The Canada Revenue Agency (CRA) has just opened the window for its last lot of $2,000 Canada Emergency Response Benefit (CERB) payments. If you are out of a job after September, the Canadian government is putting in place a CERB alternative called the Canada Recovery Benefit (CRB), which will pay you $1,600 a month. The process will be similar to the CERB. You can apply bi-weekly or monthly for the benefit, and if you qualify, you get the payment. These payments will become a part of your taxable income.
However, there will be changes in the alternative. The CERB was for every Canadian above 19 years of age who earned at least $5,000 last year or less than $1,000 a month. The CERB alternative will be divided into two parts. The government is bringing back the Employment Insurance (EI), but with new improvements. So, those in the insurable employment will be moved back to EI. For those who don’t have an EI, the CRA is bringing the CRB.
What is CRB?
The CRB is a new benefit the CRA is putting in place to help Canadians return to work. It is like an EI for freelancers, part-time workers, and the self-employed who do not have unemployment benefits. The CRB will come into effect on September 27 and will remain in place for 12 months.
There is a lot of uncertainty in the economy that could impact your income. There are fears of a looming recession. One month you may be earning, and the next you may not. Hence, the CRA stretched the benefit period. You can apply for the CRB on a new web page the CRA is creating. Please note that you will get the payment in arrears, which means after the end of the benefit period.
Do you qualify for CRB?
Before you apply, you need to see if you qualify for the benefit.
- You must be a Canadian above 19 years of age.
- You must not have EI and are out of work or are earning less because of the pandemic.
- The CRA has removed the $1,000 maximum earning limit. So, you can apply for the CRB even if you are working. You can get the CRB until your annual net income reaches $38,000, which equates to $3,166 a month. After that, the CRA will phase out your CRB payment at the rate of $0.5 for every dollar earned above $3,166.
If you qualify for the CRB, the CRA will give you $400 a week, or $1,600 a month, for up to 26 weeks, to meet your living expenses. Now, these 26 weeks need not be in a row. It could be stretched over 12 months.
For instance, Jane is a hairdresser and runs her salon. October was pretty busy for her, as she got many appointments and earned a good income. However, COVID-19 cases surged in her area in November, and her salon was temporarily closed, as it fell under the containment zone. She can claim CRB for that month.
Jane is back in business in December, but her income is less than $3,000. She can get the CRB for that month as well, even though she is working. In February 2021, she falls sick and has to close her shop for 20 days. She can claim her next CRB in February. Once she is back in business, she may not apply for the CRB.
How to maximize your CRA benefit
You can make the most of your CRB payments. Like Jane, you can claim your $1,600 CRB over and above your $3,000 working income. You can set aside $1,000 from your income, and invest it in a lower-risk growth stock like Constellation Software (TSX:CSU).
Constellation acquires small companies that provide mission-critical software to niche verticals that have limited competition. Over the last 25 years, it has diversified its portfolio by acquiring over 260 companies that serve more than 125,000 customers across 100 plus geographies. Such a varied portfolio has made it resilient to the pandemic.
Constellation stock is growing at a CAGR of 20% for the last five years. The stock has the potential to double in the next four to five years as it continues to acquire new companies.
