The clean-up of the inadvertent payments of the Canada Emergency Response Benefit (CERB) is ongoing. If you received the taxable benefit and the Canada Revenue Agency (CRA) finds out you are ineligible, it could take back your $14,000 CERB.
The CRA window for CERB disbursements will remain open for four weeks more or until September 27, 2020, because of the second program extension. However, the CRA also has a repayment process in place if you need to return or repay your CERB.
Two common return scenarios
The CRA is strict with eligibility requirements, because the pandemic money must go only to eligible Canadians. Likewise, no individual should receive more than a maximum of $14,000 in 28 weeks.
There are two return scenarios you must know to ensure the CRA will not be at your back. First, if you applied for CERB, received the cheque, and later found out you’re not eligible, you must return your CERB.
The second instance is when you applied for CERB with the CRA and Service Canada. You can only file your application with either but not both. Two applications will result in multiple or double payments. Thus, you should immediately return the excess.
Both scenarios above are the common reasons the CRA is taking back CERB. It’s possible too that you applied for CERB with the CRA for the same eligibility period. Another situation is when you suddenly obtained employment or earned self-employment income earlier than expected.
Return procedures
If you need to return your CERB, send the payment to the cheque source or issuer, either the CRA or Service Canada. The CRA reminds recipients that CERB is taxable. You will receive a T4A tax slip based on the CERB amount you receive. The CRA won’t issue a T4A for CERB repayments made before December 31, 2020.
Heighten your awareness
The 2020 health crisis should heighten awareness of Canadians toward building emergency savings. It would be impossible to ride out the pandemic without work or income. The CRA delivered a temporary lifeline to millions of displaced Canadians.
Even with the forthcoming CERB replacement, people should be thinking of earning passive income. A straightforward but less cumbersome approach is dividend investing. Your free cash can generate an emergency fund from dividend earnings, while the capital compounds over time.
Bank of Montreal (TSX:BMO)(NYSE:BMO), the pioneer in dividend payments, can help you achieve your financial objective post-pandemic. This bank stock is a dependable and investor-friendly asset. With its unbeatable dividend track record of 191 years, you can buy it now and own it forever.
BMO shares sunk to a COVID-19 low of $54.66 on March 23, 2020. As of the writing, the bank stock is trading at $82.78, or a 34% rebound. The dividend yield is a juicy 5.12%. A starting position of $25,000 will produce $1,280 in passive income. If you don’t sell the stock, the pay is good for another two centuries.
Do the right thing
The CRA will not come knocking on your door to collect CERB if you meet the eligibility criteria. However, if you determine that you’re ineligible because your situation has changed, do the right thing.
