10-fold to $20,000 by now. Although its growth rate has slowed, it still has the potential to double your money in three to five years.
Investing tip
I would suggest you claim your CERB payment, even if you have to pay tax on it. Your tax bill on the $2,000 CERB payment will come to around $200, but this money will earn you $2,000 in the mid-term.
