The Motley Fool

CRA: Confused About the CERB to CRB Transition? Here Are 3 Things You Should Know

Image source: Getty Images

The Canada Recovery Benefit (CRB) is one of the new measures that replaced the Canada Emergency Response Benefit (CERB). This time, the recovery benefits cover three broad circumstances.

The CRB is, more or less, the direct replacement for CERB, since the temporary benefit focuses on unemployed Canadians in October or individuals still looking for work. Applications for CRB opened on October 12, 2020, with the Canada Revenue Agency (CRA) administering the program once more.

Some CERB recipients are encountering confusion regarding the shift to CRB, which is understandable. The following are three things you should know for a problem-free transition.

1. For non-EI eligible people

The estimate from the Canada Centre for Policy Alternatives (CCPA) is that the government needs to wean four million people from CERB. The majority will move to the enhanced Employment Insurance (EI) system, although roughly 25% will not qualify for EI.

Hence, the CRB is for employed or self-employed individuals, including independent contractors or gig workers. You won’t be at a disadvantage if you don’t qualify for the new EI plan, because the CRB also provides $500 weekly for 26 weeks.

2. No work or reduced income

You can qualify for CRB in two ways. First, you stopped working due to COVID-19 but are available for work, actively looking for work, or did not decline reasonable work opportunities. Also, you did not quit your job voluntarily after September 27, 2020. Your gross income in 2019 or 2020 must be $5,000 or less before applying for CRB.

Second, you can apply and still receive CRB while working. The condition is that you must have seen your income drop by at least 50% due to COVID-19. If you don’t meet the minimum income requirement, provide supporting documents to the CRA.

3. A 10% tax deduction

The eligibility period and payment scheme of CRB are not like CERB. You must apply every two weeks if you still meet the eligibility requirements. The CRA pays $1,000 each payment but will deduct a 10% tax upfront. Thus, the net amount you will receive per two-week period is $900 only.

Earn CRB-like income

Earning extra income or creating passive income is essential these days. Canada is in a deep recession, and an economic recovery might be slower than expected. If your finances allow, consider investing in a dividend all-star.

National Bank of Canada (TSX:NA) has a dividend-growth streak of 10 years. During the same period, the total return is a respectable 207.86%. As of November 9, 2020, the bank stock is down by only 2.83% year to date. The dividend offered is 4.24%, which should be safe owing to the low 46.76% payout ratio.

One thing going for investors in Canada’s sixth-largest bank is its foothold in Quebec. The province accounts for 55% of National Bank’s total revenues. Its international footprint, mostly ABA Bank in Cambodia, contributes 19%. In the meantime, the bank will pause expansion in emerging markets.

The strong monetary policy that support’s Quebec’s economy, the perennially low unemployment numbers, and relatively affordable home prices are the tailwinds. National Bank can provide you with recurring, CRB-like income for years.

New pandemic money

The CRB will cost the federal government another $22 billion in temporary but necessary benefits. Apply now to receive a new stream of pandemic money, similar to CERB, for one year.

Speaking of three must-know rules to avoid confusion when transitioning from CERB to CRB...

Looking for the Next Potential Netflix? We’ve Got You Covered with These 3 Free Stock Picks

Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution.
Click on the link below for our stock recommendations that we believe could battle Netflix for entertainment dominance.

Click Here to Get Your Free Report Today!

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

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.