Accessing CERB after EI benefits end
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.
CERB elgibility with two part-time jobs
Tim in Kingston, Ont.:
I am a healthcare provider with two part-time jobs. One is a salaried position where I continue to receive income of more than $1,000 per month. The second part-time job is fee for services, where income has been decreased by 90 per cent. Each job contributes approximately 50 per cent of my total income.
This drop in income is affecting my ability to meet fixed costs, debt maintenance and support for my family.
I’ve been following the ongoing changes to [Canada Emergency Response Benefit] CERB eligibility and other government programs but don’t believe any of them apply to me.
Am I correct or missing something? Help! (April 18, 2020)
Jessica Moorhouse, financial counsellor and personal finance blogger for JessicaMoorhouse.com:
So if you find yourself in a situation where normally your employment income is made up of two different part-time jobs - one of them has been affected by COVID-19 so you’re not earning anything from that job; and the other one you’re still working at, however you’re earning more than that $1,000 – well, unfortunately you will not be eligible for the CERB because even though they’ve made it more flexible so it does include more people now, you cannot earn over $1,000 to be eligible.
So, you may be wondering, ‘if I can’t get CERB what can I do to pay my bills and to survive during this trying time?’. Here’s a few suggestions:
So number one, if you are dealing with debt this is absolutely the time to talk to your different lenders, different financial institutions to see if they have any kind of different relief programs. I’ve been seeing a lot of different banks and credit card companies offering some sort of relief, either lowering interest rates or offering deferral programs.
Another thing you can do is - and I know this may not sound super fun - file your taxes, especially, most especially if you were expecting a tax refund. So file your taxes, get that tax refund, that money can go towards savings or paying your bills or your debts.
And lastly - I know this probably sounds annoying and you’re sick of hearing it - but this is a great time to make a budget and see what costs are happening right now, where’s your money going and seeing if there’s any way you can cut costs, even temporarily. Remember this does not have to be permanent but maybe getting rid of some subscriptions, some of those things you would normally buy, to make your cost of living as low as possible so you can afford to pay your work bills. (April 22, 2020)
GIC interest and CERB eligibility
Liz in Oakville, Ont.:
I understand dividend income qualifies for CERB. Does Guaranteed Investment Certificates (GIC) interest count as income? It's my only source of income and my GICs will crash and burn this year and the next several years. I made more than $5,000 in interest income last year. (April 19, 2020)
Marlena Pospiech, director of wealth planning at National Bank Private Banking 1859:
No, unfortunately GIC interest income would not qualify for purposes of the CERB benefit eligibility rules. Eligible income is limited to employment (e.g. salary) and self-employment income (e.g. salary or non-eligible dividend income paid to an incorporated business owner or professional from corporate income taxed at the small business rate). (April 23, 2020)
Financial relief for teachers
Kevin in Langley, B.C.:
Would a teacher, permanent or not, who normally gets a summer job to supplement income, qualify for benefits if no summer employment is available? They may still be on the teaching payroll for the summer (as some take their pay over 12 months) or they may not (paid over 10 months). As well, they will likely not have a Record of Employment (ROE) from the previous summer. (April 18, 2020)
Robyn Thompson, personal finance expert and president of Castlemark Wealth Management Inc.:
This teacher will not qualify for the Canadian Emergency Response Benefit or CERB if they continue to be employed as a teacher and receive more than $1,000 a month from their employer as employment income.
The CERB has been specifically designed to help those Canadians who have lost their job to no fault of their own because of COVID-19 or COVID-19-related issues. You must have also had $5,000 in income in the previous calendar year or in the 12 months leading up to your CERB application.
This is also not a forward-looking benefit which means it’s not going to pair to benefit based on potential future job losses or unavailability of jobs. For your eligibility check www.canada.ca. (April 22, 2020)
Are my saving deposits safe?
Loraine in Vancouver, B.C.:
I am a U.S. citizen and permanent resident of Canada. I have savings deposits in a Canada Deposit Insurance Corporation (CDIC)-insured Canadian bank (TD Bank) and a Federal Deposit Insurance Corporation (FDIC)-insured U.S. bank (Santander). Both amounts are within the insurance limit in each country.
I'm wondering if my money is really safe in both places? Is one economy more likely to lead to bank failures than the other? Is there any chance CDIC or FDIC could run out of money? Is there a safer option for one's savings at a time of economic crisis? (April 22, 2020)
Jamie Golombek, managing director of tax and estate planning at CIBC Wealth Advisory Service:
Both Canada and the United States have deposit insurance. In the U.S., the FDIC typically will insure up to $250,000 per owner; in Canada, CDIC typically $100,000 per account type and you can get all the details on what’s covered on the various websites for FDIC and CDIC.
In terms of the risk - ultimately if a bank fails and CDIC or FDIC not being able to pay out - I think the risk is zero or at least very close to zero. The reason I say that is at the end of the day governments have the ability to print money.
So at the end of the day they can print money to honour those commitments and I think the real risk there of course is that you get into the situation where if the government is printing money, ultimately obviously the value of that currency could decline in terms of purchasing power because of hyper-inflation.
We saw an example of that certainly in Zimbabwe. And the other risk of course is ultimate sovereign failure, so we saw that example years ago with Russia.
But ultimately, I mean unless the entire government collapses and governments cannot honour any commitments, I think relying on the limits in both CDIC and FDIC are reasonable. (April 23, 2020)
Financial relief for small businesses
Bryan in Burlington, Ont:
Is there any relief for very small businesses with small payroll, under $20,000? I am semi-retired and using personal equity and pension income to pay myself. I am paying down a line-of-credit loan and it would be great if we had at least a little interest relief. (April 21, 2020)
Filomena May, financial advisor at Filo Financial Solutions of Raymond James Ltd.:
Depending on your circumstances as a business owner, you may qualify for the Canada Emergency Business Account (CEBA) loan of $40,000 at zero per cent, and 25 per cent of the loan is forgiven if the loan is paid back under the terms provided. The minimum payroll amount to qualify is $20,000.
Another option for the self-employed is the Canada Emergency Response Benefit (CERB) if you earned a minimum of $5,000 before taxes in the last 12 months and don’t expect to earn monthly income (under $1,000 per month) due to COVID-19. If you qualify for the loan it could provide some interest relief by moving the higher-interest debt you carry to the CEBA loan.
Requesting a deferral of payments on the existing loan to reduce the financial strain temporarily also helps.
Best to apply through "My Accounts" on CRA and review the full criteria on Canada.ca based on your circumstances, as well as speak with your accountant. (April 23, 2020)
Claiming work from home expenses
Nilesh in Port Credit, ON:
Both my wife and I are working from home. She has been working at home for a long time while I just started once our office shut down and all employees were told to work at home. We will both be getting T2200 forms for 2020. We calculate 10 per cent of our home expenses (electricity, water, home phone, gas, etc.) as expenses for my wife. Are both of us eligible to deduct 10 per cent of our home expenses? (April 17, 2020)
Robin Taub, founder of Robin Taub Financial Consulting:
Because your office shut down and your employer told you that you had to work from home, you can deduct the portion of certain costs like utilities, that relate to your home work space.
You have to use a reasonable basis to prorate these expenses like the square footage of your home workspace divided by the total finished area of your house. If you spent money to maintain the workspace only, you may be able to deduct all of those costs without prorating them.
Assuming you and your wife use different workspaces that aren’t the same size, then the percentage you use to prorate home office expenses can be different. Finally, you can only claim home office expenses for the period in 2020 when you had to work from home. (April 20, 2020)
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