What you need to know about transitioning from CERB to EI
With the Canadian Emergency Response Benefit set to end this weekend, the federal Liberals are awaiting legislative approval for three new recovery benefits.
On Thursday, Ottawa raised one of the proposed benefits, the Canada Recovery Benefit (CRB), to $500 from $400 per week to match the value of the CERB.
However, some Canadians may still have questions around the transition to the proposed COVID-19 benefits, with nearly nine million having applied for the CERB as of Sept. 13, according to the Government of Canada.
Melissa Leong, personal finance expert and author of Happy Go Money, says the most important thing to remember during the transition is to be aware of your spending to make sure that you can afford any additional expenses that may have arisen during the pandemic.
“My hope is that Canadians who will be [transitioning] will have an idea of what their inflow and outflow in terms of their money will be, their expenses, and they will be able to balance that so it’s not a shock,” Leong said in a television interview with BNN Bloomberg on Wednesday.
The three new proposed benefit programs the Liberals are introducing – in addition to the transition to a modified employment insurance (EI) program on Sept. 27 – are the CRB, the Canada Recovery Sickness Benefit, and the Canada Recovery Caregiving Benefit.
“If you have exhausted your EI benefits, if you are self-employed, if you take advantage of the gig economy, you can apply for the Canada Recovery Benefit,” Leong explained.
“The government wants you to work, and so you actually can make money while receiving the CRB. It’s just that at tax time if you’ve made more than $38,500 – that’s the threshold – any money above that you’ll have to pay back some of your benefits.”
The Canada Recovery Caregiving Benefit, meanwhile, is designed to help Canadians who can’t work because they need to take care of dependents, such as children staying home from school or daycare.
“The stipulations here are that the school or daycare centre have to have closed if can’t be just because you choose that,” Leong said. “Another stipulation is perhaps upon medical advice that your child has to stay home or your dependent is staying home. Or finally, the regular caregiver who is looking after your dependents is unavailable for reasons relating to COVID-19.”
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Canadians may also be eligible for the Canada Recovery Sickness Benefit, which will financially support those who are sick or must isolate due to COVID-19, and are therefore unable to work.
Jordan Damiani, senior wealth advisor at Meridian, says while Canadians take advantage of the programs that the federal government is offering, they need to start planning ahead to tax season. He notes CERB is a taxable benefit, and is urging Canadians to prepare now so they’re not caught off guard by their tax bill next year.
“A good strategy I recommend is to take out your last pay stub and look at how much income tax has already been deducted. Maybe go online and use a tax calculator – and then you’re kind of able to estimate what tax implication you’ll have with that CERB come income tax time,” Damiani said in a television interview on Tuesday.
He added that the financial situation many Canadians are finding themselves in due to the pandemic underscores the importance of being prepared financially in the months to come.
“It goes back to that narrative of planning ahead and being prepared for things and in this environment,” he said.
“You can only do your best, and doing your best is really looking at the possible scenarios that will affect an individual – whether they’re business owner or a household – and try to mitigate them.”