Canada Revenue Agency: CERB Is Extended 4 More Weeks!

About four million Canadians will benefit from the second CERB extension of four weeks. For those with free money to invest, a dividend king like Chemtrade Logistics stock is a fitting CERB replacement.

| More on:
young woman celebrating a victory while working with mobile phone in the office

Image source: Getty Images

The Canada Revenue Agency (CRA) is granting extension after extension in 2020. Taxpayers are getting a reprieve from the new tax-filing and tax-payment deadlines. But the most vital is the extension of the pandemic lifeline.

Canadians who are exhausting their Canada Emergency Response Benefit (CERB) welcome the latest four weeks extension. From 16 weeks and then 24 weeks, CERB will run for a maximum of 28 weeks total. Likewise, a recipient can receive a $14,000 in taxable benefits.

Two CERB extensions

Canada’s deputy prime minister and newly appointed finance minister Chrystia Freeland announced the second CERB extension on August 20, 2020. The federal government embeds the additional $8 billion spending in the $37 billion emergency package that will come after the termination of CERB.

CERB will be in place until September 27, 2020, after which the government will transition recipients to the expanded Employment Insurance (EI) and the new Canada Recovery Benefit (CRB). Displaced workers can also be eligible to receive the Canada Recovery Sickness Benefit (CRSB) or the Canada Recovery Caregiving Benefit (CRCB).

Sound advice

The new recovery benefits are opening in October 2020, and unlike CERB, the CRA will tax all payments at the source. For this reason, tax experts are advising recipients of the $4,000 extra to prepare for the taxes due on CERB in 2021. You have an income source for four weeks more, but it could be a double-edged sword if you don’t consider future tax obligations.

A bit of sound advice is to plan before October. Figure out your income level and the tax implications when you factor in CERB and the new recovery benefits you will receive in 2020. Some CERB recipients are setting aside money for taxes and not spending all the pandemic money. It will lighten your tax burden if you do the same.

CERB replacement

Replacing CERB is possible if your income is stable. Chemtrade Logistics Income Fund (TSX:CHE.UN) is trading at a ridiculously low price of $5.68 but offering an incredible 10.26% dividend. An investment of $50,000 will produce $427.50 in monthly income. This dividend king has been paying dividends since 2001.

The $525.97 million income fund engages in producing and distributing industrial chemicals and services in North America. Chemtrade specializes in sulfuric acid, spent acid processing services, and inorganic coagulants. It supplies a large volume for water treatment and other industrial solutions.

Although its marketing services agreements with customers are long term, lockdowns in several industries caused a massive decline in sales volume and selling prices. In Q2 2020, adjusted EBITDA and total sales fell 17% and 12.4%, respectively.

Analysts covering Chemtrade predicts 27.8% growth in 2020, as the economy recovers in the next two quarters. The stock price could follow and appreciate by 111.2% to $12 in the next 12 months. While being a niche player is a competitive advantage, Chemtrade remains vulnerable to industry-wide risks and price fluctuations.

Leave no one behind

The government extended CERB, because about four million Canadians still need a lifeline. Of the total, three million will transition to EI in October. If you’re ineligible for EI, you can apply for the recovery benefit so you aren’t left behind.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

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

CPP Pension: Boost Your Payouts by $5,232 per Year

You can raise your after-tax CPP by making RRSP contributions. Alimentation Couche-Tard (TSX:ATD) is a good RRSP stock.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

Here are three no-brainer stocks that are suitable for anyone getting started on their investing journey.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

3 Top Dividend Stocks That Keep Raising Their Payouts

These three TSX stocks are ideal buy as they consistently raise their payouts, depicting their healthy financials.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

This 5% Dividend Stock Pays Cash Every Month

This monthly dividend stock offers cash every month, but also returns that continue to climb higher from being in a…

Read more »

Solar panels and windmills
Dividend Stocks

How Much Will TransAlta Renewables Pay in Dividends This Year?

TransAlta Corporation’s (TSX:TA) acquisition of TransAlta Renewables stock holds significant implications for income-oriented investors who previously held this monthly dividend…

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

3 Stocks That Can Help You to Get Richer in the Next 5 Years

Consistent growth stocks with a relatively bright future are one of the most trustworthy ways to grow wealth.

Read more »

Dividend Stocks

3 Blue-Chip Stocks Every Canadian Should Own

These Canadian blue-chip stocks are backed by well-established businesses and a growing earnings base, enabling them to generate above-average returns.

Read more »

grow money, wealth build
Dividend Stocks

Is This 7.25%-Yielding Dividend Grower the Ultimate Income Stock?

This top Canadian dividend stock has increased the distribution annually for nearly three decades.

Read more »