Apr 28, 2020
Students, small businesses and seniors: Ask BNN Bloomberg answers your personal finance questions
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 email@example.com, and we will aim to answer them weekly.
Questions and answers have been edited for clarity. Last names will not be used.
Leaving job due to closures
Brooke in Penticton, B.C.:
When my workplace had to close its doors due to the COVID-19 situation in my university town, they sent out forms from the Canadian government saying to sign your name if you agree that this is a temporary layoff and will, within the next five months, come back to work for the business if and when they need me.
However, I could not sign it because I had to move back home since the university shut down and I couldn’t live there anymore while paying for groceries when I didn’t have work. So for me to sit around and wait for them to be able to re-open again was not an option.
Therefore, me signing that means legally I quit. But I did not quit because I didn’t want to work there. I didn’t sign because I won’t be around in the next five months because I had to move home due to COVID-19.
Now the Canada Emergency Response Benefit (CERB) requirements say you aren’t eligible if you voluntarily quit your job, but there are certain reasons that are exempted like if you had to quit to take care of a loved one who is sick from COVID-19, or if you yourself are sick. It also says that reasons to stop working are not limited to these specific COVID-19 reasons.
Would I still be eligible? I could not sign the temporary layoff because I had to move back to my family home and away from the business I worked at due to COVID-19.
Also, eligibility was expanded to seasonal workers. Every summer I have a job at a beach restaurant, and of course it is not opening. Does this count as a seasonal work? (April 18, 2020)
Kelley Keehn, consumer advocate at FP Canada:
I’m so sorry to hear about your situation but from what you’ve described, it does not sound at all like you’ve quit your job.
You in fact did your best, you weren’t able to sign that letter of termination because you had to physically leave so I think the government would probably agree that in that circumstance you did not quit.
Please make sure you take copious notes and record all the dates of all these occurrences but from the sounds of it, as long as you’ve met the eligibility requirements of earning $5,000 in 2019 or the last 12 months, it sounds that you would be eligible for the CERB program. (April 21, 2020)
CERB eligibility for seniors collecting pension
Rodney in Brandon, Man.:
I am a retired person who collects a pension, however I was working as a casual employee for the Manitoba government until September 2019 when I was laid off. I did receive in 2019 over $5,000 in wages. I also worked enough hours to qualify for employment Insurance (EI) which I did, and it ran out on February 19, 2020.
So my question is, does being retired and collecting a pension once a month disqualify me from being eligible for the CERB? Any information on this would be greatly appreciated. (April 18, 2020)
Melissa Leong, financial speaker and author of the finance guide, Happy Go Money:
The Canada Emergency Response Benefit (CERB) provides $2,000 every four weeks, for up to 16 weeks for anyone who has lost their income due to COVID-19. So let’s go through a couple of the requirements to see if you’re eligible.
Number one: You have to have made $5,000 in the last 12 months or in 2019, so you’re good there.
Number two: According to some recent government updates, if you have exhausted Employment Insurance (EI) between December 29, 2019 and October 3, 2020 you are eligible to apply for the CERB.
Finally, you’re collecting a pension. Pension income - CPP, OAS - they’re not considered employment income for the purposes of the CERB so you are eligible to apply. (April 22, 2020)
Will pandemic rescue measures cause high inflation?
Bobby in Toronto:
I am a retired senior depending on income from interest and dividend. With so much debt created from the pandemic, what will the government do? Will this create high inflation like in the 70s? (April 17, 2020)
Beata Caranci, chief economist and senior vice president of TD Bank Group:
Relative to the size of the economy, government spending is roughly six times the amount that was offered during the global financial crisis. However, the economic contraction is also deeper than recent historical experiences.
The government has oriented funds towards temporary measures that will naturally expire if the economy avoids a prolonged recession. This, along with a recovery in tax receipts, would help stabilize debt-to-GDP levels, provided the government can resist turning temporary measures into permanent ones.
In an optimistic scenario, where the economy begins to reopen within the next month, it will likely take a year or more for Canadian activity to return to pre-crisis levels. The job market is less likely to fully recover. This leaves the balance of inflation risks to the downside due to a demand gap. In a less optimistic scenario that takes the economy upwards of two years or more to recover to pre-crisis levels, downward pressure on inflation will build and governments will have to spend even more on income stabilizers, leaving deficit fighting for another day (and generation). (April 22, 2020)
Should I get a reverse mortgage?
Cecile in Burns Lake, B.C.:
The federal government has not given any relief money for seniors other than drawing out retirement funds at a reduced income tax rate. Would this be the time for seniors to apply for the Chip Reverse Mortgage? (April 18, 2020)
Rob McLister, founder of RateSpy.com:
Reverse mortgages are meant for seniors who want to stay in their home, need cash and have no better options.
Assuming you genuinely need the money and are willing to pay reverse mortgage rates to get it, step one is to rule out all other options. Those might include downsizing, getting a home equity line of credit (HELOC), finding a renter or roommate, selling other assets, selling your home to loved ones at a below-market price with a leaseback agreement, and so on.
Barring alternatives, a reverse mortgage is an easy source of fast liquidity. But don’t tie yourself to one lender. Compare both HomeEquity Bank (founder of CHIP) to Equitable Bank, its much newer competitor. The former will lend you more money with less restrictions, but generally has higher rates. The latter lends less money, as a percentage of your home value, but has lower rates and fees. As we speak, the best reverse mortgage rates will save you 1.25 percentage points of interest annually. That means $15,500 less interest on a $200,000 lump-sum reverse mortgage over five years. (April 22, 2020)
Waiting on a SIN renewal amid COVID-19
Iqbal in Brampton, Ont.:
I want to know if I am eligible to apply for CERB. Last year I worked at McDonald’s part-time as I was a full-time student. Then I graduated in November and applied for a post-graduation work permit since at the time I was not eligible to work. My employer told me to come back to work when I got my work permit.
I received my work permit on March 6, 2020 and received it in mail on March 12, 2020. The next day Service Canada was closed and I couldn’t renew my social insurance number (SIN) so I won’t be able to return to work. They are accepting only mail application for SIN numbers, which takes one month, so I want to know if am eligible because I am meeting all other conditions. (April 18, 2020)
Dilys D’Cruz, VP and head of wealth management at Meridian Credit Union:
Sounds like you’re a foreign student working in Canada with a temporary SIN. Now the delay in getting your SIN renewed likely is not going to meet the eligibility for the CERB, which was designed to help Canadians who were working and directly impacted COVID-19 and unable to work and seen a reduction in your income and/or hours.
And so in this case, you weren’t working prior to COVID-19 and will likely not qualify for the CERB. But the good news is, it sounds like you got you’ve got your paperwork on the go and likely just maybe a week or two away from getting your SIN renewed, and it also sounds like your employer has an opportunity waiting for you.
So I wish you the best with that and one thing that I do suggest is you go onto the CERB website. Things are changing so rapidly, the government is continuously implementing new programs to help Canadians and things get updated regularly so stay informed, check out the website. Good luck! (April 23, 2020)
Options for small businesses
Mas in Kelowna, B.C.:
I run a small services business, which has been completely shut down due to the virus. But I still have to pay overhead charges like rental, insurance and some interest to the bank.
I also work another job which I am still able to carry on as it is more IT-based. Because of the job, I am not able to qualify for the CERB.
Can you please advise what would be the way forward for me? Should I close my business permanently? I am not able to pay my bills. (April 22, 2020)
Barry Choi, personal finance blogger for Moneywehave.com:
The prime minister just announced Ottawa may propose a Canada Emergency Commercial Rent Assistance for small businesses that will lower your rent by 75 per cent for April, May and June. To qualify, your rent must be less than $50,000 a month. In addition, you must have ceased operations or seen your income drop by 70 per cent compared to pre-COVID-19 income. The government is working with the Canada Mortgage and Housing Corporation to cover 50 per cent of the rent, your landlord would cover 25 per cent and you would be responsible for the remaining 25 per cent.
If the program goes through, it will be available in mid-May, so talk to your landlord if this will help you keep your business operating. That said, if the outstanding rent, insurance and other overhead costs are eating into your cash flow, it might make sense to cut your losses and close your business. (April 24, 2020)
To have your personal finance question answered an industry professional, send an email to firstname.lastname@example.org.
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