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.
Guidelines to write off investment loss
Bruce in Prince George, B.C.:
I have a bond that lost about 90 per cent of its value due to low interest rates and mostly funds disappearing. The money that was left got rolled into a new investment but there was no T-5008 disposition of capital issued by the company.
Is it possible to still write off the loss without selling the investment the money got rolled into? What kind of a loss would this be? I would prefer to not have to sell the new investment if I don’t have to. (April 23, 2020)
Carol Bezaire, VP of tax, estate and strategic philanthropy at Mackenzie Investments:
Bruce, the adjusted cost base of the bond, when transferred, likely became your adjusted cost base of your new investment. As there was no disposition, there is no T5008 and losses are not realized. The move to the new investment will allow you time to recoup your loss; however you cannot use the loss on the bond against your capital gains on other investments until the new investment is sold to realize the loss for tax purposes. (April 28, 2020)
Collecting CERB if I ask to be laid off
Emily in Guelph, Ont.:
My employer is currently receiving the Canada Emergency Wage Subsidy (CEWS) and keeping employees on payroll by paying them with the wage subsidy. However, they have offered to lay off employees who would gain more financial benefit from Canada Emergency Response Benefit (CERB).
If I ask to be temporarily laid off would I qualify for CERB or would that count as voluntarily leaving my job? And, if my employer is accessing the wage subsidy program, can they also lay off employees related to COVID-19? (April 20, 2020)
Muneeza Sheikh, employment lawyer at Levitt LLP:
The whole point behind the wage subsidy program is to encourage employers to bring their employees back and avoid the layoff all together.
The requirements however are quite stringent, so where an employer might qualify for the wage subsidy program one month because there’s a revenue drop of 30 per cent, if in the next month it is only a revenue drop of 25 per cent, the employer may essentially have to lay off the very employees that they recalled. Now with that being said we will see a combination of employers using layoffs and also the wage subsidy program.
If we’re talking about eligibility for the CERB program, employees should keep in mind that if they are voluntarily asking for a layoff or are asking to stay home, that would preclude them from being entitled to that specific benefit and so where you are being legitimately laid off, that is when you are able to apply for the benefit. (April 27, 2020)
Dividends and the CERB
Joe in Alberta:
I'm a consultant in the energy industry. I have not worked since July due to the downturn in commodity prices. Now with COVID-19, it is even more difficult to find work. Technically, I'm employed by my corporation and I receive a small salary and dividends from it, but these are running out. Can I suspend dividends and salary to myself and collect the CERB? (April 18, 2020)
Michael Samotis, senior financial advisor at Kerr Financial:
To qualify for the CERB you must be a resident of Canada, have not quit your job voluntarily, had employment/self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of application, and have stopped working because of reasons related to COVID-19, or are eligible for Employment Insurance (EI) regular or sickness benefits, or have exhausted regular EI benefits between December 29, 2019 and October 3, 2020.
If you stop paying yourself a dividend and salary and it is directly related to COVID-19, and you meet the criteria above, you would be able to receive the CERB.
Recent changes by the Canada Revenue Agency (CRA) count non-eligible dividends towards the $5,000 income requirement for CERB.
The CRA may interpret that you do not qualify because the ceasing of the dividend and salary is not directly related to the COVID-19 crisis given you haven’t worked since July 2019. Reach out to the CRA for guidance. (April 21, 2020)
CERB eligibility for new business owners
Dave from Edmonton:
I incorporated a small business just over a year ago in 2018 and have 50/50 split ownership with my son. Last year the business had revenue over $5,000, however the payments were made directly to the corporation (numbered company). I haven't drawn any income from the business to date as I am trying to build some equity into it.
Would I be eligible for CERB? (April 17, 2020)
Tim Cestnick, co-founder and CEO of Our Family Office Inc.:
The Canada Emergency Response Benefit (CERB) is available to Canadians who have lost all or substantially all of their income because of COVID-19.
Now the benefit’s available only if you’ve earned $5,000 or more of income last year in 2019 or in that 12-month period leading up to the date of your application.
Now if you happen to be self-employed and maybe you operate through a corporation, then maybe your corporation earned more than $5,000 of income last year, well that’s not necessarily going to help you because this is not a benefit available to companies or corporations. But you are an employee of your corporation so if you pulled or took salary or other income out of your corporation to the tune of $5,000 or more last year and you can’t do that any longer because of COVID-19, then you may still actually qualify for this benefit.
Also, make sure you check into what benefits your province might be able to offer over and above the CERB as well.
Finally, if you are self-employed and you do have a business, you may be entitled to claim some wage subsidies or even some interest-rate loans from the government to help out as well at this time. (April 24, 2020)
Financial aid for students
Sarah in Trail, B.C.:
I am a B.C. resident and I have a question about any potential support for me amid the COVID-19 crisis. I'm in a bit of an unusual position unanswered by the Canadian Revenue Agency website.
I'm very fortunate to be in my position, and I am cognizant of the privilege I have to still be working in a tier-two essential business job. I continue to work full-time due to our essential status and make approximately $2,400 per month.
I find myself in financial hardship as I have for many years. I have supplemented my income with a second job managing an outdoor pool during the summer months and working up to 80 hours per week on top of my regular day job. This second seasonal job is my highest-paying position and I typically work full-time hours May through mid-September, which allowed me to put myself through university for the past number of years. I graduated with my bachelor's degree in June 2019 and have been working since, but will be a student again this fall when I begin law school in B.C.
Again, I recognize how lucky I am to be maintaining my 40 hours per week. However, with the enormous cost of law school tuition ahead of me, I have no idea how I am going to able to afford that with the significant loss of my second job, where I have made $25,000 annually. I now expect to lose that entire income.
With my current job, I barely scrape by paying rent, groceries and bills. I do not have any additional funds to put towards saving. Is there any help for me if I can clearly substantiate a significant loss of earnings? Approximately 60 per cent of my annual income?
I know this is a long shot. (April 23, 2020)
Marlena Pospiech, director of wealth planning at National Bank Private Banking 1859:
Unfortunately, earning more than $1,000 per month disqualifies you from accessing both the Canada Emergency Response Benefit and the B.C. Emergency Benefit For Workers. However, you may be eligible to receive up to $5,000 for community volunteer work under the new Canada Student Service Grant (CSSG).
For additional financial assistance, you can apply for a grant (doubled to up to $6,000) under the Canada Student Grants program and also for a loan (raised from $210 to up to $350 per week) under the Canada Student Loans Program. (April 28, 2020)
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