The federal government successfully averted a disruption of income support with the Canada Recovery Benefits Act’s timely passing. Canadians impacted by COVID-19 were anxious about the ending of the Canada Emergency Response Benefit (CERB) on September 27, 2020.
The Canada Recovery Benefit (CRB) is the new pandemic lifeline after CERB. Although the weekly taxable benefit amounts are the same, you can differentiate the two programs from their acronyms. In CERB, the “ER” stands for emergency response, while the “R” in CRB means recovery. Thus, Canada is now in the recovery phase.
How to claim the new payout
The first thing to remember about CRB is that the program is for employed and self-employed individuals who will not qualify for Employment Insurance (EI). Service Canada administers the EI claims, while the Canada Revenue Agency (CRA) is in charge of CRB.
A CRB applicant with a valid Social Insurance Number (SIN) can expect to receive $500 per week for up to 26 weeks. The releases are $1,000 for every two-week periods. Unlike CERB, where the amount is gross of tax, the CRA will deduct the tax due upfront. You don’t need to set aside money for the tax payment next year. The full amount for the entire period of 26 weeks is $13,000.
Before applying for your first CRB, you must have earned a minimum of $5,000 (employment or self-employment income) in 2019, 2020, or 12 months preceding the application. There’s a repayment mechanism if your income in 2020 or 2021 exceeds $38,000. You must repay 50 cents for every dollar of income earned in that year, up to the total amount of CRB you received.
Since it’s an attestation process, a CRB claimant must also have stopped working due to the COVID-19 pandemic but remain available and actively looking for work. A person who is working but their income dropped by at least 50% can also apply for CRB. You’re outright ineligible if you quit your job voluntarily.
Sail through uncertainties
You can earn CRB-like income and not depend on federal aid by owning dividend stocks. Your savings or free cash can work for you and compound in value over time. Insurance stock Manulife Financial (TSX:MFC)(NYSE:MFC) is a reliable dividend payer.
The $35.84 billion diversified financial services company pays a hefty 6.09% dividend. Likewise, the stock has a dividend-growth streak of six years. A $75,000 stake will produce $4,567.50 in passive income. The beauty of this Dividend Aristocrat is that you can hold it for as long as you want to keep the income stream flowing.
For the six months ended June 30, 2020, Manulife reported $2.02 billion in net income, although it was 45% lower than in the same period in 2019. Despite the ongoing uncertainty, Manulife president and CEO Roy Gori assure investors the company is well positioned to navigate this challenging new environment due to a strong balance sheet and capital levels.
Apply for CRB if you’re looking for work
The CRB encountered birth pains in the first week since the CRA started accepting applications on October 12, 2020. However, the technical glitches were resolved, and the routine system maintenance is over. The processing should be problem-free from here on out.
