May 12, 2020
Breaking down CERB guidelines: Ask BNN Bloomberg
With growing economic uncertainty during the COVID-19 pandemic, the financial landscape is shifting every day.
Whether it's dealing with sudden unemployment, ballooning debt, or expenses related to working from home, BNN Bloomberg wants to help Canadians navigate these uncharted waters. retirement
That’s why we created Ask BNN Bloomberg, where you can have your personal finance questions answered by industry professionals.
Email or send your questions via video to firstname.lastname@example.org, and we will aim to answer them weekly.
Questions and answers have been edited for clarity. Last names will not be used.
Do I have to return to work if my employer reopens?
Stephen in Edmonton:
I was laid off from my job as my employer’s revenue dropped to almost zero. Now I am now on the Canadian Emergency Response Benefit (CERB). My employer now wants to reopen and asked me to return to work.
However, in my opinion, the environment will be dangerous as there are no protections for me like shields or social distancing. I do not want to endanger my health, but if I do not go back, will I lose my CERB income? (May 3, 2020)
Jamie Golombek, managing director of tax and estate planning at CIBC Wealth Advisory Service:
The CERB of $2,000 a month is available to employees and self-employed who have lost their job as a result of COVID-19. If your employer has laid you off and you’re getting the CERB, and then asks you to return you do have an obligation to return.
That being said, if you feel it’s unsafe and your employer is still insisting that you return, you could file a complaint with the Occupational Health and Safety that’s part of the Ministry of Labour. They will make an independent determination on whether it’s safe for you to return to the workplace. And if it is safe, then you must return. Failure to return to that workplace could be seen effectively as you quitting your job and in the rules, if you quit your job, you’re no longer eligible for the CERB. (May 4, 2020)
Employers asking workers to take mandatory days off
Cecilia in Brampton Ont.:
I am a salaried employee. My work has told us we have to take 15 days (three weeks) off/furlough pay cut. They are taking the pay cuts evenly from May until end of the year. We have repeatedly asked our human resources department if we can take two weeks off consecutively of the required three-week furlough so that we can qualify for CERB. But we are told that is not allowed.
Our team has said that we are willing to work and cover each other so that each of us can qualify for the CERB. But they still say no. We are told instead that we have to take the three weeks spread out over April, May and June (five days off per month) and that we can’t even take two days off consecutively in my department.
Is this legal? Can they make us take furlough but not give us the three weeks off consecutively so that we can at least qualify for CERB? (April 25, 2020)
Kevin Coon, partner at Baker McKenzie and a specialist in labour law:
What the employer is doing is legal, although it may seem unfair to you and other employees. The impact of COVID-19 is unprecedented and completely out of the control of the employer.
In the circumstances, the employer has greater latitude to organize how it operates the business, including temporary layoffs and work schedules. In addition, there have been a number of changes to employment insurance (EI) rules, the new CERB and other potential supports for employees and employers dealing with the impact.
The real issue seems to be whether you would qualify to receive CERB and not related to how the furlough is scheduled.
In order to qualify for CERB, you cannot have earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of your claim. If you are working for the full month, except for the one week a month, then it is unlikely that you would qualify for CERB whether the one week was split up or taken consecutively. (May 4, 2020)
Impact of additional income on CERB eligibility
Chris in Mississauga, Ont.:
I am currently claiming CERB as a result of being temporarily laid off, but I have now started doing some consulting work from home.
This month I will have earned around $1,200 through this consulting, but had to spend roughly $500 to get my home office set up. Will I be able to claim these costs as business expenses and still qualify for CERB? (May 2, 2020)
Silvia Jacinto, tax partner at Crowe Soberman LLP:
It is assumed that when you first applied for the CERB, you had less than $1,000 in employment and/or self-employment income. For subsequent claims, you cannot have earned more than $1,000 of employment or self-employment income. I assume that the consulting income of $1,200 is from self-employment and not tied to your regular employment. I don’t have the details regarding the $500 expenses in this case.
You should confirm whether all or any portion of these expenses are deductible when computing your net self-employment income. As long as your net self-employment income is $1,000 or less, you should be eligible for subsequent CERB payments. (May 6, 2020)
Can employees choose to leave work for CERB?
Michael in Cambridge, Ont.:
I work for an essential company in Ontario and it’s been open through this entire pandemic. Let’s say we have 20 employees are our store. Of those 20 employees, we have eight employees who have chosen to take a leave absence due to everything that is going on. Half of them is because of underlying medical conditions, which is totally understandable because it could be the difference of life and death if they were to contract the virus.
But, the other half have chosen to take a leave of absence simply because they are fearful or potentially could be making more money from CERB than actually coming to work and helping their team. They have no children, no elderly to tend too; they just simply do not want to come to work when they have an opportunity of making 30 to 40 hours a week.
What happens to these ‘technically employed’ individuals who choose to not come to a working job? Are they entitled to the $2,000 monthly payments and be taxed in accordance with an increase in annual income? Or will these individuals owe the entire $2,000 for each month they collect when it comes to paying taxes next year? (May 3, 2020)
Jessica Moorhouse, financial counsellor and personal finance blogger at JessicaMoorhouse.com:
From what you’ve shared, I would have to say those employees would not be eligible for CERB. As stated on the Canadian Revenue Agency’s (CRA) website, you can only be eligible for CERB if:
- You have lost your job
- You are in quarantine or sick due to COVID-19
- You are taking care of others because they are in quarantine or sick due to COVID-19
- You are taking care of children or other dependents because their care facility is closed due to COVID-19
Moreover, it’s states several times on the website that you cannot voluntarily quit your job and if you are concerned with your safety due to your current working conditions, that is a situation you must discuss with your employer.
So, what happens if they received the benefit but aren’t entitled to it? Well, you will have to repay those benefits and will receive a letter from the CRA with more information about the repayment process. Or, if you know you are definitely not eligible, if you received a cheque in payment, if you still have original cheque and did not cash it, you can return it via mail. If you received payment via direct deposit (or cash the cheque), you can mail your repayment in the form of a new cheque to the CRA. More information can be found here. (May 7, 2020)
Using life insurance to supplement income during COVID-19
Deedee in Edmonton, Alta.:
Is it a good idea to use life insurance cash reserves during this difficult time? (May 6, 2020)
Jordan Damiani, senior wealth advisor at Meridian:
When deciding whether to draw out from a universal life or whole life insurance policy, it’s important to realize that you could be triggering an unwanted capital gain.
Ideally, I’d first look to some of the government support programs like the CERB to see if they could help with some of the short-term cash flow needs. Alternatively, if you do have a tax-free savings account (TFSA) that’s a great vehicle to draw from in the short-term, as any withdrawals do not trigger income tax. The benefit being that you can recontribute to the plan in the future when the financial strain isn’t there.
Should you have no choice but to withdraw from the cash surrender value, I’d recommend calling the insurance company to determine how long a withdrawal will take, and also taking out the partial amount that you do need relative to the full amount that you might be entitled to take out. (May 8, 2020)
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