The Motley Fool

CRA: Create a $2,000 Personal Emergency Benefit

Image source: Getty Images

The Canada Revenue Agency (CRA) created a number of emergency benefits in the last year. In fact, it goes beyond benefits. There are benefits, tax credits, deferrals, forgiven loans, and other ways that the CRA has tried to get Canadians back on track financially.

The original goal

At first, the goal was to get cash to Canadians as quickly as possible. With COVID-19 sweeping the country, Canadians were being let go, furloughed, or simply had reduced pay because of the virus. So, the government created the Canada Emergency Response Benefit (CERB) as a sweeping solution. The $2,000-per-month payments flooded the country, but there was an issue.

Canadians had to get back to work. It was great creating a way for Canadians to keep the country at least partially financially afloat, but now the country needed businesses to be opened. So, by the end of the summer, new benefits were introduced along with credits and the other solutions I mentioned. All of this was to get Canadians back to work, pumping money into the economy.

This was likely your goal too: to get back to normal, or some semblance of normal, at least. Sure, you might still work from home a lot. But your kids are back in school, you can buy lunch, and you can visit a grocery store. But today, that could change yet again.

The new goal

Your new goal has changed, just as the country’s has. Now, the financial goal is to keep Canadians working for as long as it’s safe. The new benefits support this, as you can’t simply apply if you’ve been even slightly affected by COVID-19. You now have to have a pretty dire situation to apply for these benefits. Whether you meet those requirements or not, it’s time for a new goal.

That goal is to create your own personal emergency benefit. It likely won’t be as high as $2,000 per month, but you could make it as high as $2,000 per year. That’s especially if you have a Tax-Free Savings Account (TFSA). All you need is a strong stock that provides dividends. That’s it. If you can find that, then you can create a passive-income stream that will set you up for life.

Create your PEB

The TFSA will have $75,500 of contribution room as of Jan. 1, 2021. That’s grown since 2009, so if you’ve been adding each year you could have reached that $69,500 limit last year. That means you have $6,000 of contribution room as of next year. If you’re able, you can make that all in one go. But you don’t have to. Instead, start putting aside some of each paycheque towards your investment. Then, when shares fall, you can buy up a stake on the cheap and likely see a solid rebound. With a market crash likely in the beginning of next year, it’s a great time to start researching.

A solid stock to consider, at least for the next few years, is Enbridge (TSX:ENB)(NYSE:ENB). Enbridge has been beaten down by the oil and gas sector, and by delays in its pipeline projects. But once these projects are online, it will create a solution to get the trapped Alberta oil moving once more.

Granted, it’s likely this stock will see some heavy days in the next few decades, but in the next few years, it’s perfect as an emergency investment tool. When oil and gas rebound, which it will, Enbridge will be at the forefront. Its shares could double in the next year or two, and, of course, it has a strong dividend to offer of 7.61% as of writing.

To reach $2,000 per year, today that would cost $26,419. That’s completely doable in your TFSA. You’ve now created a passive-income stream of $2,000 each year, which can be used as your personal emergency benefit during another downturn.

Still worried about cash this year? Motley Fool experts are doubling down on these stocks!

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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 Amy Legate-Wolfe owns shares of ENBRIDGE INC. The Motley Fool owns shares of and recommends Enbridge.

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.