CRA to 213,000 Canadians: Time to Pay Back the CERB

As predicted, the CRA wants people to pay back the CERB. Going forward, you can avoid these kinds of predicaments by investing in ETFs like the iShares S&P/TSX 60 Index Fund (TSX:XIU).

| More on:
sad concerned deep in thought

Image source: Getty Images

Ever since the CERB started, there have been indications that the CRA would demand that people re-pay the benefit. Between “snitch lines” and strongly worded statements to the media, the signs have been plentiful.

Today, we’re beginning to see the CRA move forward with collecting the money.

Just recently, the agency announced that it was going to call on 213,000 Canadians to repay the CERB. It clarified that bills wouldn’t come due until after the pandemic ended, but was already issuing letters to those it sought payment from. It’s the first major enforcement action we’ve seen since the snitch line was rolled out. And it’s only going to accelerate.

Why the CRA is calling for repayment

There are many reasons why the CRA would seek to take back the CERB from someone who received it:

  • The recipient being ineligible.
  • The money having gone to the wrong person.
  • Double payment.

The last item on that list is what the CRA is going after now. In a statement to the CBC, it said that it was pursuing 213,000 Canadians who received more than one CERB payment in a single payment period. That’s not huge as a percentage of all CERB recipients. But it’s enough people that the money recovered could be measured in billions of dollars.

How to tell if you’re likely to be impacted

If you’re worried that the CRA is going to demand your CERB, you have the right to be. There was always a blanket of uncertainty surrounding CERB eligibility, and it continues to this day.

For this particular round of repayment demands, the standard is pretty simple:

Did you receive more than $2,000 in CERB money in a single month?

Right now, it’s mainly double payments that the CRA is going after. There is no broad review of all CERB payments, as MP Peter McCauley called for last week. Not yet, anyway. The CRA has said from the beginning that it would actively pursue repayment from every ineligible CERB recipient. So we may expect that the current round of repayment demands will expand to more than just those who received double payments.

A parting note

If the CRA’s demands for CERB repayment concern you, then now would be a good time to start thinking ahead. COVID-19 will end some day, but it’s guaranteed there’ll be more crises in the future. You want to get yourself in a position where you don’t need to take CRA benefits in such crises.

A great way to get a start on that is by holding ETFs like the iShares S&P/TSX 60 Index Fund (TSX:XIU) in a TFSA. Dividend-paying ETFs produce cash income, typically paid quarterly (four times per year). If you build a large enough position in such an ETF, you could eventually receive a sizable income supplement every year. Through this year, XIU has yielded between 2.5% and 3%. That means you could have received between $2,500 and $3,000 on a $100,000 investment. That’s more than enough to replace two CERB cheques.

Maybe you don’t have $100,000 to invest in ETFs like XIU now. But by adding $10,000 in savings every year, you could get there. Eventually, you’d have a tax-free passive income stream that could limit the need for benefits like the CERB.

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 Andrew Button owns shares of iSHARES SP TSX 60 INDEX FUND.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »