Preparing for the CERB

Lately, I have felt like a downer with all the information and safeguards I have been posting within the group and on my FB business page. 

But I do it with the best intentions of keeping you informed in a language that is understandable, providing cautionary steps, and trying to ensure you make the right decision for you and your families.

Today’s note reflects around the Canadian government announcement of a $2,000 aid to individuals for the next 4 months.  Things to consider before you sign up for the money.

#1 This is NOT free money.  It is 100% taxable.  What does this mean?  Well, in a nutshell, you will receive a T-slip come February 2021 which will list the total amount you received.  The amount will be added into your taxable income and therefore be taxed at the rates for 2020 in both federal and provincial. 

#2 The Canada Emergency Response Benefit [CERB] becomes part of your taxable income it could affect your GST/HST – Child tax credit – Sales Tax – Energy + Property tax credits, as all of these credits are based on taxable income calculations.

#3 The CERB benefit eligibility period to apply for will be available from April to October 2020 so if you don’t need the money right this moment you do not have to apply immediately as you will still have time later.

#4 The CERB benefit is ONLY provided for 4 months total.  There is no confirmation on whether you must accept all 4 months, or if you can take just one month’s payment, nor whether you can split it between months.

#5 The CERB will be paid out via your Revenue Canada Account [CRA].  As all Canadians should already be registered with the CRA for taxation this should not be an issue.  However, for those that are not registered for automatic deposit with CRA, this will cause a delay. 

:: If you have not yet registered for your online CRA account make sure you do so now.  The quickest way is to go to https://www.canada.ca/en/revenue-agency/services/e-services/cra-login-services.html

:: Select ‘my account’ and choose option 1 ‘sign-in partner login/register.  This will give you the option to use your current banking institution for signing into your account.

:: If you have not registered for direct deposit with CRA now is the time to do it as this is how your benefit and credit payments will be supplied to you. 

It is all about balance.  The government is providing a resource to get almost everyone through this crisis.  Not all will qualify for the CERB. 

If you need the funds then apply.  Just keep in mind that when all is said and done and you return to work you may end up with additional hours, switch positions for higher pay, or find a new job altogether.  It will be important for you to keep tabs on your overall earnings for the year as well as the amount you collected from the CERB.

When you find that your combined payroll income or self-employment income + CERB reaches a taxable payable point start tucking away money in anticipation of having to pay tax on the CERB benefit that you received. 

Remember they are providing this now because of need, but your income circumstances may change before December 31, 2020.  Don’t be caught off guard.

As always if you have any questions just reach out and contact me.