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.
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.
Financial aid for workers in the travel industry
Charles in Winnipeg:
I’m wondering if there’s been any word on employees in the travel industry affected by COVID-19? My hours have been reduced but I still make more than what the Canadian Emergency Response Benefit (CERB) allows, but my bills are still the same and I make less money.
There must be a high percentage of Canadians that fall in this category, but I have yet to read about a solution for those affected. Am I correct in this thinking? (May 4, 2020)
Jordan Damiani, senior wealth advisor at Meridian Credit Union:
Thanks for the question. I’m sorry to hear that you’re going through a tough time, which is understandable given the impact of COVID-19 on the travel industry.
The good news is there is an existing government program that should be able to help both you and your employer. It’s called the Canada Emergency Wage Subsidy (CEWS) and as long as your employer has seen a 15 per cent reduction in revenue for March and 30 per cent for both May and June, they can apply.
Now they can actually still pay you your full-time wages even if there isn’t enough work to do, and get 75 per cent reimbursed by the federal government. It’s capped at the first $58,700 worth of wages or $847 weekly.
In addition to that, banks and credit unions are still providing credit relief and mortgage deferrals even for people who have seen a partial loss of income, not necessarily a complete loss of income. I hope this helps and I wish you all the best. (June 11, 2020)
Bank of Canada buying corporate bonds
Tony in Sherwood Park, Alb.:
I see that the federal government is buying corporate bonds, for me paying two or three per cent on a bond.
It sounds better than six or seven per cent on a loan. I have a private corporation; can I issue bonds? If so, what’s the process? (May 23, 2020)
Jamie Golombek, managing director of tax and estate planning at CIBC Wealth Advisory Service:
The Bank of Canada is actually buying back bonds but it’s buying corporate bonds and these are bonds of public companies.
There’s actually a number of restrictions on the bonds that are being purchased.
First of all, the bonds have to be included in the FTSE bond index; they have to be investment grade, that’s typically a triple-B grade or higher; they’ve got to have terms of five years or less and the corporation can’t be a deposit taking institution.
So effectively, dealers will submit eligible bonds that they own from their inventory and then TD Asset Management and the Bank of Canada will decide which bonds they want to purchase. So while it might seem attractive as a private company to issue some bonds and then have the government buy it, you’re not going to qualify because again this has to be public bonds and it has a number of restrictions including the quality and duration of that bond. (June 11, 2020)
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Taking a closer look at CERB eligibility guidelines
Stephen in Calgary:
I am a small business owner, incorporated in March 2018. I have no employees but there are four of us working on products to launch (software and hardware).
In 2019, I was successful in securing a purchase order for $8,003 based on our prototype, which is now an accounts receivable because we’ve been working on delivering the product solution.
Due to COVID-19 our customer’s business has been severely impacted as well as our ability to complete their order due to the work stoppage which occurred in Spain (our key component supplier).
In addition, our funding source with our strategic partner had to be put on hold as of March 23, due to COVID-19 because of their own financial issues related to the pandemic, which temporarily ceased our ability to proceed.
Now we can fast forward to today and we have just resumed business with our strategic partner and have been informed our funding will be reinstated as of August 1, which will enable us to deliver our products. Therefore, we will be able to deliver the purchase order and finally enter the market to start generating consistent revenue.
During the pandemic I applied for CERB given the above situation and acted in good faith given my company's revenue of $8,003, which was reported to Canada Revenue Agency on my 2019 corporate taxes.
My question is do I qualify for CERB, or am I at risk?
My second question is that I’ve received $6,000 to date from CERB; am I eligible to apply for the remaining $2,000 given that we won’t really be back on our feet until August?
It is unclear to me so I’m hoping you can shed some light and provide advice. (June 10, 2020)
Peter Papadakis, principal of financial planning and tax advisory services at Kerr Financial:
The CERB is a support program for individuals who have involuntarily ceased working because of COVID-19 and is available to individuals:
- Residing in Canada and are at least 15 years old
- Who have stopped working because of reasons related to COVID-19 or are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits or Employment Insurance fishing benefits between December 29, 2019 and October 3, 2020.
- Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application
- Including non-eligible dividends received by owner-managers
- Who have not quit their job voluntarily.
You mentioned that $8,003 was declared on your 2019 corporate income tax return but have no mention of any other income or dividends paid to yourself in 2019.
Based on our understanding of your situation, you would unfortunately not qualify for the CERB. With respect to your second question you would also not qualify for the remaining CERB as the income eligibility criteria would be the same as previously described. (June 18, 2020)
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